As the coronavirus swept through Massachusetts early this year, state officials rushed to find coveted masks for frontline workers. Desperate, they turned to brokers who had never worked in the medical supply industry before but wanted to make money off the deals.
Now Massachusetts officials are scrambling to get taxpayer money back.
WBUR found problems with at least three deals in which masks were never delivered or their quality was subpar. In each of these cases, Massachusetts pre-paid millions of dollars to brokers and waited weeks and weeks to get masks. As some deals soured, the state continued its mad dash for protective equipment.
The state has yet to get nearly $1 million back on one order placed with a New Jersey company that fell through.
Working through a broker from New York, the state paid $9.6 million for multiple orders of masks that never materialized. The broker recently returned the money to Massachusetts, saying he ran into export problems in China.
Other orders came through, but some of the masks failed to meet safety standards, including a shipment of masks delivered via the New England Patriots plane on April 2. Landing that order was touted as a huge success by state officials, however, some of the respiratory masks when tested turned out to be substandard.
It’s unclear what impact these failed deals have had on Massachusetts’ supply of masks. In a lawsuit filed Wednesday, New York’s attorney general claims a company drained hospital resources when it promised masks but never delivered. The company allegedly demanded upfront payments from health care providers and wasted employees’ time trying to secure masks.
Massachusetts has been secretive about how it has spent taxpayer money for personal protective equipment like masks. State officials declined to comment on the troubled transactions and would not explain whether the state had a process for vetting these brokers.
Massachusetts prepaid one company, IDDC Global Brands, about $905,000 for masks at the end of March, according to the state comptroller’s office and IDDC’s chairman, Jim Sherlock.
A spokeswoman for the Massachusetts attorney general’s office confirmed it’s investigating IDDC Global Brands and another company involved in the deal.
“Right now we have a severe situation,” Sherlock said about the company being under investigation.
The company launched in New Jersey in January, in response to the coronavirus. IDDC Global Brands became a broker, or as Sherlock calls it, a “facilitator,” for states and companies that needed personal protective equipment, or PPE.
Sherlock described one of his partners as someone who knew a Federal Emergency Management Agency employee who explained how to get masks.
IDDC Global Brands’ vice president of operations, according to its website, is Charles W. Jarvis. He filed for federal bankruptcy protection in March and did the same the prior year. In 2014, he pleaded guilty to forging a notice to the IRS.
Prior to this venture, Sherlock was in the automotive industry. He now runs Reborn Group, a nonprofit supporting children in developing countries, according to its website.
In the deal with Massachusetts, IDDC passed the state’s money onto another company, which Sherlock wouldn’t name, that was supposed to help acquire the PPE.
But the masks never arrived in Massachusetts.
“I can’t let you know who has the masks,” he said. The other company is “refusing to tell us if they have the masks.”
Sherlock said IDDC turned over documents and is cooperating with the attorney general’s investigation, which began at the end of April. The company has taken down its website, which pictured two generic ambulances parked near a medical facility.
“I know I didn’t do anything wrong,” said Sherlock, who added that he didn’t personally manage the Massachusetts deal. “I can’t wait until this is uncovered.”
Sherlock said he’s trying to get Massachusetts taxpayers’ money back, but declined to provide further details because of the investigation.
Denterlein, a Boston-based crisis and public relations firm hired by IDDC Global Brands, reached out to WBUR.
“IDDC is working diligently and cooperatively with the commonwealth to seek return of its money,” Denterlein’s Jill Reilly said in the statement. “These efforts include working with its supplier, which had received payment and advised IDDC that it had already begun manufacturing and shipping the masks that were the subject of the order.”
While Massachusetts ponied up millions of dollars in several deals before even receiving masks, other states handled the process differently. Indiana and Washington refused to pay any money in advance for masks from China that were labeled KN95. The CDC states buyers should be leery of some of these masks and should refuse to prepay. States should also require a sample mask be sent and obtain a test report from an accredited lab, the CDC said.
In the few months that Sherlock has been part of the supply chain for PPE, he’s learned some people can’t be trusted.
“A lot of people out there say they can deliver, and one out of 20 or 30 I know have had a delivery,” he said. “Unless you are dealing with 3M you don’t want to touch this.”
The St. Paul, Minn.-based company, 3M, is one of the largest manufacturers of N95 masks, the most sought after variety that’s certified. The masks are worn by many health professionals to protect themselves from airborne particles including those that carry the coronavirus.
Sherlock now regrets jumping into this business, saying if he could do it all over: “I wouldn’t touch this with a 10-foot pole.”
Massachusetts has not fully disclosed how these and other transactions unfolded and how much it’s paid companies for masks.
The governor’s office, the Massachusetts Emergency Management Agency and the Executive Office for Administration and Finance would not answer WBUR’s questions and refused to be interviewed. The Executive Office of Health and Human Services also delayed public records requests for invoices and communications.
Many companies like IDDC are not even listed as receiving payments on the comptroller’s office website. WBUR discovered them after filing a public records request.
That revealed vendors such as Letova, out of New York.
Letova owner Morris Catton said he pivoted from managing transactions between manufacturers in China and U.S. wholesalers for clothing like T-shirts and jackets to PPE once the pandemic began.
He said one of Letova’s sales representatives searched Google for information on Massachusetts and then contacted an official here at the end of March.
The state paid Letova more than $11 million for masks, but didn’t get a single one, according to Catton.
In one order, the state paid Letova $2.1 million in advance for 3 million three-ply surgical masks made in China.
Initially, Catton hoped the masks would be delivered in April.
But he said the order ran into huge delays, and Massachusetts extended the deadline to May 18.
Catton said he worked with a subcontractor who handled the order with the manufacturer, Shenzhen Hangsen, in China. But Catton said he encountered problems with chain of custody, packaging and Chinese export regulations, and couldn’t make the state’s deadline.
So he offered Massachusetts similar masks from another Chinese manufacturer that he said were sitting in a New York warehouse.
“They are the same level and quality,” he said he told a state official. “I could truck them up in four to five hours. And they replied, ‘We don’t want any masks, you breached the contract.’ ”
Catton said he doesn’t know why Massachusetts abruptly canceled the order and has returned what he says is his share of the money.