B2B Payments

California Officials Question State’s Strange Payment For Masks

The State of California retracted a payment of half a billion dollars for masks

Lawmakers are curious about a government payment to Blue Flame Medical, LLC, a medical supply company that had only existed for three days before the payment.

Concerns were raised by California Assemblywoman Cottie Petrie-Norris, who was concerned over a payment of half a billion dollars to Blue Flame to purchase masks for the state on March 26.

It was unclear why Gov. Gavin Newsom’s administration made the deal at all. Newsom credited that to the time period being the very early days of the pandemic in March, calling it ‘the Wild West’ in which everyone was somewhat confused about what direction to take.

He said the vetting process for medical firms to assist the state has improved since then, seeking input from experts in health, logistics and foreign commodities, along with law enforcement and federal emergency management personnel.

Mark Ghilarducci, Newsom’s Director of Emergency Services, described a relentless onslaught of applications from all sorts of companies seeking to assist in the pandemic.

Blue Flame had only come into existence, according to documents, on March 23, just days prior, started by Republican operatives Mike Gula and John Thomas, who have no history working in the medical field. And governmental offices have not replied to journalistic questions about the payment as of Sunday (May 10).

Petrie-Norris said Congress needed to “ensure that there are appropriate controls in place” and that Congress was spending the taxpayers’ money in a responsible manner.

The deal has since collapsed, and the money was returned just hours after the transaction initially took place, with bankers involved in the transfer finding that it raised red flags. One banker thought the transaction could’ve been suspicious enough to report to the FBI.

But the odd terms of its origins, some lawmakers say, make it worth looking into.

Petrie-Norris said she wants to ask Newsom’s people at an upcoming hearing about what the state learned, what the new safeguards are, whether any issues still remain, and what can be done to close them if so.

The rollout of the government financial aid for the pandemic has been fraught with problems, including payments sent to companies big enough not to need them and banks accused of prioritizing some recipients of loans over others.

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