"I'm talking with you against the advice of my attorney."
May 6, 2020 9:26 AM Subscribe
On Twitter, reporter J. David McSwane reports on "one of the most bizarre stories of his career," as he travels via private jet with the CEO of two-year-old company Federal Government Experts LLC, which had previously advertised "block chain" AI procurement solutions, chasing down vanishing leads for N95 facemasks, trying to fulfill a no-bid contract with the VA for procuring masks. Here's the complete story at ProPublica.
McSwane or Stewart? McSwane is the reporter.
posted by EmpressCallipygos at 9:34 AM on May 6, 2020 [4 favorites]
posted by EmpressCallipygos at 9:34 AM on May 6, 2020 [4 favorites]
And this story is so Byzantine I had a hard time following exactly who was defrauding whom, who was just incompetent, and why.
I was also weirdly reminded of comedian David Mitchell's account of the cause of the KFC Chicken Shortage that affected the UK last year.
posted by EmpressCallipygos at 9:36 AM on May 6, 2020 [11 favorites]
I was also weirdly reminded of comedian David Mitchell's account of the cause of the KFC Chicken Shortage that affected the UK last year.
posted by EmpressCallipygos at 9:36 AM on May 6, 2020 [11 favorites]
I have received word via the usual channels that there are now KN95 mask dealers operating in my neighborhood. I'll leave it to you to guess what they were dealing before they started dabbling in medical devices. So this is the dystopia we've chosen then - Battle Angel. I don't want to be a cyborg!
posted by 1adam12 at 9:46 AM on May 6, 2020 [9 favorites]
posted by 1adam12 at 9:46 AM on May 6, 2020 [9 favorites]
Grifters grifting grifters (with a fair amount of fucking stupidity thrown in).
posted by anansi at 9:47 AM on May 6, 2020 [9 favorites]
posted by anansi at 9:47 AM on May 6, 2020 [9 favorites]
There was a similar story on Planet Money a couple weeks ago: A moving company with no medical device experience organizes a bunch of side deals with chinese manufacturers to get ~1MM masks. Lots of rules end up getting broken, and the Illinois Comptroller makes a mad dash down the highway at dawn to hand off a physical check before the deal falls through. One big difference was that, int he Illinois case, it happened to work out, and the players weren't too crooked.
Ultimately, this is all fallout from the lack of coordinated federal response: all of the states are competing against each other, leading to more gouging and chaos on the ground.
[edit window abuse: here's the planet money episode.]
posted by kaibutsu at 9:59 AM on May 6, 2020 [20 favorites]
Ultimately, this is all fallout from the lack of coordinated federal response: all of the states are competing against each other, leading to more gouging and chaos on the ground.
[edit window abuse: here's the planet money episode.]
posted by kaibutsu at 9:59 AM on May 6, 2020 [20 favorites]
A quick Google search showed large portions of the text on FGE’s company website had been lifted verbatim from a 1982 Harvard Business Review article. The company primarily advertised IT consulting and advertised a “block chain” A.I. solution to government procurement, whatever that means.
*dabs “block chain” on grifter bingo card*
posted by mandolin conspiracy at 9:59 AM on May 6, 2020 [45 favorites]
*dabs “block chain” on grifter bingo card*
posted by mandolin conspiracy at 9:59 AM on May 6, 2020 [45 favorites]
his company absolutely should not have been given that contract.
It sounds like the VA risked and lost nothing. They might be taking all sorts of long shot deals like this hoping a few come though.
posted by paper chromatographologist at 10:01 AM on May 6, 2020 [4 favorites]
It sounds like the VA risked and lost nothing. They might be taking all sorts of long shot deals like this hoping a few come though.
posted by paper chromatographologist at 10:01 AM on May 6, 2020 [4 favorites]
McSwane or Stewart? McSwane is the reporter.
Ah I got their names mixed up. You are correct, Stewart is the one I feel a bit sorry for; the reporter is great.
posted by JHarris at 10:01 AM on May 6, 2020 [1 favorite]
Ah I got their names mixed up. You are correct, Stewart is the one I feel a bit sorry for; the reporter is great.
posted by JHarris at 10:01 AM on May 6, 2020 [1 favorite]
...advertised "block chain"...
That right there should have abruptly ended the sales pitch and gotten him unceremoniouslydraggedescorted out of the building. Maybe with a good dickpunchscolding in the elevator for good measure.
posted by Thorzdad at 10:06 AM on May 6, 2020 [16 favorites]
That right there should have abruptly ended the sales pitch and gotten him unceremoniously
posted by Thorzdad at 10:06 AM on May 6, 2020 [16 favorites]
I feel like it's always going to be a safe bet that a company with a name like "Federal Government Experts" is going to turn out to be a sibling company - in spirit if not in actual fact - to Fraud Guarantee.
posted by nickmark at 10:35 AM on May 6, 2020 [13 favorites]
posted by nickmark at 10:35 AM on May 6, 2020 [13 favorites]
It sounds like the VA risked and lost nothing.
They established that they were willing to pay a huge markup for protective equipment. Which hurts everyone. That incentives price gouging and counterfeiting. And at the end of the day, they still didn't have the protective equipment, putting their workers and patients at risk, whereas if they'd gone with a provider that actually had the equipment, they might have had it in hand.
posted by Candleman at 10:54 AM on May 6, 2020 [20 favorites]
They established that they were willing to pay a huge markup for protective equipment. Which hurts everyone. That incentives price gouging and counterfeiting. And at the end of the day, they still didn't have the protective equipment, putting their workers and patients at risk, whereas if they'd gone with a provider that actually had the equipment, they might have had it in hand.
posted by Candleman at 10:54 AM on May 6, 2020 [20 favorites]
When I asked why he spent more than $22,000 on a private plane, he said it was to prove he was no fly-by-nighter but a reputable government contractor.
“It comes down to me and my credibility,” he said. “Why would anybody pay $22,000 to have a ghost box delivery? It doesn’t make any sense.”
This was money out of FGE’s pocket. The government typically doesn’t pay vendors like Stewart until the goods are delivered. (ProPublica reimbursed FGE for the cost of a commercial ticket.)
Stewart pulled a faded Bible from his bag and talked about miracles. His chance to prove himself on this deal, he said, is a small miracle.
Thoughts and prayers.
Ultimately, though, Smith a symptom of the comorbidities wracking the American body politic. He's one foot soldier in a vast army of grifters (c.f. "Friends of Jared") enabled and emboldened by an administration built on a family legacy of cons and frauds, licking their lips at the prospect of taking various federal agencies -- scrambling as decades of austerity take their final toll -- for a ride.
As Belize put it in Angels in America:
I hate America, Louis. I hate this country. Nothing but a bunch of big ideas and stories and people dying, and then people like you. The white cracker who wrote the national anthem knew what he was doing. He set the word 'free' to a note so high nobody can reach it. That was deliberate. Nothing on Earth sounds less like freedom to me. You come to room 1013 over at the hospital, Louis, I'll show you America. Terminal, crazy and mean.
In that last line, he's referring to a dying Roy Cohn, which is not without its own rich irony in the current situation.
posted by mandolin conspiracy at 11:15 AM on May 6, 2020 [36 favorites]
“It comes down to me and my credibility,” he said. “Why would anybody pay $22,000 to have a ghost box delivery? It doesn’t make any sense.”
This was money out of FGE’s pocket. The government typically doesn’t pay vendors like Stewart until the goods are delivered. (ProPublica reimbursed FGE for the cost of a commercial ticket.)
Stewart pulled a faded Bible from his bag and talked about miracles. His chance to prove himself on this deal, he said, is a small miracle.
Thoughts and prayers.
Ultimately, though, Smith a symptom of the comorbidities wracking the American body politic. He's one foot soldier in a vast army of grifters (c.f. "Friends of Jared") enabled and emboldened by an administration built on a family legacy of cons and frauds, licking their lips at the prospect of taking various federal agencies -- scrambling as decades of austerity take their final toll -- for a ride.
As Belize put it in Angels in America:
I hate America, Louis. I hate this country. Nothing but a bunch of big ideas and stories and people dying, and then people like you. The white cracker who wrote the national anthem knew what he was doing. He set the word 'free' to a note so high nobody can reach it. That was deliberate. Nothing on Earth sounds less like freedom to me. You come to room 1013 over at the hospital, Louis, I'll show you America. Terminal, crazy and mean.
In that last line, he's referring to a dying Roy Cohn, which is not without its own rich irony in the current situation.
posted by mandolin conspiracy at 11:15 AM on May 6, 2020 [36 favorites]
Is it even legal to have a limited company, or even a trading name that includes "Federal Government"?
posted by unearthed at 2:01 PM on May 6, 2020
posted by unearthed at 2:01 PM on May 6, 2020
I was a reporter for many years. I'll never understand why a guy in this situation would ever, EVER, totally open himself up to a reporter like this. Especially when, as he said (iirc) "my attorney said I shouldn't do this."
posted by martin q blank at 2:27 PM on May 6, 2020 [3 favorites]
posted by martin q blank at 2:27 PM on May 6, 2020 [3 favorites]
I'll never understand why a guy in this situation would ever, EVER, totally open himself up to a reporter like this.
Because the administration doesn't select for smart people, they select for unethical people. And because the smart grifters are running beneath the surface.
posted by Candleman at 2:29 PM on May 6, 2020 [8 favorites]
Because the administration doesn't select for smart people, they select for unethical people. And because the smart grifters are running beneath the surface.
posted by Candleman at 2:29 PM on May 6, 2020 [8 favorites]
> martin q blank: "I'll never understand why a guy in this situation would ever, EVER, totally open himself up to a reporter like this."
I mean, the dude spent $22K on a private jet on nothing more than mere hopes and wishes that millions of N95 masks would magically be available to him when he landed in Chicago. I'm guessing good judgment isn't one of his key strengths.
posted by mhum at 3:00 PM on May 6, 2020 [12 favorites]
I mean, the dude spent $22K on a private jet on nothing more than mere hopes and wishes that millions of N95 masks would magically be available to him when he landed in Chicago. I'm guessing good judgment isn't one of his key strengths.
posted by mhum at 3:00 PM on May 6, 2020 [12 favorites]
Yo, y'all gotta check this dude's website because you'd think he could have spent $150 of his grift on a freelance copy editor, but instead we get glorious randomly capitalized sentences such as:
"However, in leveraging our processes, skills and unique approach we've developed comprehensive solution(s) that are 'Client' specific and situationally dependent based on Your objectives not our bottom line."
and
"Conclusions – the management consultant’s opinions for which the client waits with great eagerness (to playfully plagiarize Sir John Gielgud in “Arthur”). Who was trained on DOCA – gather Data, make Observations, draw Conclusions, suggest Actions – in a way that the advice doesn’t just sound right but is right?"
posted by mostly vowels at 4:29 PM on May 6, 2020 [2 favorites]
"However, in leveraging our processes, skills and unique approach we've developed comprehensive solution(s) that are 'Client' specific and situationally dependent based on Your objectives not our bottom line."
and
"Conclusions – the management consultant’s opinions for which the client waits with great eagerness (to playfully plagiarize Sir John Gielgud in “Arthur”). Who was trained on DOCA – gather Data, make Observations, draw Conclusions, suggest Actions – in a way that the advice doesn’t just sound right but is right?"
posted by mostly vowels at 4:29 PM on May 6, 2020 [2 favorites]
Is it even legal to have a limited company, or even a trading name that includes "Federal Government"?
The list of restricted terms varies by state, but if you look at this PDF, you can see all the restricted terms for California.
Besides obvious stuff like "Your Corporation can't have 'LLC' in it, duh", the only real restrictions are "Bank"...and apparently various variations about the Olympics. I can't believe the IOC got that into the actual law, must have been a condition of the them coming to Los Angeles in 1984.
Anyway, you can't call yourself a bank unless you are actually a consumer bank with all the bank related documentation and insurance. Ever wonder why Banc of America does stocks and Banc of California does business banking? It's because changing that C to K means all kinds of shit you might not want to do if you aren't handing out checking accounts.
As an aside: you'd think that'd be an easy restriction to explain, but I used to work for an online business filings company, and you would not believe the amount of people who just don't get why the reason you can't file a Articles of Incorporation for their nightclub with "ASS BOOTY BANK, INC." as a entity name isn't the ASS, nor the BOOTY. I overheard a whole bunch of customer service calls where the one side I could hear was something like: "no, it's not the 'ass', no, can't use 'butt', sir, sir, it's the "bank", no it doesn't matter if, you can't call it a bank. No, the Secretary of State of California Alex Padilla (or whomever it was back then) isn't going to change his mind if he hears your business proposition, sorry", etc.
posted by sideshow at 4:51 PM on May 6, 2020 [7 favorites]
The list of restricted terms varies by state, but if you look at this PDF, you can see all the restricted terms for California.
Besides obvious stuff like "Your Corporation can't have 'LLC' in it, duh", the only real restrictions are "Bank"...and apparently various variations about the Olympics. I can't believe the IOC got that into the actual law, must have been a condition of the them coming to Los Angeles in 1984.
Anyway, you can't call yourself a bank unless you are actually a consumer bank with all the bank related documentation and insurance. Ever wonder why Banc of America does stocks and Banc of California does business banking? It's because changing that C to K means all kinds of shit you might not want to do if you aren't handing out checking accounts.
As an aside: you'd think that'd be an easy restriction to explain, but I used to work for an online business filings company, and you would not believe the amount of people who just don't get why the reason you can't file a Articles of Incorporation for their nightclub with "ASS BOOTY BANK, INC." as a entity name isn't the ASS, nor the BOOTY. I overheard a whole bunch of customer service calls where the one side I could hear was something like: "no, it's not the 'ass', no, can't use 'butt', sir, sir, it's the "bank", no it doesn't matter if
posted by sideshow at 4:51 PM on May 6, 2020 [7 favorites]
Especially when, as he said (iirc) "my attorney said I shouldn't do this."
Based on the criminal defense attorneys I follow on Twitter, actually shutting the fuck up and not saying "my attorney said I shouldn't, but...." is the exception and not the norm.
posted by sideshow at 4:54 PM on May 6, 2020 [6 favorites]
Based on the criminal defense attorneys I follow on Twitter, actually shutting the fuck up and not saying "my attorney said I shouldn't, but...." is the exception and not the norm.
posted by sideshow at 4:54 PM on May 6, 2020 [6 favorites]
"Conclusions – the management consultant’s opinions for which the client waits with great eagerness (to playfully plagiarize Sir John Gielgud in “Arthur”). Who was trained on DOCA – gather Data, make Observations, draw Conclusions, suggest Actions – in a way that the advice doesn’t just sound right but is right?
Huh. This is Markov chain Glengarry Glen Ross.
posted by mandolin conspiracy at 5:24 PM on May 6, 2020 [8 favorites]
Huh. This is Markov chain Glengarry Glen Ross.
posted by mandolin conspiracy at 5:24 PM on May 6, 2020 [8 favorites]
Blockchain and AI, at the same time. This man is not on the level, and you should not feel bad for him even the tiniest bit.
These scammers always stick to the script way past the point where it makes sense to a normal person. I think the idea is that they later claim to be naive or foolish instead of criminal? Their gormlessness is a smokescreen.
You saw it a lot in James Randi Award applicants, back when that was a thing. And of course...
posted by Horkus at 6:38 PM on May 6, 2020 [4 favorites]
These scammers always stick to the script way past the point where it makes sense to a normal person. I think the idea is that they later claim to be naive or foolish instead of criminal? Their gormlessness is a smokescreen.
You saw it a lot in James Randi Award applicants, back when that was a thing. And of course...
posted by Horkus at 6:38 PM on May 6, 2020 [4 favorites]
I'll never understand why a guy in this situation would ever, EVER, totally open himself up to a reporter like this. Especially when, as he said (iirc) "my attorney said I shouldn't do this."
His attorney missed the ($22,000) flight. Slept in, he said.
Federal Government Experts LLC is a Service-Disabled Veteran-Owned small business, which is how it gets on the VA's no-bid contract gravy train. Stewart declined to explain his disability.
Being on the list of approved government contractors for a particular mandated service is a golden ticket, and therefore also a siren song for grifters. Google "24 hour passport" for a prime example. (travel.state.gov is finally the [sponsored] top results for that search, but jeez it took them a few decades.)
posted by carsonb at 9:07 PM on May 6, 2020 [1 favorite]
His attorney missed the ($22,000) flight. Slept in, he said.
Federal Government Experts LLC is a Service-Disabled Veteran-Owned small business, which is how it gets on the VA's no-bid contract gravy train. Stewart declined to explain his disability.
Being on the list of approved government contractors for a particular mandated service is a golden ticket, and therefore also a siren song for grifters. Google "24 hour passport" for a prime example. (travel.state.gov is finally the [sponsored] top results for that search, but jeez it took them a few decades.)
posted by carsonb at 9:07 PM on May 6, 2020 [1 favorite]
What an incredible ratking of middlemen.
posted by away for regrooving at 11:47 PM on May 6, 2020
posted by away for regrooving at 11:47 PM on May 6, 2020
My feeling sorry for Smith has to do with his poor origins (he's from Columbus, GA, which is not that far from me) and his hopes to impress his parents. It seems likely he will remain poor, and his parents probably weren't impressed. He's bought into a lot of things that are bad ideas, but I think it's because he honestly believes this is how it's done? It doesn't help that Trump's administration is encouraging it. Well, I never said I wasn't a sympathetic sap.
posted by JHarris at 6:29 AM on May 7, 2020 [1 favorite]
posted by JHarris at 6:29 AM on May 7, 2020 [1 favorite]
These two fellows were playing for all the marbles, it seems:
Update May 6, 2020: After this story posted last night, The Washington Post reported this morning that the U.S. Justice Department has opened a criminal investigation into Blue Flame Medical. The Post’s anonymous sources said the inquiry is focused on the firm’s troubled contracts with California and Maryland, and that Blue Flame’s attorney declined comment on the federal probe.
On March 26, as the coronavirus pandemic was mounting and governors across America scrambled to secure medical supplies, the state of California wired almost a half-billion dollars to a company that had been in business for just three days.
The recipient: Blue Flame Medical LLC, a Delaware-based company headed by two Republican operatives who jumped into the medical supply business on March 23. The pair — Mike Gula from Washington, D.C., and John Thomas of Southern California — had vowed, in their words, to help “fight Covid-19 with the industry’s broadest product selection from hundreds of suppliers.”
Within hours of the enormous wire transfer, the deal was dead and California was clawing its money back — $456.9 million, nearly half of what the Legislature had allocated for the state’s pandemic response. The payment to Blue Flame and cancellation of the deal six hours later were revealed in copies of checks, wire transfer receipts and emails obtained by CalMatters through a public records request.
posted by mandolin conspiracy at 7:48 PM on May 7, 2020 [2 favorites]
Update May 6, 2020: After this story posted last night, The Washington Post reported this morning that the U.S. Justice Department has opened a criminal investigation into Blue Flame Medical. The Post’s anonymous sources said the inquiry is focused on the firm’s troubled contracts with California and Maryland, and that Blue Flame’s attorney declined comment on the federal probe.
On March 26, as the coronavirus pandemic was mounting and governors across America scrambled to secure medical supplies, the state of California wired almost a half-billion dollars to a company that had been in business for just three days.
The recipient: Blue Flame Medical LLC, a Delaware-based company headed by two Republican operatives who jumped into the medical supply business on March 23. The pair — Mike Gula from Washington, D.C., and John Thomas of Southern California — had vowed, in their words, to help “fight Covid-19 with the industry’s broadest product selection from hundreds of suppliers.”
Within hours of the enormous wire transfer, the deal was dead and California was clawing its money back — $456.9 million, nearly half of what the Legislature had allocated for the state’s pandemic response. The payment to Blue Flame and cancellation of the deal six hours later were revealed in copies of checks, wire transfer receipts and emails obtained by CalMatters through a public records request.
posted by mandolin conspiracy at 7:48 PM on May 7, 2020 [2 favorites]
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posted by JHarris at 9:27 AM on May 6, 2020 [1 favorite]