Friday, 21 Jun 2024

Acting Attorney General Sat on Board of Company Accused of Bilking Customers

WASHINGTON — Matthew G. Whitaker, the acting attorney general, served on the advisory board of a Florida company that a federal judge shut down last year and fined nearly $26 million after the government accused it of scamming customers.

The company, World Patent Marketing, “bilked thousands of consumers out of millions of dollars” by promising inventors lucrative patent agreements, according to a complaint filed in Florida by the Federal Trade Commission.

Court documents show that when frustrated consumers tried to get their money back, Scott J. Cooper, the company’s president and founder, used Mr. Whitaker to threaten them as a former federal prosecutor. Mr. Cooper’s company paid Mr. Whitaker nearly $10,000 before it closed.

Mr. Whitaker’s role in the company would complicate his confirmation prospects should President Trump nominate him as attorney general.

It is not clear if Mr. Trump was aware of Mr. Whitaker’s involvement with the patent marketing company before naming him as a replacement for Jeff Sessions, who was ousted by Mr. Trump on Wednesday.

A Justice Department spokeswoman declined to comment on Mr. Whitaker’s ties to the patent company, which were first reported by The Miami New Times.

Before his ascension to the office of the nation’s top law enforcement official, Mr. Whitaker, 49, was Mr. Sessions’s chief of staff. A conservative Republican from Iowa, he was seen within the Justice Department as a White House loyalist who publicly expressed doubts about the special counsel, Robert S. Mueller III, who is investigating Russian interference in the 2016 election and whether Mr. Trump or any of his associates conspired in the effort.

Mr. Whitaker’s appointment has prompted concerns that he might shut down or stymie the special counsel’s investigation.

In August 2017, Mr. Whitaker highlighted on Twitter a opinion article with the headline “Note to Trump’s Lawyer: Do Not Cooperate With Mueller Lynch Mob.” In his tweet, Mr. Whitaker wrote that it was “worth a read.”

Mr. Whitaker also wrote an opinion article that same day for CNN’s website with the headline “Mueller’s Investigation of Trump Is Going Too Far.” He said the investigation needed to be limited. Mr. Whitaker, a former college football player, joined the Justice Department in October 2017 after Mr. Trump watched him as a CNN analyst and approved of his television appearances.

World Patent Marketing was founded in 2014 and had the hallmarks of a legitimate business. It used a splashy website and other marketing materials to “create the impression that they have successfully helped other inventors,” the trade commission said in its complaint.

In reality, the commission said, the Miami Beach company failed to make good on almost every promise it made to consumers, and strung them along for months or years after taking their money.

When prospective customers left their contact information on the company website, an employee would call them back and follow a script: The company was an “invention powerhouse” with an “incredible advisory board,” including Mr. Whitaker, a “former United States attorney who was appointed by President George Bush.” Mr. Whitaker had served as the top prosecutor for the Southern District of Iowa, a position he held until 2009.

In joining the board, Mr. Whitaker was quoted in a news release issued by the company as saying that he was honored to be a part of World Patent Marketing because it was a “trusted partner to many inventors.”

In another news release, Mr. Whitaker was quoted as saying that “as a former U.S. attorney, I would only align myself with a first-class organization.”

“World Patent Marketing,” the release continued, “goes beyond making statements about doing business ‘ethically’ and translates those words into action.”

In footage uploaded to Vimeo, a video platform, in 2015, Mr. Whitaker can be seen reviewing an invention meant to reduce razor-blade cuts. Mr. Cooper also posted a picture of himself on social media with a smiling Mr. Whitaker at the company offices in Miami.

The trade commission complaint said that consumers were told they had to spend about $3,000 for a “Global Invention Royalty Analysis” to begin the process of examining an invention with the goal of getting a patent. After making the payment, the company’s clients were then pitched various packages ranging from approximately $8,000 to about $65,000.

After the company took the money, it typically began ignoring customers, who became frustrated that they were left in the dark. Mr. Cooper would often berate or threaten them when they asked questions or wanted their money back.

“Defendants and their lawyers have threatened consumers with lawsuits and even criminal charges and imprisonment for making any kind of complaint,” the trade commission’s complaint said.

In at least two instances, Mr. Cooper used Mr. Whitaker’s former position as a federal prosecutor to rebuff customers.

Mr. Whitaker, using his Iowa law firm’s email, told a man who had complained to Mr. Cooper that he was a former federal prosecutor and served on the company’s board.

“Your emails and message from today seem to be an apparent attempt at possible blackmail or extortion,” Mr. Whitaker wrote in August 2015. “You also mentioned filing a complaint with the Better Business Bureau and to smear World Patent Marketing’s reputation online. I am assuming you understand that there could be serious civil and criminal consequences for you.”

When another frustrated customer, Rich O’Neill of Montana, emailed around the same time and wanted his $1,300 returned, Mr. Cooper fired back a threatening email.

“You’re telling me that if I don’t refund your $1,300, you will blackmail me into filing complaints with regulators? And you just put it in writing,” Mr. Cooper wrote. “You are aware that we have a former U.S. attorney on our board.”

Mr. Cooper returned the money to Mr. O’Neill, who said in an interview on Thursday that he believed the email referencing Mr. Whitaker was meant to intimidate him.

The complaint also accused the company of using thuggish tactics, according to court documents. In an email to customers, the company referenced a blog post that described how one person wanted to speak with Mr. Cooper about his invention idea. The post said that the person was intercepted by the company’s “intimidating security team, all ex-Israeli special ops and trained in Krav Maga, one of the most deadly of the martial arts.”

The post added, “The World Patent Marketing Security Team are the kind of guys who are trained to knock out first and ask questions later.”

Another customer, Brenda Wilcox, 49, a Trump supporter who lives in Broward County, Fla., said in an interview on Thursday that World Patent Marketing scammed $11,000 from her. She said the company had agreed to market, license and develop a bracelet she invented that would warn drivers if they left a baby in the back seat of their car.

Another customer, William Knecht of Texas, lost about $35,000 on a patent package, according to the complaint. “The entire time I worked with W.P.M. I feel like the company cut corners, did the bare minimum to get by, and were just slimy enough to keep me happy and not complaining,” Mr. Knecht said in a 2017 statement as part of the trade commission’s case.

Another customer, Christopher Seaver, a Florida doctor who spent more than $300,000 hoping to make money on an invention, said that Mr. Cooper asked him to be on the advisory board to do consulting work on medical patents.

“I have not made any money from my involvement with W.P.M.,” Dr. Seaver said in the complaint. “This has caused financial hardship for me because I paid life savings to W.P.M.” He added, “I’ve gotten nothing in return.”

This past March, the federal judge, Darrin P. Gayles, banned Mr. Cooper and World Patent Marketing from the invention promotion industry.

Mr. Cooper was also ordered to pay the trade commission nearly $1 million, according to court documents. His lawyers did not immediately respond to requests for comment on Thursday.

Adam Goldman reported from Washington, and Frances Robles from Miami. Katie Benner contributed reporting from Washington.

Follow Adam Goldman and Frances Robles on Twitter: @adamgoldmanNYT and @FrancesRobles.

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