Herts medical company accuses supplier of £20m fraud over NHS masks

PUBLISHED: 15:46 11 November 2020 | UPDATED: 12:25 18 November 2020

The Herts Advertiser has obtained court documents showing a company in Shenley has filed a $27million lawsuit in America over an alleged Covid-19 PPE 'fraud'. Pictures: Charles Thomson / Sora Shimazaki - Pexels / Ren mch - Pixabay.

The Herts Advertiser has obtained court documents showing a company in Shenley has filed a $27million lawsuit in America over an alleged Covid-19 PPE 'fraud'. Pictures: Charles Thomson / Sora Shimazaki - Pexels / Ren mch - Pixabay.

Archant

A medical company based in a Hertfordshire village has filed legal papers claiming it was the victim of a £20million coronavirus fraud.

Purple Surgical UK Ltd is based in the rural Hertfordshire village of Shenley. Picture: Archant.Purple Surgical UK Ltd is based in the rural Hertfordshire village of Shenley. Picture: Archant.

Purple Surgical UK Ltd alleges that it bought five million items of personal protective equipment (PPE) for the NHS, as part of a government contract, which never arrived.

The company – based in Shenley, just outside St Albans – has won multiple government contracts this year, worth more than £238million, to provide masks, goggles and gowns for frontline NHS workers battling the pandemic.

Among the contracts was a £44.5million deal, signed in April, to procure disposable respirator masks.

But in August, Purple Surgical filed legal papers in California, alleging “fraud” and “breach of contract” by its supplier.

Purple Surgical UK Ltd won a government contract in April, from the Departmentof Health and Social Care, to provide face masks manufactured by the company 3M. Picture: Charles Thomson.Purple Surgical UK Ltd won a government contract in April, from the Departmentof Health and Social Care, to provide face masks manufactured by the company 3M. Picture: Charles Thomson.

The Herts Ad has obtained copies of those legal papers.

The Deal

In May, Purple Surgical claims it “entered into negotiations” with Win Billion Investment Group - a company registered in the British Virgin Islands and based in Hong Kong.

A Win Billion representative, Ric Wu, allegedly claimed the company was “affiliated” with an official distributor for the mask manufacturer 3M.

The UK government contracted Purple Surgical UK Ltd to procure disposable respirator masks, similar to the one pictured, for frontline NHS staff. Picture: Matilda Wormwood - Pexels.The UK government contracted Purple Surgical UK Ltd to procure disposable respirator masks, similar to the one pictured, for frontline NHS staff. Picture: Matilda Wormwood - Pexels.

Purple Surgical agreed to pay $27m (US) for 5million masks and placed the money into an escrow account on May 22.

An escrow account is where money is held by a third party until a deal is completed.

A deposit of $9.45m was to be immediately released from escrow to Win Billion. The masks would then be delivered within 10 days and the remaining $17.55m would be released.

Delays

Purple Surgical UK Ltd, based in Shenley, has filed a lawsuit in San Francisco, California, alleging 'fraud' and 'breach of contract' by Hong Kong based Win Billion Investment Group. Win Billion denies the allegations. Picture: Charles Thomson.Purple Surgical UK Ltd, based in Shenley, has filed a lawsuit in San Francisco, California, alleging 'fraud' and 'breach of contract' by Hong Kong based Win Billion Investment Group. Win Billion denies the allegations. Picture: Charles Thomson.

The lawsuit alleges that problems began immediately, with Mr Wu claiming there had been a delay in Win Billion receiving the deposit.

In mid-June, he provided “a heavily redacted” invoice with 3M’s logo, purporting to show that the masks had been ordered, Purple Surgical allege in the court papers.

But after that, the files claim, there were many more delays.

“Each time, Defendants promised that the masks would be ready for inspection and delivery by a certain date, and then, after being asked for an update, reneged and stated they would be ready at a later date, due to delays on the part of 3M,” the lawsuit claims.

Purple Surgical UK Ltd claims in court documents that when it investigated an alleged deposit paid by Win Billion to PPE company 3M, it found the money was actually wired to a bank account registered to an address in the former Soviet state of Georgia. Picture: Charles Thomson.Purple Surgical UK Ltd claims in court documents that when it investigated an alleged deposit paid by Win Billion to PPE company 3M, it found the money was actually wired to a bank account registered to an address in the former Soviet state of Georgia. Picture: Charles Thomson.

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“Defendants’ reasons for the delays seemed to change each time, and they were unwilling to provide any concrete evidence regarding the alleged delay.”

Georgian bank account

In late June, Purple Surgical demanded more proof that the order had been placed with 3M.

In legal papers, Purple Surgical UK Ltd alleges that its supplier, Win Billion Investment Group, provided 'false' information and was 'never in a position' to deliver the 3M face masks. Picture: Charles Thomson.In legal papers, Purple Surgical UK Ltd alleges that its supplier, Win Billion Investment Group, provided 'false' information and was 'never in a position' to deliver the 3M face masks. Picture: Charles Thomson.

According to the lawsuit, Mr Wu provided “a heavily redacted bank statement purporting to show that Win Billion had paid 3M for the masks.”

But Purple Surgical used software to “remove the redactions” and found the document actually showed a payment of $247,545.25 to a bank account in New York, registered to an address in Tblisi City, in the former Soviet state of Georgia.

The account was registered under the name “3M Georgia LLC” – but the lawsuit asserts that 3M has no premises in Tblisi City and no legal entity of that name.

‘3M has not received any funds’

In June, government became suspicious and contacted mask manufacturer 3M.

A spokesperson for 3M confirmed to the Herts Ad that it had no affiliations with any of the organisations involved in the lawsuit and had never received any payment.

They said: “The UK government contacted 3M in June to ask whether the offer was likely to be legitimate. The answer was no... 3M has not received any funds related to this matter.”

Purple Surgical decided to cancel the deal and demand a refund, but claims in legal papers that the person running the escrow account refused to return the money or even provide evidence that it remains in the account.

In August, the company filed a lawsuit demanding repayment of the $27million, plus interest, damages and legal costs.

‘Not fraudulent’

San Francisco lawyer Jay Jambeck, of Leigh Law Group, is representing Win Billion and Mr Wu.

He said his clients, “have demonstrable evidence that this transaction is not fraudulent. However, because litigation is ongoing, they are unable to provide that evidence at this time.”

He added: “At the appropriate time in the litigation, should it proceed, they will file a general denial of the allegations and present evidence to the trier of fact.

“Finally, as you may be aware, there have been significant disruptions to the worldwide supply chain for the products at issue.”

Purple Surgical said it was “deeply distressed” by the situation and vowed to repay the full value of the contract if the order could not be fulfilled.

The Department of Health and Social Care was approached for comment.


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