President Trump just named Matthew Whitaker as acting U.S. attorney general, replacing now-former Attorney General Jeff Sessions who “resigned” on Wednesday. A dive into Whitaker’s business affairs show he was, as of at least late 2014, involved in a business saddled with serious ethical complaints.
Back in 2014, a man named Scott J. Cooper started a business in Miami that claimed to help inventors turn their ideas into businesses by registering patents and helping with manufacturing. At least, that was the idea. According to a complaint filed by the Federal Trade Commission (FTC), Cooper’s business was what the FTC characterized as a “scam” that “bilked thousands of customers out of millions of dollars.” Whitaker, the new acting Attorney General, was on the advisory board of the company during at least part of the three years over which, according to the FTC, the so-called scam behavior took place.
To be clear: The FTC does not claim any wrongdoing specifically on Whitaker’s behalf, but his involvement with the company at the very least provides greater details about his private business relationships.
Cooper set up a website for what he called World Patent Marketing—a business where people could pay for a “global patent” and get help from Ivy League professors to commercialize their ideas. The only problem? There’s no such thing as a “global patent,” and the company simply made millions while leaving inventors with all but nothing, according to the FTC.
Client complaints filed with the FTC about World Patent Marketing, obtained by Gizmodo through a Freedom of Information Act request (FOIA) last year and reported for the first time today, reveal a pattern of broken promises and thousands of dollars in losses for people who thought they were going to get help turning their ideas into profitable businesses.
According to the FTC, World Patent Marketing didn’t actually secure any licensing or manufacturing agreements for its customers. In fact, the FTC notes in its complaint that virtually no one made their money back from World Patent Marketing, let alone made a profit from their patents.
Despite the business almost never delivering anything of value, World Patent Marketing would sometimes make an effort to create a logo or register an internet domain (what the FTC calls “inconsequential services”), which virtually anyone could do, even without patent expertise. After an initial phone call, consumers were encouraged to buy a $l,295 “Global Invention Royalty Analysis” before being pressured to spend even more money, according to the FTC. Packages are said to have cost anywhere from $7,995 to $64,995.
What did the company receive for providing these services? As much as $10 million since 2014, by the FTC’s estimates.
“These low-effort, low-value services may include: registering an internet domain name for one year; designing drawings, logos, brochures, and banners; and issuing a press release on the internet,” the FTC complaint reads. Most recently, the FTC ruled this past March that Scott Cooper was banned for life from doing business in patent marketing.
The strangest part to this whole saga? The World Patent Marketing board of directors was filled with a wide cross-section of politicians and military experts. Dell L. Dailey, former head of the State Department’s counterterrorism, joined the board in April of 2016. Admiral Al Konetzni joined the board in September of 2016. And a name that is about to become a lot more famous, Matthew G. Whitaker, was also on the board starting in late December of 2014.
The FTC complaint against World Patent Marketing cites business activities that began in March of 2014 and extended over three years. Whitaker joined the board in December 2014. It is unclear from the available documents how long Whitaker served in that role; however, the company’s website identified him as a member of the company’s advisory board until March 2017, although it is not clear whether he maintained any relationship with the company at that time.
Whitaker was billed in World Patent Marketing’s promotional videos (now deleted, but downloaded by Gizmodo last year) as the former U.S. attorney for the Southern District of Iowa and the executive director of the Foundation for Accountability & Civic Trust (FACT), a conservative nonprofit formed in 2014. Whitaker held the U.S. attorney position, to which he was appointed by former President George W. Bush, from June 2004 to November 2009.
Whitaker himself is not listed in any of the FTC complaints, and it is unknown what advice he may have given the company in his role on the advisory board.
Whitaker did not immediately respond to Gizmodo’s request for comment, which was sent to the Justice Department on Wednesday afternoon. The FTC previously declined to comment on World Patent Marketing beyond its complaint against the company. Earlier requests for comment from other members of the company’s advisory board went unanswered.
World Patent Marketing’s sketchy business dealings came to light after a whistleblower called the FTC’s call center in April of 2015 with a tip claiming that the company wasn’t being honest with customers. The person, who said they worked for World Patent Marketing, alleged that inventors were given the wrong price for their first investment just so that WPM could get a second investment. By the second investment, customers were supposed to hand over $10,000 or more, the person claimed.
According to the FTC, Cooper did his best to silence critics. In a warning email cited in an FTC complaint, the company told the story of kicking an inventor out of WPM’s office by their “intimidating security team, all ex-Israeli Special Ops and trained in Krav Maga, one of the most deadly of the martial arts.” Yes, that’s a real quote.
The company further explained that, “The World Patent Marketing Security Team are the kind of guys who are trained to knockout first and ask questions later,” FTC documents show.
Now, this might seem like an over-the-top and ridiculous bit of intimidation, but if you’re 1) someone who’s a little vulnerable and 2) someone who’s already invested a lot of money in what critics characterize as a scam, it’s precisely the kind of warning that you might take seriously.
World Patent Marketing also started to include a comprehensive non-disparagement clause in all its contracts that forbade customers from complaining online:
The Client and WPM shall refrain from making or causing to be made, publishing, ratifying or endorsing any and all disparaging, negative, or other similar statements concerning either of them to any third party, including but not limited to individuals, entities, internet websites, blogs, publications, postings, emails, and any social media, such as Facebook, Twitter, blogs and wikis.
But people did complain. A lot.
One complaint obtained through a FOIA request with the FTC explains that one person paid almost $1,000 before being asked to drop $10,000 on their services (minor spelling errors corrected throughout):
Consumer is calling because she was in contact with World Patent Marketing for a patent idea she had. She was told she would need to pay a $995 one time fee. After paying she was told she needed to pay an additional $10,000 for a “global analysis” and to start up the process to putting her idea out world wide, being she had been told she only needed to pay the one time fee. She feels they are misleading consumers. She claims she has never sent anything in writing.
Another complaint read:
I found this invention help type company thinking they were on the up and up. First thing they told me was they will have MIT and Harvard do a market report for my invention for $1295.00 to get started. Then once they felt it scored high enough and passed that they recommended I go on and apply for a patent. So I did that also through them for $7995.00 and this whole time they were telling me how they will take it to trade shows and work towards getting a licensing deal for me. After they got the large sum of money they stopped communication unless I made it... and it got worse as time went on.
Another complaint explained that they gave World Patent Marketing almost $35,000 and the company didn’t do anything of value:
I hired World Patent Marketing to file a patent for me for $34,995 - which was to include patent writing, filing, marketing, trade shows, advertising, etc. I was never allowed to speak with attorneys regarding my patent. The patent filing process has been grossly neglected to the point that I do not even have a patent filed with the European Patent Office (at least that I am aware). My product was not marketed or advertised in any way sufficiently - in fact, I have done all of the advertising and marketing myself so far. Throughout my interaction with the company and Scott Cooper himself, I have never gotten a straight answer about anything - even despite having entered into a supposed “partnership” with Scott Cooper. Ultimately, I do not have a patent, nor has World Patent Marketing performed half of what was promised independent of any partnership agreement that I made with Scott Cooper. I have been contacted by two different attorneys previously contracted by Scott Cooper to handle my patent application, and they have informed me that at this point my patent has been abandoned and nothing further is currently being done.
Some of the complaints were about money lost in the hundreds of dollars, but others were in the tens of thousands. It’s not clear what, if anything, Whitaker knew about any of these complaints while he was on the advisory board of World Patent Marketing.
Whatever he knew about the company at the time, Whitaker is now one of the most powerful people in the country and holds the fate of the Trump-Russia investigation in his hands.
Best of luck with all of that, America.