Masks Off

PPE, The NRA, Liberty University, Nikola, WantedByFeds, and Prosecuting the President

Last week the newsletter took a break to enjoy the holiday and give thanks that 2020 has nearly come to an end. I hope you’ve recovered from the celebrations, because this week we’re feasting on a big helping of scam.

PPE

I’ve written a lot about PPE scams since the pandemic hit America. As we approach a third wave/peak/whatever, it’s worth reading the New York Times dive into what went wrong with the federal government’s plans to provide protective equipment to healthcare professionals.

First off, can we talk about how white guys reading books affects US health policy? Or, maybe just white guys named Bill:

In 1998, President Bill Clinton read a Richard Preston novel, “The Cobra Event,” about a bioweapon wreaking havoc across the country. Horrified, he subsequently established what would become the Strategic National Stockpile, which has since cached tremendous quantities of P.P.E., ventilators, vaccines and medicines. The S.N.S. eventually developed into a network of warehouses strategically located near transportation hubs, prestocked with 50-ton pallets of supplies that could be delivered anywhere in the nation within 12 hours.

I mean, I’ve heard worse origin stories. We should give incoming presidents a stack of disaster fiction and let their imaginations run wild. Speaking of presidents, much has been made of the Trump administration dismantling the country’s pandemic preparedness infrastructure, but Obama didn’t help either:

In 2009, the Obama administration disbursed 85 million respirators from the S.N.S. while combating the H1N1 pandemic, and then failed to effectively replace them, despite being warned to do so.

The Trump administration ignored experts who warned them the country was ill-prepared for the coming pandemic:

Some of those warnings — including memos addressed directly to the president — highlighted how America’s P.P.E. supply would be overwhelmed. As a whistle-blower report would later reveal, in January, Department of Health and Human Services officials effectively dismissed an offer from one of America’s few remaining N95 manufacturers, Prestige Ameritech, to expand its production lines. And when the head of an H.H.S. agency responsible for preparing the nation for pandemics tried to expand his budget to increase domestic respirator production, he was overruled by a senior H.H.S. official, Robert Kadlec.

So we went into March comically short on N95 masks:

On March 3, Kadlec was pointedly questioned by the Senate’s committee on health about the nation’s supply of N95s. He referenced a C.D.C. estimate that, in a pandemic, America would need as many as 3.5 billion N95s for its health care workers and emergency medical workers — but, he confessed, the government’s stockpiles held only 10 percent of that. Shortly after, H.H.S. clarified that Kadlec had misspoken: The S.N.S. had a tenth of the figure he’d cited, or one one-hundredth of what the country would need.

Cool! The federal government’s refusal to get involved in N95 mask acquisition caused the market for fake and non-existent masks to balloon in America:

By early May, the Department of Homeland Security would open 370 cases and arrest 11 people for mask-related fraud. Steve Francis, a special agent in an investigatory division of the D.H.S., told me that the illicit P.P.E. market was so profitable that some transnational criminal organizations turned from smuggling humans and narcotics to moving masks.

That’s right - the US government botched pandemic preparedness so badly that masks became more profitable than heroin.

When they weren’t fueling price-gouging by refusing to step in and help states and hospitals acquire PPE, the federal government was stealing it for themselves, though they still deny it:

The mayor of Los Angeles described cutting a check for a shipment of masks, only to have FEMA swoop in at the last moment. The governor of Montana complained on a conference call to President Trump that his state lost four or five orders in the previous week to federal agencies. After Massachusetts officials came to suspect that the federal government had snatched supplies already in transit, the state’s Republican governor arranged for over a million N95s to be flown in from Shenzhen on the New England Patriots’ private jet. Illinois officials similarly spent nearly $1.8 million chartering flights from China to airlift P.P.E. in secret, afraid that the Trump administration might otherwise commandeer it.

As the pandemic numbers dipped in summer and supply chains recovered, hospitals and states were able to add to their supplies of PPE. However, with cases rising again all over the country and hospitals filling up with COVID-19 patients, supplies are running short. Until a Biden administration is sworn in and can coordinate equipment distribution we’re going to continue to put our front line health care providers at risk because our corrupt, incompetent federal government refuses to do its job.

The NRA

Over the summer, the Attorney General of New York filed charges against the NRA, alleging decades of fraud and theft at the non-profit. Then, one NRA executive decided to publish a tell-all about how corrupt its leadership is. Then! It came out LaPierre is facing personal criminal liability for tax fraud.

So when I saw headlines about the NRA admitting to “misspending” by executives I thought - ah ha! They admit it! Well, not exactly:

After years of denying allegations of lax financial oversight, the National Rifle Association has made a stunning declaration in a new tax filing: Current and former executives used the nonprofit group’s money for personal benefit and enrichment.

Okay, that’s a good start. So what did they do about it?

The disclosures in the tax return suggest that the organization is standing by its 71-year-old chief executive while continuing to pursue former executives of the group. The filing says that LaPierre “corrected” his financial lapses with a repayment and contends that former executives “improperly” used NRA funds or charged the nonprofit for expenses that were “not appropriate.”

Oh! Okay. The long story short is the NRA has decided to back LaPierre, and has allowed him to reimburse a fraction of what he’s accused of stealing. Also, they’re going after LaPierre’s enemies, claiming they were the culprits:

The tax filing acknowledges that there are disputes over the alleged financial abuses the NRA blames on the departed officers, including former board president Oliver North and former chief lobbyist Chris Cox.

Some of those executives parted ways with LaPierre over his leadership and are cooperating with the New York attorney general’s investigation, according to two people familiar with the matter who spoke on the condition of anonymity because of the sensitive nature of the ongoing investigation.

Bold gambit! For those who haven’t followed the NRA story - LaPierre had been at war with other executives and board members over control of the organization. Oliver North - yes, that guy - tried to oust him. Now, the NRA is claiming North is one of the bad guys. Convenient!

Given that many of the people involved in the fraud are cooperating with investigators, I’m not sure this tame admission by the NRA will do much, but who knows. In the mean time, William Brewer’s law firm continues to drain tens of millions of dollars a year from the NRA in legal fees, as they continue to lose legal cases:

In the latest legal setback, New York insurance regulators announced last week that the NRA is barred from selling insurance in the state for five years and will pay a $2.5 million civil penalty to settle charges of illegally marketing insurance to gun owners involved in self-defense shootings. The NRA said in a statement that it had “successfully resolved” the matter.

They spent years denying any wrongdoing at the organization, and as the authorities close in on them, they are desperate attempts to protect their corrupt leadership. Their best chance at avoiding severe penalties may have been to throw LaPierre under the bus, but instead they’ve doubled down on their support for him. Couldn’t happen to a worse bunch of crooks.

Liberty University

Speaking of crooks running sketchy non-profits, POLITICO recently published a piece on Liberty University. Headline writers prefer the sexual improprieties of Falwell Jr. and his wife, but I’m not going to bother with those because they aren’t illegal I don’t need to kink shame. What definitely isn’t legal, however, is using your non-profit university as a personal piggy bank:

[…] a university community so committed to the Falwell legacy that even trustees considered it unthinkable to exert power over the son and namesake of the university’s revered founder. Plus, the university employed at least 20 relatives of stakeholders — defined as senior administrators and the 32-member Board of Trustees, according to federal tax disclosures — which gave many leaders an incentive to stay on Falwell’s good side.

Sounds familiar! Falwell took his father’s evangelical university and used it to enrich himself and his friends, paying off or forcing out anyone who spoke against him:

Meanwhile, Falwell experienced so little oversight that he regularly used the university’s private jet for personal travel, often to Florida; kept five of his immediate family members on the payroll, including his 31-year-old son Trey at a salary of $234,310; sold a university-owned home to Trey; extended a university-backed loan to a family friend; rented university property on favorable terms to his former personal trainer; and used the university’s employees for renovations on his home, for which he repaid $175,000, among many instances when Liberty’s resources benefited the Falwells and their allies.

Falwell Jr. credits himself with turning Liberty from a small religious college into an education powerhouse, with tens of thousands of students enrolled in-person and online. Whether it’s strictly true or not, the university did make billions of dollars in tuition. How? The government, of course:

Though Falwell received widespread credit for reviving Liberty’s finances, the university’s growth — in particular its online learning operation — was also fueled by financial aid provided by the federal government to its students.

Over just the last three academic years, for instance, the university took in nearly $2 billion in federal student loans and nearly $300 million in Pell grants, according to a POLITICO analysis of Education Department data.

Liberty University is now one of the largest recipients of federal student aid money of any type of college or university in the country.

According to US News, Liberty has a 32% graduation rate which is pretty bad compared to other schools, but very good if your goal is to use tuition money to pay for a private jet to fly around on.

Liberty has said it will pay Falwell two years of his $1 million salary and 32 years’ worth of “accrued benefits”. Falwell Jr has sued Liberty for a variety of things in response to his ouster, and is asking for an unspecified amount for “damaging his reputation”. He says he’s the target of a malicious smear campaign.

Liberty is located in Virginia, and depending on how the state Attorney General feels, may be forced to reckon with years of letting a princeling run the tax exempt organization as his personal checking account. For now, they’re dealing with the cascade of sex scandals and lawsuits which make for juicy reading but draw focus away from years of illegal behavior at the school.

Nikola

Nikola, the fraud that simply won’t die, is in the news yet again because GM has pulled out of their deal:

General Motors (GM) announced on Monday that it would not be buying into the electric vehicle company Nikola and it would be ending development of an electric and hydrogen powered vehicle.

[…]

Nikola said it would begin refunding customers who had made deposits for the vehicle. Shares for the Phoenix-based company dropped by 24 percent after the announcement.

Somehow, even losing their only large commercial contract hasn’t managed to kill the company entirely, and it’s still worth $7 billion dollars for some reason.

WantedByFeds

This week in aspirational screen names:

A North Carolina man who engaged in a series of cyber and swatting attacks, including sending bogus threats of shootings and bombings to schools in the United States and United Kingdom, was sentenced today to 95 months in federal prison.

Timothy Dalton Vaughn, 22, whose online aliases included “WantedbyFeds” and “Hacker_R_US,” of Winston-Salem, North Carolina, was sentenced by United States District Judge Otis D. Wright II.

Normally I would take this opportunity to give advice to Mr. Vaughn on avoiding screen names that draw attention to his crimes, but he was up to some pretty unpleasant stuff, so I’m glad he’s now CaughtByFeds.

Prosecuting the President

Last month, Jonathan Mahler wrote at length about what it would mean to prosecute Trump after he leaves office. It’s become a thought experiment for pundits:

The stakes of an indictment would be very high. The commander in chief’s broad powers under the Constitution could make it difficult to secure convictions. The damage to democracy that would be caused by a failed prosecution of a former president is hard to even fathom. An acquittal could also set back future efforts at accountability, and embolden aspiring abusers of authority. Even once he’s out of office, Trump is going to be a powerful force in the country’s political life; putting him on trial for his conduct as president would be tantamount to putting on trial the more than 72 million Americans who voted for his re-election.

I mean, sure. Indicting a former president - even for crimes he committed prior to taking the job - would be a first. Not because America is a democracy free of corruption, but because we bestow such incredible power on the president it has become unthinkable, no matter how corrupt a president’s actions. Ford’s pardon of Nixon after Watergate was the most obvious example - despite what we’re told, presidents are really above the law as far as the political establishment is concerned.

The point Mahler and other legal scholars miss is that corrupt presidents do not exist in a vacuum - in fact, many people in Nixon’s orbit were charged, and some went to jail. While I would absolutely love to see Trump held accountable for his crimes as a private citizen, the easier targets are his political co-conspirators. Does that mean we’ll see a Bill Barr perp walk? I’m not holding my breath. But it’s important we don’t miss the forest by focusing on its tallest tree. Biden’s Justice Department should spend time running down the dozens of campaign finance violations, misuse of inaugural funds, and other low- and mid-level corruption that went on for the last four years. The names might not be as headline-grabbing, but if we want to have any hope of discouraging future corruption in the American political system, we’re going to have to start putting some folks in jail.

Short Cons

BuzzFeed News - “"It is essential that law enforcement is as prepared as possible for what will be an onslaught of all types of criminal activity linked to the COVID-19 vaccine, which is why Interpol has issued this global warning."”

LA Times - “The district attorneys called the situation “the most significant fraud on taxpayer funds in California history,” according to a letter obtained by The Times, describing crimes that involve identity theft of prisoners as well as alleged conspiracies by individual inmates and organized gangs to game the state system.”

Krebs on Security - “Fraudsters redirected email and web traffic destined for several cryptocurrency trading platforms over the past week. The attacks were facilitated by scams targeting employees at GoDaddy, the world’s largest domain name registrar…”

Tips, thoughts, black market vaccines to scammerdarkly@gmail.com