A California medical supply company is suing McLean-based Chain Bridge Bank, alleging the bank was responsible for destroying the company’s reputation and making it lose a $600 million state contract for personal protective equipment.

In the lawsuit, Blue Flame Medical claims that Chain Bridge Bank told California officials that Blue Flame could be “fraudulent,” leading California’s state government to cancel a contract for 100 million N95 masks and demand the return of a $456 million down payment.

In response to the lawsuit, Chain Bridge bank spokesperson Rich Danker said in a statement that “the bank acted properly and fulfilled its legal and regulatory responsibilities.”

The Washington Post reported in May that the U.S. Department of Justice opened a criminal investigation into Blue Flame. Neither the Justice Department, nor Blue Flame’s attorney, would comment on the report’s validity.

Blue Flame alleges that Chain Bridge abruptly removed funds from Blue Flame’s account and closed it, a violation of Virginia law, according to the lawsuit filed in the U.S District Court for the Eastern District of Virginia. A hearing has not yet been scheduled.

Republican political consultants Mike Gula and John Thomas launched Blue Flame in March in response to the coronavirus outbreak. They did not have previous experience in the personal protective equipment business.

“They both saw that there was this need in the marketplace,” says Blue Flame’s attorney, Ethan Bearman. “There were cries for help to get PPE, and I know that these guys thought that they would be able to help get PPE to people who needed it.”

Gula chose Chain Bridge Bank for a corporate account because he was a longtime customer.

The lawsuit alleges the bank’s actions caused Blue Flame significant harm, ranging from the cancellation of a $19 million-plus contract by another state government to death threats following intense press coverage.

“Chain Bridge set off a chain reaction of unbelievable negativity in the marketplace that directly interfered in contracts,” Bearman claims.

In July, Blue Flame was trying to appeal Maryland’s decision to cancel a $12.5 million contract with the company after the state said Blue Flame failed to provide ventilators and protective masks on time.

Meanwhile, Blue Flame continues to do business in California.

“The most important thing is we want the bank to be held accountable for what they did wrong, and we want the reputation of Blue Flame Medical restored,” Bearman says.

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