The offer to the Federal Emergency Management Agency looked promising: a Silicon Valley engineer said it could supply thousands of ventilators from manufacturers across China to help hospitals treat coronavirus patients.
The engineer was asked to provide more details. Within 12 hours, he responded with a 28-page digital catalog of medical supplies available to him, including masks and goggles.
But there were also a series of caveats: interested buyers had to sign a contract within four hours of receiving a quote and pay the entire order in advance. “Not negotiable”, according to the catalog. And the engineer, Yaron Oren-Pines, had no apparent experience in purchasing medical equipment.
Federal officials passed on seller’s information to senior New York officials, and within days the state reached an agreement to buy 1,450 fans from Mr. Oren-Pines for $ 86 million, one of the most large medical supply contracts since the epidemic.
The deal, however, started to fall apart as quickly as it was made.
Within days, a bank froze funds that the state had transferred to Oren-Pines because it found a suspicious transaction on his account. Mr. Oren-Pines and his trading partners then warned state officials of the possible complications of the shipment and were told that fans may need to be routed via Israel, where they said they had connections .
Shortly after, Mr. Oren-Pines and his partners began to accuse the state of breach of contract. State officials later attempted to send inspectors to confirm the stock in China; this effort was unsuccessful and the contract was terminated.
Governor Andrew M. Cuomo’s office said contract was canceled due to state hospitalization rate far from projections, and New York’s need for ventilators has diminished, which has reduced the urgency of concluding a contract mired in complications.
But interviews with state and federal officials, as well as emails obtained from the New York Times, point out how the challenges of a pandemic may have obscured a decision that put millions of taxpayers’ dollars at risk. .
Canceled contract illustrates desperate measures New York took at the height of the pandemic to procure precious medical equipment, as authorities hastened to find as many of the 40,000 ventilators the state thought it needed to avert a disaster . As the state scoured the world for supplies, it avoided bidding protocols to speed up acquisitions and turned to suppliers who had never done business with the state.
Without a coordinated federal approach to distributing medical equipment as needed, states have had to fend for themselves, bid against each other in the midst of a global shortage.
In fact, federal officials also removed Mr. Oren-Pines to New Jersey. But officials from the state said they were disturbed by a series of warning signs and refused to obtain equipment from Mr. Oren-Pines, according to someone familiar with the matter.
New Jersey officials considered Oren-Pines’ insistence on the initial payment to be problematic, and backed down from the price of the fans and the time it would take to deliver them, the person said.
But in New York, officials decided to try their luck.
Mr. Oren-Pines’ offer of help was originally presented by a team of young, inexperienced volunteers recruited to FEMA by President Trump’s son-in-law, Jared Kushner. Officials in New York City said that an official with the Department of Health and Social Services told them that the federal government had verified Mr. Oren-Pines and that a consulting firm had carried out a video inspection of the fans in China.
A FEMA spokesperson said the agency did not recommend Mr. Oren-Pines to New York and noted: “Although the volunteers played an important role, they were not employees of the FEMA. “
A Trump administration official involved in the White House coronavirus task force defended the FEMA runway tracing process, but said states should always do their own due diligence.
New York officials said Mr. Oren-Pines had provided certificates for the fans and passed a state-run background check.
“When New York found it difficult to buy fans to meet the demand for projection models from the federal government, the Department of Health and Social Services sent us directly to Oren-Pines, confirming that they were examined and approved by the federal government itself, “said Richard Azzopardi, a senior governor official. ” The idea that the federal government is now effectively saying that states cannot trust the federal government’s own recommendations is bizarre. “
A spokesperson for the Department of Health and Social Services said she “is looking into this matter and has nothing more to add at this time.”
Oren-Pines denied several requests for interviews, saying in a text message that a confidentiality agreement prohibited him from speaking to journalists. “Continue to follow your tracks and your sources and I hope that one day the truth will come and my name will be erased,” he wrote.
A graduate of the University of Maryland who studied electrical engineering, Mr. Oren-Pines, 50, has experience in mobile communications technology and has held several technology-related positions, including as a consultant for Google, according to its LinkedIn profile. .
He is also a co-founder of a networking company called Legasus Networks; his other co-founders, Douglas Lee and Thao Tran, said the company had nothing to do with the fans. Mr. Tran said Mr. Oren-Pines was the type of person who would jump at the opportunity if he spotted one.
“His personality is that he will try his luck and do any type of business outside of his field,” he said.
It is not known when Mr. Oren-Pines contacted the federal government to offer medical supplies. But his offer was received by FEMA volunteers appointed by Kushner who came from venture capital and private equity firms, and had little or no experience with public procurement procedures.
On March 24, one of the volunteers, a partner in a private equity firm in New York, thanked Mr. Oren-Pines for reaching out and asked him to complete a form detailing the stock and the price of supplies to which he had access. , according to emails.
Mr. Oren-Pines quickly returned the form by email with the 28-page catalog.
The volunteers passed the information on to two federal officials – both of whom worked for the Department of Health and Human Services – who then sent it to Cuomo’s aides before March 27.
But Mr. Oren-Pines and his associates seemed to get impatient with the pace of the process and simultaneously went on Twitter to find other potential buyers.
On March 27, after Mr. Trump used Twitter to urge General Motors and Ford to speed up fan production, Oren-Pines tweeted the president: “We can provide critical, invasive and non-invasive fans invasive. Ask someone to call me URGENT. ”
One of Oren-Pines’ two partners, Segev Binyamin, also used Twitter to try to get the attention of the Israeli Defense Minister, writing: “I have a Chinese company capable of shipping 1,400 machines in Israel. “
In an email to a New York official on March 28, Oren-Pines urged the state to speed up the process because he said he had access to the respirators “for a limited time”. He said it had been checked by FEMA.
On March 30, New York formalized the $ 86 million contract for 1,450 fans, or about $ 59,000 per fan, and agreed to pay Mr. Oren-Pines $ 69 million in advance. It was a high price: at the time, Cuomo said authorities saw prices for fans rise to $ 45,000 from $ 25,000.
The contract did not go through typical procedures which require the state comptroller to independently review the contracts before issuing a payment. Earlier this month, Cuomo issued an emergency order exempting emergency contracts from following these procedures.
Wells Fargo, Oren-Pines’ bank, froze its funds in early April after reporting a suspicious transaction, state officials said. Oren-Pines, however, was able to transfer $ 10 million before the funds froze.
After the freeze, and as the state’s need for fans began to decline, New York officials sought to organize their own fan inspection in China. They failed.
On April 9, Guy Peleg, another of Mr. Oren-Pines’ business partners, sent an email to Judith Mogul, a special lawyer for Mr. Cuomo, accusing New York City officials of acting illegally, breaking the contract and freeze their bank account. He said they had retained a lawyer and that they were unlikely to provide the fans on the agreed date, April 29.
In any event, said Peleg, Chinese regulations made it difficult to ship fans to the United States, so he offered to channel the machines through Tel Aviv.
“Our participation in this endeavor is crucial for these precious fans to leave Chinese soil and soil in Israeli territory and then be sent to the United States,” he wrote. “As you can see, we have established here a very expert and tight outfit to meet your requests. No other constellation can achieve our goal of providing these vents to the United States. “
Ms. Mogul replied that it was Wells Fargo, not New York, who had imposed the freeze and informed the men that the state would end the contract unless they could start securing the fans with the $ 10 million. dollars they had on hand.
“In light of the changing facts, we are not prepared to jeopardize additional state funds without certainty when or if we will receive the specified goods,” she wrote.
New York finally ended the contract. Azzopardi said the state has recovered $ 59 million, with the remaining $ 10 million being negotiated between the parties.
Mark Werksman, lawyer for Mr. Oren-Pines and his two business partners, Mr. Binyamin and Mr. Peleg, said his clients hoped to reach an amicable resolution with the state.
“They worked tirelessly to begin delivery of the promised fans and would have fulfilled the terms of the contract if the state had not abruptly canceled it before they could deliver the first set of 150 fans,” he said. . “Yaron acted quickly and in good faith to provide vital medical supplies to the state in this hour of need.”
Last weekend, Oren-Pines emailed New York officials describing the personal and financial fallout from the botched fan deal, pleading with them to issue a statement to erase his name.
Referring to the story from BuzzFeed News, he said he was the victim of a “fictional / false story” about his connection to the White House, and that he and his family were now receiving threats and anti-Semitic messages.
BuzzFeed News spokesperson did not respond to criticism from Oren-Pines, but said the outlet was “proud to have been the first to report that New York State had given a $ 69 million contract to an unqualified supplier who had not delivered. “
In an email to New York officials, Oren-Pines said, “What has happened to me personally in the past few days is worse than the death itself. He said the sudden cancellation of the order had left him and his partners “with tens of millions of dollars in debt and contracts.”
“In Israel, I am called a traitor and charged with a Sting operation against NYS,” he wrote. “I did not do anything wrong! All I wanted to do was help New York State and in doing so I was thrown under a bus. “
Nick Corasaniti and Zolan Kanno-Youngs contributed to the report. Susan C. Beachy contributed to the research.