State Controller Betty Yee is facing calls for an investigation into her newly disclosed role in arranging a sketchy $600 million no-bid contract for COVID-19 masks back in March 2020.
The controller is responsible for paying the state’s bills but has no role in selecting state contractors. So it was a surprise when documents from a civil lawsuit revealed that Yee had communicated with the owners of Blue Flame, LLC, about the best way to ask the state for an upfront payment of $457 million and how to get that payment wired to the company’s bank as quickly as possible. There were almost 150 text messages between Yee and John Thomas, a co-founder of the brand-new company who previously had been a Republican fundraiser.
In one text message, Yee even advised Thomas to refrain from disclosing that Blue Flame would earn $134 million in profits on the contract, because the information could “become a matter of public record and make headlines.”
The Blue Flame contract went up in flames almost immediately. After the state wired the company’s bank $457 million, the bank alerted the state to potential fraud, advising that Blue Flame had only opened its account the day before. The wire transfer was reversed. Yee texted Thomas that he should no longer keep her “in the loop.”
Even given the urgency and difficulty of the effort to procure masks and other personal protection equipment at the start of the pandemic, the Blue Flame deal reeks of political influence. It is alleged in court documents that Democratic fundraiser Mathew Littman was paid by Blue Flame for referrals, and he contacted Yee’s political fundraiser, Stephanie Daily Smith, to arrange an introduction between Yee and Thomas.
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At a minimum, there is the appearance of impropriety when political fundraisers are involved in helping to arrange no-bid contracts, especially during a crisis when hundreds of millions of taxpayer dollars are flying out the door at hypersonic speed.
Yee, who has served two terms as controller, is ineligible to run for re-election and has formed a campaign committee to raise funds to run for state treasurer in 2026.
The concealment of Yee’s role in the Blue Flame contract during investigations by both federal and state authorities has been cited by some lawmakers as troubling.
It certainly is.