Thursday, 15 Nov 2018

Before heading the Justice Department, Matthew G. Whitaker promoted a company accused of misleading his clients.

When federal investigators were looking for an invention company accused of fraud by customers, they sought information in 2017 from a prominent member of its advisory board: Matthew G. Whitaker, a former US lawyer in Iowa.

It is unclear how Whitaker – who was appointed acting Attorney General by President Trump on Wednesday – responded to a Federal Trade Commission assignment to his law firm, according to two people close to the investigation .

In the end, the FTC filed a lawsuit against Miami-based World Patent Marketing, accusing it of misleading investors and falsely promising that it would help them to patent and profit from their inventions, according to the documents. filed by the court.

In May of this year, a Florida federal court ordered the company to pay a settlement of over $ 25 million and close the shop, according to the archives. The company has not admitted or denied committing a wrongdoing.

Whitaker's sudden rise this week to replace sacked Attorney General, Jeff Sessions, takes a fresh look at his involvement in the closed society, of which he was a member of the advisory council in 2014, shortly after failing in the Senate race American in Iowa.

At the time, he also ran a conservative monitoring group linked to other powerful nonprofit organizations on the right and was beginning to develop a career of Trump-friendly cable television commentator.

World Patent Marketing – founded by Miami businessman Scott J. Cooper, who donated $ 2,600 to the Whitaker campaign in the Senate – said Whitaker's CV as a former US lawyer, which contributed to the credibility of the company.

But Whitaker seems to have been more than a figurehead. He spoke about the inventions of the company's customers in online videos, including a special spa seat for people with reduced mobility. He also wrote a response to at least one complaint, a threatening email in which he spoke of his role as a former US lawyer, according to court filings.

"It's really shocking to know that this guy will be Attorney General," said Ryan Masti, 26, who lost $ 77,000 after having paid World Patent Marketing to help him market his idea of 39, a social media application for people with disabilities. "It's so offensive. It's like a stab in the back. "

Whitaker has not responded to requests for comments on World Patent Marketing or the survey. "We will refuse," Justice Department spokeswoman Sarah Isgur Flores said in an email to the Washington Post.

A spokesman for the FTC also declined to comment.

There was no evidence that Whitaker knew that the vendors of the company were making false promises to the inventors, said Court Commissioner Jonathan Perlman in an interview.

"I have no reason to believe that he was aware of the wrongdoing," Perlman said.

Whitaker was paid at least $ 10,000 by the company, according to the documents filed by the court.

At the conclusion of the FTC's investigation, Perlman sent a letter of request to Whitaker – along with other members of the advisory council – requesting reimbursement of the fees collected. Whitaker did not answer, Perlman said.

When Whitaker was appointed to the Board of Directors of World Patent Marketing in October 2014, a spokesman for the company said in a statement that it would provide a "vision and direction". Later, the company touted Whitaker's legal background and said he was working with the company to help investors avoid fraud in patent marketing.

"As a former US attorney, I would only align with a first-class organization," said Whitaker in a press release issued in 2014. "World Patent Marketing is not content with to make statements about the "ethical" behavior of business and translate those words into action. "

However, according to the FTC, the company had falsely promised its customers to patent and market their ideas in exchange for high fees – and then pocket the money.

"In the past three years, the defendants have exploited a scam tied to promoting an invention that has cost millions of consumers to millions of consumers," said the agency in a recently unheard case. sealed. "In reality, defendants do not keep almost all the promises they make to consumers."

Neither Cooper nor his current lawyer has responded to requests for comment.

In court documents, Cooper told the court that the company was providing certain services to customers and that its website warned customers that most inventions were not commercially successful, according to Sun-Sentinel, Fort Lauderdale, Florida.

The sellers of World Patent Marketing would persuade potential customers to sign a confidentiality agreement and then ask them to explain their idea, according to court documents.

Whatever the concept, regardless of the banality or improbability found by the investigators, the seller would consider the idea fantastic and encourage the customer to pay for the placing on the market of a package and to patent the idea, as the documents show.

According to the FTC, many people have become indebted or have lost their life savings.

The promotional material highlighted the fleshy resumes of board members such as Whitaker, who seemed to be a key part of the business. The company said the board would help examine the inventors' ideas to maximize their ability to get rich.

"The innovators are today's revolutionaries, forward-thinking visionaries who have come together to form the powerful and influential advisory board of the World Patent Marketing," said the narrator of a promotional video, while photos from Whitaker and other council members were filling the screen.

Masti, who said he had fought ADHD since childhood and hoped that his invention would help other people like him, said in an interview that he had confidence in the company, partly because that he had learned that members of the advisory council, including Whitaker, had reviewed his idea and thought. it would be successful.

"They said he was very high up. He is a professional. He has a lot of power, "said Masti, a resident of Cameron, New York, who voted for Trump in 2016." That's how they sold you. "

Now, Masti said that he lived with his parents and was facing overwhelming debt related to loans taken out to pay the company.

Another former customer, Penn Mason, an employee of the Nashville airline, said he paid $ 21,000 to World Patent Marketing to help him patent and market a real estate application he had invented.

The company failed to patent his product and quickly stopped sending back phone calls, he said.

Mason said that he thought paid members of the advisory board such as Whitaker had essentially pocketed the money of unsuspecting victims.

"It was our money," said Mason, 52. Whitaker was appointed Acting Attorney General and said, "It makes me sick. . . It's like a punch in the belly. "

When investors started complaining of having paid the company large sums of money with no great result, they were threatened, according to interviews and court documents.

Mason said that after he began to complain, he received a call from Cooper, the CEO, who had threatened to sue him for defamation. "It really scares me," Mason said. "You feel like you're dealing with all these bigwigs."

The New Times of Miami, which released a thorough investigation of the company last year, said that Cooper sometimes informed people who had published negative reviews about him that he had safety training with specialized training in the Israeli martial art Krav Maga.

In an email dated August 2015 included in the court documents, Whitaker wrote to a complainant who was threatening to address the Bureau of Business Ethics: "I guess you understand that". there could be serious civil and criminal consequences for you. "American lawyer.

Another board member, Aileen M. Marty, Professor of Infectious Diseases at Florida International University in Miami, said that she was informed upon arrival at the board that interesting patent ideas would be sent to her for review – but Had never received one.

Marty stated that she had received a check for her counseling service, which she rendered when she heard that the company could commit fraud.

"I would have liked to have never heard of the company and wish my name would not be associated with it in any way. I can not go back and accept the offer to sit on their board – trust me if I could, I would, "she said in an email to The Post.

While advising World Patent Marketing, Whitaker led a conservative watch group called the Foundation for Accountability and Civic Confidence. The group filed numerous ethics complaints and asked for investigations, targeting Hillary Clinton and Supreme Court nominee Merrick Garland, as well as some Republicans.

FACT lists an address from downtown Washington on its website. But it is one of the 200 "virtual members" who use a K Street site to establish themselves in the nation's capital, according to Brian Bullock, deputy general manager of Carr Workplaces, the company that operates the site.

"They only come every six months or so," Bullock said. "We accept their mail."

FACT was created in 2014 thanks to a major donation from another tax-exempt charity that has been a source of revenue for organizations affiliated with the conservative movement – an arrangement that helps to further mask the company's reputation. 39, donor identity.

The group has received more than a million dollars in recent years from a donor-advised fund, called Donors Trust Inc., which funds many other conservative groups, including Judicial Watch, Project Veritas, the Claremont Institute, the Federalist Society and the David Horowitz Freedom Center, issuing tax returns.

Whitaker received $ 402,000 in 2016 as president and director of FACT, nearly one-third of the donations received by the group that year, according to his tax returns. He received $ 252,000 in 2015, more than half of the charity's receipts that year, as the tax returns show.

FACT officials declined to comment, but described the group as a non-partisan ethics watchdog that holds government officials from both sides accountable.

Alice Crites and Tom Hamburger contributed to this report.


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