Politics

Records show Whitaker knew of fraud claims at Florida 'scam company'

Acting AG was on advisory board

(CNN) - Acting Attorney General Matthew Whitaker continued to sit on the advisory board of a now-shuttered patent company after learning of multiple claims of fraud made against it by disgruntled customers, documents released Friday show.

Whitaker advised World Patent Market, the Florida based company, beginning in 2014 and was often sought out for legal advice by its CEO, who would add Whitaker onto email chains where customers had complained, the documents show. The Federal Trade Commission has called the company "an invention-promotion scam that has bilked thousands of consumers out of millions of dollars" in court filings.

In May, World Patent Marketing agreed to pay a nearly $26 million judgment as part of a settlement agreement in the case. A judge has partially suspended that payment.

According to internal communications released by the Federal Trade Commission on Friday, Whitaker was sent a handful of complaints from consumers who had reached out to him about the company.

"Dear Matthew can you get a message to scoot cooper you are on his advisory board but what you don't know is how many people were scammed by him and how fraudulent they are and how much money they robbed from people," one person wrote to Whitaker in 2016. Whitaker forwarded the email to Scott Cooper, the company's CEO.

Kerri Kupec, a Justice Department spokeswoman, had previously said that Whitaker was "not aware of any fraudulent activity. Any stories suggesting otherwise are false."

In October 2017, the FTC sent a subpoena to Whitaker as part of its probe into World Patent Marketing demanding he turn over records and communications related to his work at the company. Whitaker did not respond by the deadline on the subpoena, the FTC documents show.

In a voicemail message left for an FTC official after he was notified that he had missed the subpoena, Whitaker said that he wasn't aware of the subpoena because it had been sent to his Iowa law firm, and he had since moved to DC where he served as then-Attorney General Jeff Sessions' chief of staff.

"I didn't know that you had served a subpoena. I am now at the Department of Justice here in Washington, D.C., as the chief of staff to the attorney general, so I want to be very helpful," Whitaker said in the voicemail, according to an audio recording of it that was released Friday.

Notes from an FTC official on an apparent follow-up call between Whitaker and the agency about the subpoena show that Whitaker said it would be challenging to respond to the order because of attorney-client privilege.

Whitaker described his role at the company as narrow and mentioned only limited communication with customers in the call with the FTC, according to the FTC official's notes.

CNN has reached out to the Justice Department for comment.

House Democrats earlier this month sent letters to Whitaker, Cooper and the FTC asking for records related to company and the agency's investigation into it, prompting Friday's release.

The FTC on Friday also briefed congressional staff on their investigation into World Patent Marketing on Capitol Hill, according to a Democrat aide.

In a statement, Rep. Elijah Cummings, the top Democrat on the House Oversight Committee who is expected to chair the panel next year, said the revelations in the documents raise "serious concerns about his fitness to serve as acting Attorney General."

"These new documents suggest that Mr. Whitaker was personally aware of allegations of fraud by World Patent Marketing and its CEO at the same time he was receiving payments as a member of the Advisory Board," Cummings said. "If true, this is extremely troubling and raises serious concerns about his fitness to serve as acting Attorney General and whether he was properly vetted for this critical position."

Whitaker earned at least $9,375 from the company from October 2014, when he joined the advisory board, through February 2016, documents show.

In 2014, he agreed to appear in an advertisement for the company that Cooper said was going to air on CNN. Cooper offered to pay Whitaker for his role, though it's not clear if the advertisement ever was taped, or if Whitaker was ever paid for it.

In one 2015 email, Whitaker threatened "civil and criminal consequences" to a customer who had complained about the company's practices.

"I am a former United States Attorney for the Southern District of Iowa," Whitaker wrote. "Your emails and message from today seem to be an attempt at blackmail or extortion. ... I am assuming you understand that there could be civil and criminal consequences for you if that is in fact what you and your 'group' are doing."

Whitaker's resume has been scrutinized since his sudden installation as the acting head of the Department of Justice by President Donald Trump earlier this month, and critics of the White House have called him unqualified.

The Iowa native was a relative newcomer to Washington when he joined the Justice Department in 2017. Before that, he had run an ethics watchdog group in DC that he founded in 2014 to go after GOP-favored targets and appeared on CNN as a legal commentator.

An Iowa day care center that he owned for more than a decade and has listed as a qualifier of his "strong administrative experience" in interviews was cited for several state licensing violations and had its status temporarily downgraded in 2007 after an inspection report found several paperwork infractions and a lack of supplies for certain age groups, according to state records released this week.


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