Additional reporting by Josefa Velasquez
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City Hall’s frantic hunt for protective masks and medical equipment to combat coronavirus led officials to sign emergency contracts totaling nearly $119 million with a firm run by a major donor to Mayor Bill de Blasio’s failed presidential campaign.
Digital Gadgets LLC, a New Jersey-based wholesaler of hoverboards and other electronic devices to QVC and similar TV outlets, entered into three contracts with the Department of Citywide istrative Services between March 25 and March 28, city contract records show.
The first payment of $9.1 million came the following Tuesday — representing 10% of a total $91 million agreed to for “procurement of respirators and breathing kits” through the end of June. One order of two million N95 masks comes at a price of $8 million, or $4 a mask.
The Digital Gadgets deal arrived in the midst of a bidding war among cities, states, and nations around the globe for personal protective gear and was well within range of prices on offer at the time.
Before March 25, Digital Gadgets had never appeared in the city comptroller’s decade-old CheckbookNYC tracking system.
Digital Gadgets’ website features a pop-up box: “If you are inquiring about our COVID-19 PPE please click on button below,” followed by an email address.
Company CEO Charlie Tebele and family made donations totaling $32,000 to de Blasio’s now-abandoned campaign for the Democratic nomination for president and related political action committees, state and federal records show. Tebele and family also contributed at least $12,750 to de Blasio’s 2017 reelection campaign.
Tebele, who owns a Manhattan townhouse residence on East 61st Street, and Digital Gadgets did not respond to multiple emails and phone calls from THE CITY.
Chinese Ventilators
The $91 million respirator order from Digital Gadgets, dated March 30, covers 2,000 Aeonmed VG70 ventilators at $41,000 each, along with 200,000 “breathing kits” at $45 each, according to the Department of Citywide istrative Services.
The U.S. Food and Drug istration approved the Chinese-made Aeonmed VG70 for patient use on March 25 — the first new ventilator model to be greenlighted under an emergency authorization by the agency’s chief scientist.
The cost was in line with the price noted that same week by Gov. Andrew Cuomo in a daily COVID-19 briefing. “When we started buying them they were about $25,000,” Cuomo said on March 28. “Now, they’re about $45,000. Why? Because they’re in such demand and there’s such competition to buy the ventilators.”
Digital Gadgets sold two million N95 masks to the city for $8 million — or $4 per mask — on March 25. A day earlier, a different vendor, Illinois-based Medline Industries Inc., sold the city the same quantity of masks for $1.7 million, or 88 cents per mask.
A recent New York Times story on the interstate bidding war for masks put the pre-pandemic price at just 50 cents each, and noted multiple sellers charging more than $4 nationwide.
Comptroller records show an additional DCAS contract with Digital Gadgets ed March 28 for $11.27 million, modified two days later to $19.79 million, for N95 and surgical masks.
“The city is working around the clock to source supplies from around the country and around the world to fight this pandemic,” said Laura Feyer, a spokesperson for the mayor’s office. “We also need everyone who can donate supplies to nyc.gov/helpnow.”
Feyer said there is no connection between Tebele-tied campaign contributions and the emergency equipment purchases.
“We are thankfully getting dozens of emails a day from people who either have supplies to offer or know someone who does,” said Feyer, both from known sources and “random” ones. “We’re vetting all of them and accepting any deemed appropriate. This is no different.”
‘Vulnerable to Exploitation’
In the frenzied international search for N95 masks, City Hall has accepted prices ranging from 59 cents to $4.75 per item, Feyer said. Digital Gadgets is providing surgical masks for 55 cents each, she added, lower than any other vendor with prices ranging up to 76 cents.
Digital Gadgets offered the cheapest price for the ventilator model purchased, she added, below bids that ranged up to $67,000 each.
There is no indication that Digital Gadgets is charging more than the current, escalated market price for ventilators.
Out of more general concerns that some vendors could be taking advantage of the crisis, Councilmember Ritchie Torres (D-The Bronx) told THE CITY on Tuesday that he is calling on the city Department of Investigation to appoint a special inspector general to oversee expenditures related to coronavirus, similar to local oversight provided in the wake of 9/11.
“The city is so desperate for medical equipment and supplies that it’s particularly vulnerable to exploitation,” said Torres, who recently recovered from coronavirus. “The risk of price gouging has never been greater, and to have billions of dollars spent with little ability and little transparency would represent a betrayal of good governance.”
Power Issues
Lifesaving medical products stand out for Digital Gadgets, whose website highlights Apple Watches and wireless headphones.
While no issues have emerged with the ventilators ordered by the city, court records reveal accusations in other business dealings by the company that raise questions about the reliability of electronic products obtained in bulk purchases for resale.
In a pair of suits filed in July and September and 2019 and pending in Manhattan state Supreme Court, Digital Gadgets alleges that a seller from which it purchased Apple laptops supplied them with power adapters that don’t work in North America. The seller, in a second case, sued to complain of nonpayment of $2 million it claimed it was owed.
And in a case set to be heard before a California federal judge, court records show another vendor in 2017 sued Digital Gadgets for nonpayment of more than $1.1 million on a nearly $2.2 million shipment of hoverboards, the fad gizmos notorious for problems with exploding batteries.
Digital Gadgets fired back in court papers with an allegation that the products delivered did not meet the exacting specifications of QVC, the TV shopping channel the firm sought to sell the goods to. The firm entered into evidence an email from a QVC quality-control engineer explaining that the battery did not match the model number.
The judge in that case, citing the coronavirus crisis shutdown of the courthouse, postponed a hearing scheduled for Tuesday until July.
Catering and Cash
The de Blasio 2020 campaign did not comment on how it came to connect with Charlie Tebele and his family, and referred questions to City Hall.
Tebele gave $10,000 to de Blasio’s Fairness PAC beginning in August 2018 and a maximum $2,800 the following June to de Blasio’s presidential campaign, federal and state campaign records show. His wife, Nancy, contributed $2,800 to the campaign, $5,000 to the PACS and an additional $2,600 in catering.
City and state campaign finance records show a string of contributions originating from the Tebele family at the East 61st Street townhouse, purchased for $11.5 million in 2013 from an entity associated with chef Emeril Lagasse.
Those contributions bookended a special appearance by de Blasio at a family event, publicized by the mayor’s social media team.
Tebele made his first de Blasio campaign contribution in late December 2016, donating a maximum $4,950 to the mayor’s reelection campaign, state records show. More than three months later, the campaign credited Tebele back $2,100.
The initial contribution was followed by $4,950 from Leon Tebele in January 2017 and another $4,950 from Nancy Tebele, Charlie’s wife, in September 2017 days after de Blasio had already won the primary.
In between those two 2017 contributions, de Blasio took time mid-campaign to make an appearance at an August pop-up art gallery opening on the Bowery, presented by Arlette Tebele, Nancy and Charlie’s daughter.
Posted the mayor on his Facebook and Twitter feeds:
“We’re investing in the arts in all five boroughs so that amazing galleries like Arlette Tebele’s can flourish in every corner of the city.”
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