Federal authorities have launched an investigation into a politically connected company that the state of Maryland says failed to supply millions of dollars worth of masks and ventilators.
The U.S. Department of Justice contacted Maryland officials making them aware of the investigation, according to sources with knowledge of the probe.
An attorney for Blue Flame Medical defended the firm, arguing the company will fulfill its obligation to supply equipment needed during the pandemic.
“It is beyond comprehension what this is all about," Ethan Bearman, attorney for Blue Flame Medical, said of the investigation. "Blue Flame Medical is devoted to getting masks and ventilators to the people in Maryland who so desperately need them. The company has a contract with the State of Maryland to deliver 1.5 million masks and 110 ventilators by June 30, and Blue Flame Medical fully intends to honor that contract.”
Blue Flame Medical was founded in late March by a pair of political consultants with no experience in the medical field, Mike Gula and John Thomas.
The state signed a $12.5 million deal April 1 with Blue Flame Medical LLC to provide the N95 masks and ventilators. State officials say the order was supposed to have shipped by now and it hasn’t. The equipment was to ship by April 14, according to documents provided by the state. Blue Flame has maintained they have until June 30 to fulfill the orderThe state paid half of the money up front, but the goods never arrived, and Maryland canceled the contract, state officials have said.
“It is unconscionable that anyone would try to exploit this pandemic for profit or for personal gain,” Gov. Larry Hogan said during a news conference in Annapolis Wednesday afternoon.
Hogan said his office asked Maryland Attorney General Brian Frosh to investigate the company for “failure to perform and for potential misrepresentation.”
“We have received communications from Douglas Gansler, Esq. of Gansler, Cadwalader, Wickersham & Taft LLP, legal counsel for Blue Flame Medical, but as has been the case for several weeks now, there are still no shipping details to corroborate any claims of imminent fulfillment,” said Mike Ricci, a spokesman for Hogan.
Federal investigators are looking into whether Blue Flame took advantage of emergency contracts to buy goods and supplies related to the coronavirus pandemic, sources said. The Hogan administration has awarded more than $341 million in quickly approved contracts during the crisis.
The Washington Post reported Wednesday the investigation also includes the company’s actions in California, where a different contract with the firm was terminated.