(CN) – Shut down by the Federal Trade Commission for defrauding thousands of hopeful inventors, the scam patent firm whose advisory board included Acting Attorney General Matt Whitaker now faces a criminal probe.
The Wall Street Journal confirmed the existence of an active FBI investigation into World Patent Marketing late Friday, as new evidence comes to light regarding the role in scam played by the man tapped to succeed Jeff Sessions, who resigned Wednesday at the request of President Donald Trump.
Known as WPM for short, the Florida company that promised would-be entrepreneurs thousands of dollars to patent and promote their inventions paid a judgment of more than $25 million to the Federal Trade Commission this past May. As civil litigation over the now-defunct company trudges on, financial records show that the company paid Whitaker at least $9,375 between October 2014 and late February 2016, and owed him $7,500 more for work between May 2016 and February 2017.
Sessions tapped Whitaker as his chief of staff in September 2017, some seven months after that last scheduled payment.
Whitaker’s new position will allow him to oversee the FBI, whose Miami bureau is in charge of the active WPM investigation, according to the Journal's report.
The Department of Justice declined to comment on whether Whitaker returned what WPM paid him for his role on the 12-member “Invention Team Advisory Board.” Jonathan Perlman, a receiver in charge of the court-ordered investigation of WPM, told the Journal that Whitaker had not. Perlman also characterized the advisory board to be a sham designed to "impress customers and foster sales.”
“In addition to deceptive and unfair sales practices detailed by the FTC in its papers, the receiver’s investigation has confirmed that WPM continued deceptive sales acts through March 2017, including falsely telling customers that their idea had been reviewed and approved by a ‘board,’” Perlman wrote in his receiver’s report last year.
Perlman did not respond to an email that sought elaboration on Whitaker’s role in the scheme.
Attorney Norm Eisen, the former ethics czar under Obama who heads an anti-corruption watchdog, said Whitaker has an ethical obligation to pay back his money to benefit those who were defrauded.
“What he knew about this company and when he knew it may turn out to be yet another reason he is not fit to serve,” Eisen said in an interview. “Even if he too was fooled, what does that say about his ability to oversee investigations as acting AG? As for repayment, that's an intricate legal question, turning upon his knowledge, as well as on which state and federal laws may apply.”
Ironically, Whitaker’s profile in the archives of WPM’s now-defunct website touts his work sniffing out “scams” at his former post in the U.S. Attorney’s Office in Iowa between 2004 and 2009.
An email uncovered from the FTC litigation appears to show Whitaker threatening an unhappy WPM customer named A. Rudsky.