Partner sues NC businessman for $200m in pandemic profits

A Charlotte businessman is being sued by a former business partner who claims it is owed more than $200 million in profits from the same of COVID test to the UK. The’ N. Pham [email protected] Banks Bourne made a fortune selling hundreds of millions of COVID-19 tests to the British […]

A Charlotte businessman is being sued by a former business partner who claims it is owed more than $200 million in profits from the same of COVID test to the UK.

A Charlotte businessman is being sued by a former business partner who claims it is owed more than $200 million in profits from the same of COVID test to the UK.

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Banks Bourne made a fortune selling hundreds of millions of COVID-19 tests to the British government during the height of the pandemic.

Now, the Charlotte entrepreneur finds himself in a protracted legal fight that could determine how much of the money he gets to keep.

A lawsuit filed in the Charlotte federal courts accuses the former Wachovia investment banker, his pharmaceutical-supply companies, and a top associate of improperly withholding hundreds of millions of dollars in profits that were owed to a business partner.

FS Medical Supplies alleges that it signed a contract in 2020 to serve as the exclusive middleman between Bourne’s companies, known collectively as the Tanner Pharma Group, and the Chinese manufacturer of the tests.

The amount of money FSMS received under the deal is at the center of a three-year legal fight that has surfaced in two states and may eventually move overseas.

According to filings in the case, Tanner Pharma paid FSMS a total of $6.5 million from the profits tied to the UK sales.

FSMS claims it is owed more than $200 million. Its lawsuit seeks triple damages, which would bring the amount to more than $600 million.

Under the agreement, Tanner Pharma UK LTD., Bourne’s affiliate in Great Britain, was supposed to buy the COVID tests through FSMS, the lawsuit claims.

The two would then split the profits from the sales to the United Kingdom Department of Health and Social Care, which totaled close to $2 billion during 2020-22, according to the complaint and UK government records.

Two weeks after signing the agreement, Tanner Pharma UK breached it, the lawsuit alleges.

Bourne’s company in Great Britain began buying directly from the Chinese supplier, concealed details of early contracts with the UK government involving the sale of almost 60 million test kits, and used disputed pricing figures to under-calculate FSMS’s share of the profits, the complaint says.

“We have a lot of confidence in our claims based on the evidence we have seen so far,” said Charlotte attorney Lex Erwin, a member of the plaintiff’s legal team, “and we are looking forward to presenting that evidence to a North Carolina jury.”

Bourne and the other defendants dispute the allegations. They argue in their filings that the distribution contract both companies signed in September 2020 allowed Tanner to deal directly with the Chinese supplier; that Tanner Pharma UK had largely taken over FSMS’s role in acquiring the tests; and that the Tanner partners were clear from the start about the money FSMS would receive.

Over the eight months of payments, they say, FSMS, which was created at the start of the pandemic by two venture capitalists and their wives, never once complained about the amounts.

In a statement Thursday to The Charlotte Observer, Tanner Pharma UK, which Bourne started in 2015, said it began dealing directly with the Chinese supplier due to the urgent need for tests in Great Britain.

“At all times, Tanner Pharma UK acted within its contractual rights, and it compensated FS Medical Supplies, LLC as its contract provided,” the statement said.

While many of the financial details of the various sales have been redacted from the lawsuit, The Guardian, a British newspaper, reported last week that Tanner Pharma UK received £1.5 billion. That’s the fourth highest amount paid by the British government to a pandemic-related supplier.

As principal owner of Tanner Pharma UK, Bourne profited mightily from the company’s UK sales. According to The Guardian, the Charlottean received a dividend check in 2021 of £73 million. That’s more than $90 million, based on the exchange rate at the time.

‘Multi-billion-dollar relationship’

The lawsuit and other documents in the case offer a glance into the worldwide chaos that ensued after the emergence of the pandemic, when frantic demand and broken supply chains had countries furiously competing against each other for COVID tests, masks and other medical necessities.

It also shows how a Charlotte company and its small British affiliate filled a lucrative niche in the global pandemic marketplace. To date, Tanner Pharma UK says it has supplied more than 480 million COVID tests to the UK.

In its court filings, FSMS says it played a pivotal role early on — obtaining almost 5,000 test kits from the Chinese manufacturer that the British government wanted to analyze before ordering the tests in bulk.

FSMS’ quick actions, according to its lawsuit, “paved the way for what would become a multi-billion-dollar relationship. Without FSMS’s efforts, none of this would have been possible.”

The company’s first lawsuit against Tanner Pharma was in the courts of California in March 2021. The case was moved to the federal courts of the Northern District of California that April and dismissed three months later when a judge ruled that California was not the proper venue for the dispute.

The complaint resurfaced in the Western District of North Carolina that September. An amended version filed in September 2022 added Bourne and Stephen Scalia, the Charlotte-based president of the Tanner Pharma Group, as defendants.

The amended lawsuit also included a new claim that the defendants had violated North Carolina’s law against unfair and deceptive trade practices, which would entitle FSMS to collect triple damages.

Last month, both sides spent a full day in the courtroom, arguing over defense motions calling for the case to be dismissed on procedural grounds, or to be thrown out of the North Carolina courts and heard in Great Britain.

A ruling is expected within the next month.

Bourne, 51, is a graduate of Charlotte Country Day and N.C. State University, according to his LinkedIn profile and company biography. He received a graduate degree from Wake Forest.

According to one of his company websites, he is an active supporter of Atrium Health’s Levine Children’s Hospital and Levine Cancer Institute and is a co-founder of the Russell Guerin Melanoma Research Fund.

This story was originally published June 2, 2023, 6:00 AM.

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Michael Gordon has been the Observer’s legal affairs writer since 2013. He has been an editor and reporter at the paper since 1992, occasionally writing about schools, religion, politics and sports. He spent two summers as “Bikin Mike,” filing stories as he pedaled across the Carolinas.

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