The investor says he was trying to help provide the much needed masks to health care workers in the state and help "identify potential fraud and theft of PPE product"

By Ashley Boucher
April 22, 2020 11:30 PM
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Daymond John is hitting back at allegations he tried to sell masks at an inflated price to the state of Florida amid the novel coronavirus (COVID-19) crisis.

John, the founder of the Shark Group and an investor on Shark Tank, slammed a report from the Miami Herald on Wednesday that claimed he attempted to strike a deal that would sell the state of Florida 1 million N95 masks for $7 apiece.

Instead, the businessman says that he was trying to help provide the much-needed masks to health care workers in the state and help “identify potential fraud and theft of PPE product.”

“Today’s Miami Herald story and subsequent reports are false, inaccurate and shows a complete reckless disregard for the truth,” John said in a statement shared on Twitter on Wednesday.

“Let me be clear,” he continued. “Proper reporting would have shown I did not set any prices and that my team worked with the state of Florida to: 1. Save lives 2. Help vet the overwhelming amount of incoming PPE offerings based on my manufacturing expertise and guide them how to best do this 3. Play a pivotal role to stop price gouging, and successfully identify potential fraud and theft of PPE product to protect taxpayer funds.”

“States were not set up to vet and operate global supply chains and sourcing,” John’s statement said. “Many states were forced to blindly wire money to nefarious parties around the world and ultimately never received correct or safe product.”

The Maimi Herald did not immediately respond to PEOPLE’s request for comment.

“My company was serving as an intermediary to vet the numerous 3M distributors and to protect Florida taxpayers, while establishing escrow protections that allowed the State to conduct proper due diligence before finalizing its purchase of masks,” he continued.

“Our system did exactly what it was intended to do. No money was spent and every penny of taxpayers money remained safe. We will continue to work with the proper government agencies in this capacity,” his statement said. “The Miami Herald‘s characterization of my work completely disregards this. Instead, it opts for a gross distortion of the truth in a blind effort to create splashy headlines to mislead readers.”

Director of the Florida Department of Emergency Management Jared Moskowitz told the Herald that he trusted John to make a deal.

“This was not somebody off the street, this was Daymond John,” Moskowitz told the outlet. “He came to me and said, ‘I’ve been in the clothing business. I have connections with factories in China.'”

Several other Florida leaders signed an escrow agreement that said Florida would pay $7 million to John’s Shark Group, according to the Herald‘s report. That money would be put into an escrow account controlled by the law firm Foley & Lardner.

The Herald called the agreement “unusual” and an example of how “Florida officials waived all the contracting rules and opened an unlimited checkbook to line up middlemen and unconventional vendors.”

Foley & Lardner general counsel Jim Clark told the Herald that the escrow agreement was set up to “protect the state from getting ripped off by an unscrupulous seller.”

“Our firm has never been in the business of buying and selling face masks,” he said. “We had no relationship to the seller.”

Moskowitz told the Herald that “the reason we decided to go through an escrow agent is more and more vendors wanted money up front because we were identifying potential fraud in the marketplace.”

“We used the legal escrow process to protect the state,” he said. “It has worked in every case. If the vendor didn’t deliver the product, the money was returned through the escrow agent.”

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Clark explained that the deal had Florida putting money into the Foley & Lardner account “with an agreement between the seller and the buyer that we would hold these funds in escrow until such time as the masks were delivered by the seller.”

Once the masks were delivered, Florida would “inspect the masks and determine that the masks were of the number, type, and quality represented by the seller,” he said.

Only then would the money be taken out of the account and given to the Shark Group, according to the Herald‘s report.

None of that would come to fruition, however, as the agreement fell through on April 13, the Herald reported.

3M spokesperson Jennifer Ehrlich told the outlet that the Shark Group is not an “authorized distributor” of 3M N95 masks.

“3M is not aware of how the Shark Group would gain access to our respirators as it is not an authorized distributor of 3M products or one of our channel partners,” Ehrlich said. “3M list prices, which are published on our website, are far lower than what appears to have been offered to the State of Florida.”

The models of N95 respirators listed on the company’s website range in price from $0.68 to $3.40.

Ehrlich told the Herald that she did not have information on the Shark Group’s deal with Florida.

“3M is filing lawsuits in cases where third parties use the company’s name, brand or trademark to engage in price gouging of N95 respirators and other illegal and unethical behavior,” she said.

“We have no knowledge of whether that occurred in this situation,” she added. “We are happy, though, to assist law enforcement authorities if they wish to look into this matter.”

A spokesperson for 3M did not immediately respond to PEOPLE’s request for comment.

The company has set up a hotline in the U.S. and Canada to help purchasers detect fraud or counterfeit products at 1 (800) 426-8688. Anyone suspecting fraud can also make a report at http://www.go.3m.com/covidfraud in the U.S. or http://www.go.3M.com/covidfraud-en-ca in Canada.

In a statement provided to PEOPLE Thursday, Moskowitz defended the decision to pay for the expensive masks.

“I’m not willing to put a prices on saving people’s lives and neither should the media who doesn’t have the responsibility to help our doctors and nurses on the front lines,” his statement said.

“The Shark Group, which is connected to Daymond John, was always completely professional,” Moskowitz’s statement continued. “To set the record the straight, at the time this was executed we were competing against all 50 states and the federal government for limited quantities of PPE and these were the going rates for masks.”

“Daymond was only trying to help me procure and vet the equipment. While this deal was ultimately cancelled because masks went to people willing to pay even more and wire funds in advance, if we had received the masks, I don’t think anyone would have second guessed the cost of saving lives.”

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