Tax liens, lawsuits are part of state contractor’s history
The Glastonbury businessman on the state’s short list of suppliers for N95 masks and at-home COVID tests once admitted to misappropriating more than $1.8 million from his company’s pension fund and then failed to pay off the fine for 12 years, according to federal court records and tax liens.
State officials said they were aware of the federal investigation into the pension fund of Jeffrey Barlow’s former company when they signed an $18 million purchase order last month with his company, Jack Rubenstein CT LLC, to procure desperately needed at-home COVID tests as the omicron variant began its surge in Connecticut.
Barlow never produced the tests, however, leaving Gov. Ned Lamont and other top officials scrambling for another solution.
This was the second time the state did business with Barlow. The first time was early in the pandemic, when Barlow used his connections as an importer of cell phone parts and toy cars to procure N95 masks from China.
Barlow has no criminal history, but federal court records and tax liens filed in Glastonbury show that he had been investigated by the IRS and the FBI in New Haven from 2007 until 2019.
A spokeswoman for the Department of Administrative Services, which certified Barlow’s company as a state vendor in March 2020, acknowledged the agency did not conduct a background check on Barlow or his company at the time because the state was in the throes of a public health emergency, and state officials were scouring the globe for personal protective equipment as COVID deaths, particularly in nursing homes, started to multiply.
“The procurement team does basic research on contractors even when we procure quickly,” said Lora Rae Anderson, DAS spokeswoman. “This information regarding his offense from 2007 was known. It did not pose a risk to public health and safety, nor taxpayer dollars, as no payment would be disbursed without receiving the product. Ensuring our residents have access to tools to stop the spread of a deadly virus remains our highest priority.”
Anderson said state law doesn’t require the agency to do background checks on brokers that were used during the pandemic.
“We are not required to complete background checks on those we enter into purchase orders with in order to procure tests and PPE,” Anderson said. “The State provides a wide variety of products and services, and this is a policy discussion we would be happy to have understanding that every field is different.”
There is no evidence that Barlow did anything fraudulent in trying to procure the at-home tests. Lamont and other state officials have only said that “misrepresentations were made” to state officials.
“We understand he believed he could get tests and was unable to get them by the promised date, as many have suffered supply chain issues during this time,” Anderson said. “We don’t have full visibility to where the tests went, but regardless, no taxpayer funds were lost, and we were able to pivot to another supplier who started delivering tests two days later than planned.”
When it came time to look for at-home testing kits, DAS didn’t send out a request for proposals (RFP) because it was a “time sensitive issue” and instead contacted vendors it had used previously.
“The DAS Procurement team reached out to selected suppliers who had successfully provided PPE items earlier in response to the pandemic,” Anderson said. “Jack Rubenstein & Company was one of those suppliers.”
The state has since received and distributed millions of at-home test kits. Some of them came from CVS, which helped the Lamont administration by diverting more than a half million tests to Connecticut that were supposed to go elsewhere.
In response to questions about his past legal issues, Barlow texted a message to the CT Mirror, saying, “that matter was resolved many years ago and as such I have no comment as no current relevance due to being in excess of 10 years ago.”
While Lamont never mentioned Jack Rubenstein CT LLC or Barlow by name, he did say, when asked, that the state would work with the broker again despite the failure to deliver in December.
The state signed another purchase order with Barlow on Jan. 11, agreeing to pay him $2.46 million to deliver about 250,000 antigen at-home test kits.
This time it appears that Barlow has delivered some of that order. On Jan. 13, the state wired him $2.3 million.
Meanwhile, experts in exporting and business said the state needs to have some standards, and they questioned why the state wouldn’t require even a basic background check of potential vendors.
“You could certainly argue it’s an emergency situation, one we seem to have been in for two years now, but there has to be some level of minimal standards that you adhere to, no matter what the situation, before you make a deal for the state government,” said Victor R. Rodriguez, chairman of the Legal Studies & Political Science Department at the University of New Haven.
Douglas Stein, a Chicago-based PPE exporter, said testing kits have become the new commodity for “an enormous underbelly of nefarious characters both in the United States and abroad” following N95 masks and nitrile gloves. Stein was speaking generally about brokers, not specifically about Barlow, whom he doesn’t know.
Stein is a member of the PPE Fraud Coalition, a group of business owners who monitor possible fraudulent PPE being shipped to this country.
“It has continued to surprise me how easy it has been for some brokers or wholesalers to make it past state buyers without any background checks being done,” Stein said. “The idea that someone could say that they could get the state 3 million test kits in a few days or even a week is just preposterous, given the limited supply and overwhelming demand right now.”
Missing funds and IRS liens
Barlow’s legal troubles began in 2003 when an investigator from the U.S. Department of Labor received a complaint about money possibly missing from the pension fund for the employees of Macristy Industries Inc., a New Britain-based company owned by Barlow’s family since 1972. It was shuttered in 2008.
The government eventually filed a civil complaint in U.S. District Court in New Haven accusing Barlow of transferring about $1.8 million from the pension fund to keep the business operating. The consent judgment that resolved the DOL case indicated that he returned $1.1 million to the pension plan and also paid an additional $1 million to settle the case, court records show.
Barlow also agreed to pay a civil penalty of $200,000, but when he failed to pay all of it, the labor department referred the case to federal officials in New Haven, who filed a second civil case alleging that Barlow fraudulently transferred his Glastonbury home to his wife so it couldn’t be attached to any claim against him by the federal government.
In a consent order, Barlow agreed to pay the federal government $500 a month until the remaining balance of his civil penalty, about $58,000, was repaid, according to court records.
“We can confirm that he made payments to the satisfaction of our office and the DOL, and our office’s collection case was closed in September 2019,” said Thomas Carson, a spokesman for the U.S. Attorney’s Office in New Haven.
The IRS also investigated why Barlow hadn’t paid federal taxes from 2008 to 2011, records show.
Barlow paid the IRS debt by 2016, records show.
It was apparently a chance meeting that led Barlow’s new company, Jack Rubenstein CT LLC, to become a state vendor.
Rubenstein, which imported items from China until the pandemic hit in early 2020, was formed in 2010.
It was authorized by DAS as a state vendor on March 20, 2020, according to state records. Its first three checks for delivering PPE, for $326,000, were cut on April 25, according to the state Comptroller’s office.
Barlow told the Tulane University alumni magazine in an interview that “a state employee responsible for supplying hospitals saw him at the docks and approached him after noticing his capability to obtain hard-to-acquire equipment.”
Barlow told the magazine “that chance meeting led to a $2.5 million contract to supply much-needed hospital gowns.”
As COVID infections spread across Connecticut in the spring of 2020, Gov. Lamont declared a state of emergency and waived many contract regulations.
As the state scrambled to obtain more PPE for health care workers, the DAS procurement team was handling hundreds of calls trying to decipher which proposals were real and which were potential scams.
Barlow was one of the vendors eventually certified to do business with the state.
Throughout 2020, Barlow supplied nearly $15 million worth of PPE to the state, including N95 masks and hospital gowns, state records show.
‘Better off picking up the phone‘
Two years later, as the spread of the omicron variant coincided with the holidays, state officials realized they needed to quickly — and dramatically — increase testing availability.
With long lines at testing centers frustrating residents, a shortage of tests and delays getting test results becoming more prevalent, state officials looked to the at-home testing kit market to alleviate the backlog.
So they turned to Barlow again and agreed to pay him more than $18 million for what were supposed to be 1.5 million iHealth test kits. The purchase order was approved on Dec. 26; the next day Lamont held a press conference to announce the testing initiative.
“Connecticut is going to be at the front of the line, and we will have 3 million tests available by the end of this week,” Lamont said at a Dec. 27 press conference announcing the test kit purchase.
“This puts us ahead of the curve,” the governor said.
But three days later, Lamont stood outside the East Hartford Fire Department and announced the tests weren’t coming to Connecticut after all.
Without mentioning Barlow by name, Lamont said someone had “misrepresented” to state officials that the tests were destined for Connecticut.
“There are a lot of brokers in this game. There were a lot of people putting money on the table,” Lamont said. “It’s not like Federal Express where they say it’s going to be delivered at 10 o’clock the next morning and if it’s not there, you get your money back.”
The state did not lose any money on the deal with Barlow, a point that state officials have made several times. Barlow was only to be paid for what he delivered, which in this case was nothing.
Stinging from the test kit debacle, Lamont turned to CVS for help, and the company delivered about 500,000 test kits to the state overnight. The Connecticut National Guard and state emergency management officials have since bought more than 1 million test kits, some of which are still arriving.
Stein said he doesn’t understand why Lamont didn’t do the same thing with iHealth or Abbott Laboratories that he did with his CVS connections.
“The governor would have been better off picking up the phone himself and calling iHealth and negotiating his own deal,” Stein said. “The demand has outstripped supply so much mostly because the government and big companies like Walmart and CVS are buying them all … there’s a 30-day wait for orders, and that’s why there’s no way any broker could have kept that promise.”