COURTESY OF SIMON & SCHUSTER
The private jet of Robert Stewart Jr., whose pandemic profiteering is chronicled in J. David McSwane’s new book
This article appears in the June 2022 issue of The American Prospect magazine. Subscribe here.
Pandemic, Inc.: Chasing the Capitalists and Thieves Who Got Rich While We Got Sick
By J. David McSwane
Simon & Schuster
The 1918 influenza pandemic hit Washington, D.C., like a hammer. On a single day that fall, more than a thousand people came down with the illness and over 90 people died. The Washington Post stopped running obituaries altogether and resorted to simply printing lists of names of noteworthy residents. Before cremations were popular, so many people were dying so fast across the country that many cities ran out of coffins. In Connecticut, a woman lay dead in her house for seven days as the undertaker hunted fruitlessly for something to bury her in. In true supply-and-demand fashion, coffin makers raised prices as high as possible. Quickly, the market devolved into extortion, profiteering, and crime.
Some of this was led by governments themselves. Louis Brownlow, the D.C. commissioner, discovered two boxcars full of 270 coffins on the Potomac Railroad bound for Pittsburgh, one of the worst-hit cities. Brownlow, like a pirate on the high seas, commandeered the trains and rerouted them to the D.C. city hospital.
As prices kept climbing, an editorial in the Post noted that “the coffin trust is holding the people of the city by the throat and extorting from them outrageous prices for coffins and the disposal of the dead.”
The coffin controversy shows that, for certain people, a pandemic is a great time to make money. Our experience with COVID-19 proved no exception, as ProPublica’s J. David McSwane chronicles in his new book Pandemic, Inc.: Chasing the Capitalists and Thieves Who Got Rich While We Got Sick, a vigorous first-person account of his myriad investigations into pandemic profiteers. McSwane shows how unprepared America was for any kind of public-health emergency, necessitating a system in which the American government blindly blasted billions out the door in an effort to stem the mounting pile of body bags, enriching a group of impossibly shady characters—mask pirates, test tube fraudsters, small-business loan liars, nursing home vultures, vaccine barons—and often getting nothing to show for it.
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“I saw greed masquerading as entrepreneurial spirit, selfishness as rugged individualism, opportunism as patriotism, recklessness as bravery,” McSwane writes. “Our obsession with unfettered capitalism hurt us every step of the way.” Pandemic, Inc. is also a story about the cost of austerity and the failures of private markets, propped up entirely by unscrupulous public money.
McSwane’s story begins in April 2020, when he began to look into a business called Federal Government Experts, which had received the largest first contract from the Department of Veterans Affairs to provide masks. At least in its early days, masks were the coffins of the COVID pandemic: shockingly scarce, increasingly expensive, and the locus of price-gouging and fraud. McSwane called the owner of Federal Government Experts to learn about the business, and the owner, a man named Robert Stewart Jr., improbably and against the advice of his lawyer offered McSwane the chance to tag along as he endeavored to find and deliver six million N95 masks. The federal government had promised to pay Stewart almost $6 per mask, even though they typically retailed for about $1.
Decades of austerity coupled with crony capitalism on both sides of the aisle doomed tens of thousands of people.
Ultimately, Stewart was guaranteed about $34.5 million in revenue, despite having no demonstrable experience procuring PPE or medical supplies. But this was fairly typical during that chaotic time. Many federal contracts were going to people who had formed their LLC just weeks, or even days, before submitting their applications.
Initially, Stewart told McSwane he already had possession of the masks at a site in Los Angeles, and was taking a private jet to Chicago to oversee the transfer. To the surprise of McSwane, the plane diverted 600 miles and stopped off in Georgia to pick up Stewart’s parents and his human resources director. As they flew to Chicago, the human resources director flipped through a book called Strategic Staffing while Stewart brushed up on a federal contractor’s bible, the Federal Acquisition Regulation, and asked the pilot when it makes sense to buy a plane. (He was renting it for $22,000 a day.) McSwane began to suspect something was amiss.
Stewart would eventually change his story. The mask cache in Los Angeles didn’t exist anymore. McSwane was stunned. Why were they flying to Chicago then? “It comes down to me and my credibility,” Stewart said. “Why would anybody pay $22,000 to have a ghost box delivery? It doesn’t make any sense.” True enough. It is the power of positive thinking taken to an extreme degree. McSwane thought of all the people dying on the ground below, writing, “There I was, a passenger aboard a delusion, floating over a nightmare.”
Arriving in Chicago, the group settled into an empty Hilton, where Stewart assembled a crew of brokers to desperately track down six million masks. Attempting to negotiate deals that included many other brokers looking to feed on his federal contract, he failed.
After this experience, McSwane raced around the country to report on other shady dealers, like the man in Texas who hires people on TaskRabbit to repackage non-medical-grade masks into new boxes, or an alleged testing company called Fillakit, where supposed sterile vials were actually plastic mini-soda bottles loaded into bins with snow shovels and filled with saline solution. The government would later buy and then dispose of four million of these tests. In another instance, a man with 75 Twitter followers responded to one of President Trump’s tweets, claiming he had some ventilators, and was forwarded by a Jared Kushner–led task force to the state of New York. The state, assuming that the man was vetted (he wasn’t), awarded him an $85 million contract for 1,450 ventilators, with $69 million paid in advance. No ventilators were delivered.
“Was the plan,” McSwane wonders, “to cast money out indiscriminately, like chum into the sea, and just see what bites?”
Lurking behind all these revelations is a key question: Why did the government need to rely so heavily on private brokers to find PPE, tests, and vaccines in the first place? And why was there almost no time for oversight or vetting when it came to these brokers, leaving the door wide open for fraudsters to come rushing in?
COURTESY OF SIMON & SCHUSTER
Stewart’s team had to desperately track down six million masks after making a deal with the Department of Veterans Affairs to provide them.
The reason, of course, was that the Strategic National Stockpile—an initiative housed deep within the Department of Health and Human Services created by President Bill Clinton after he read Richard Preston’s fictionalized account of a bioterror attack on the U.S. called The Cobra Event—was completely depleted. The SNS had been designed to have on hand all things necessary to quickly stem a pandemic, like pharmaceutical remedies, masks, respirators, and other medical supplies. But in 2009, the stockpile of N95 masks was 75 percent depleted, as supplies went out to aid states in the fight against swine flu. As the senseless budget battles of Obama’s first term heated up, fiscal brinkmanship hampered the ability to resupply the cache. The 2011 Budget Control Act, which established across-the-board “sequester” cuts throughout federal agencies, forced Congress to reduce HHS funding and halt funds intended to restock the SNS.
Funding for the SNS was first reduced by 10 percent in 2011, then 9 percent a year later, and 8 percent in 2013. Moreover, the Obama administration chose to focus the reduced funds on preventative supplies for the very rare chance of smallpox and anthrax outbreaks, essentially plowing piles of money into a single company that monopolized the anthrax vaccine at the expense of masks.
McSwane profiles a domestic mask maker who tried in vain to warn the federal government that if more masks were not purchased and mask production was not ramped up in the United States, a disaster awaited. But instead of sending contracts to guarantee solvency for domestic mask makers with proven supplies and credentials—even large American manufacturer 3M had sent its mask production to China—Trump officials like Peter Navarro rushed out deals to unqualified and even delusional brokers across the country, wasting time, money, and most importantly human lives. The U.S. government’s deadly failure to respond to the pandemic has been well chronicled, but reading McSwane’s book it becomes very real why it failed. Decades of austerity coupled with crony capitalism on both sides of the aisle doomed tens of thousands of people.
In some regards, McSwane’s conclusion is multifaceted. Sometimes he blames “unfettered capitalism,” sometimes he blames a shortsighted lack of preparedness, and sometimes he shruggingly suggests that this was our destiny as a country. “This is who we are,” he writes, “though I pray it is not all we can be.” It’s refreshing that he calls different schemes what they are, in one case referring to “an unmitigated bullshit bonanza.” And while it’s comforting to progressive ideology that the private, unregulated market is a nightmare, it feels like most of the federal dysfunction when it comes to PPE distribution and federal money is simply a result of disastrous budgetary decisions. It opened the door for incompetent officials like Navarro to make ill-informed decisions in the name of expediency, to allow drug companies to keep profits from vaccines developed by the federal government, and to let criminally negligent nursing home owners off the hook. Austerity kills, and that’s the heart of the story.
Though Stewart, who was charged with federal fraud in relation to his mask contract, was McSwane’s entry into the story, the author soon moves on. But one day, while investigating the billions of dollars swindled from the government through the Paycheck Protection Program, a privately run lending operation to help pandemic-affected businesses keep their workers employed, McSwane decided to type “Federal Government Experts” into a database of businesses that received money. Sure enough, the company popped up. Stewart had received an $805,000 loan, dispersed the same week the company was targeted for investigation. In the application, Stewart claimed he had 37 employees and a payroll of $322,000, when his labor cost only amounted to $14,000, or less than one full-time employee.
Furthermore, it turned out that Stewart had been defrauding the VA since 2013, claiming to be a discharged corporal from the Marines when he was only an Air Force reservist. Prior to 2020, his scam had only netted tens of thousands of dollars. The pandemic was the real gold mine, and Stewart was quick to jump at the opportunity. Stewart applied for his mask contract in April, shortly after the pandemic started, suggesting that he knew how the federal government worked better than anyone else.
