Federal investigators last year looked into whether Matthew G. Whitaker, as an advisory board member of a Miami patent company accused of fraud by customers, played a role in trying to help the company silence critics by threatening legal action, according to two people with knowledge of the inquiry.
But he rebuffed an October 2017 subpoena from the Federal Trade Commission seeking his records related to the company, according to two people with knowledge of the case.
The FTC alleged in a 2017 complaint that the company bilked customers with fraudulent promises that it would help them market their invention. The FBI has also investigated World Patent Marketing, the Wall Street Journal reported Friday.
Whitaker was not named in the FTC complaint. World Patent Marketing, without admitting fault, settled the case for more than $25 million earlier this year, according to court documents.
Justice Department officials declined to comment on Whitaker’s handling of the FTC subpoena.
In a statement, Justice Department spokeswoman Kerri Kupec said, “Acting Attorney General Matt Whitaker has said he was not aware of any fraudulent activity. Any stories suggesting otherwise are false.”
Whitaker’s connection to World Patent Marketing came as a surprise to both senior Justice Department and White House officials, several officials said.
In their investigation, FTC staff had sought to learn more about the role played by the company’s advisory board members, including Whitaker, a former U.S. attorney whose role was prominently highlighted by the company in news releases and marketing materials.
The company said the board would help review inventors’ ideas to maximize their ability to get rich, according to promotional materials and former customers.
In truth, the board did not meet and rarely reviewed inventors’ ideas, according to court documents.
Whitaker, however, appeared to act at times as an attorney for the company, according to people with knowledge of his role.
Whitaker has told officials he served in a limited capacity as an outside legal adviser to the company and provided occasional advice when asked but that he was not part of the day-to-day operations, according to a Justice Department official, who spoke on the condition of anonymity because of the sensitivity of the case.
When the FTC subpoenaed Whitaker for his records related to the company in October 2017, he failed to provide any information, telling investigators that he was busy at that time moving from Iowa to Washington for a new job, according to people with knowledge of the case.
At the time, Whitaker was preparing to assume a new post: chief of staff to then-Attorney General Jeff Sessions.
Another advisory board member who also did legal work for the company, New York-based attorney Eric Creizman, said he also received a subpoena from the FTC and turned over records regarding the company.
“I thought you kind of had to respond to subpoenas,” he said. “If you’re busy, that doesn’t give you the right to avoid a subpoena.”
In the end, FTC investigators did not obtain evidence or internal communications showing Whitaker knew about the company’s phony promises to help investors patent and market their ideas, according to people with knowledge of the case.
This week, court receiver Jonathan Perlman, who oversaw details of the settlement, told The Washington Post that he has “no reason to believe that [Whitaker] knew of any of the wrongdoing.”
Within a few months of issuing the subpoena to Whitaker, the FTC began settlement discussions with World Patent Marketing and its chief executive, Scott Cooper.
On Friday, the Wall Street Journal reported that the FBI had opened a criminal investigation into World Patent Marketing, publishing an email that one victim of the company had received from a victim specialist for the bureau.
The July 2017 email indicated that the FBI was investigating the matter at that time, along with the U.S. Postal Inspection Service, and invited the person to call a hotline to discuss their experiences with the company.
Spokesmen for the U.S. attorney’s office in Miami and the FBI’s Miami Field Office declined to comment.
In the probe of the company, FTC investigators concluded World Patent Marketing actively “suppressed” complaints about the company through “threats, intimidation and gag clauses,” according to a news release by the agency.
They noted that Cooper used the threat of legal action as a cudgel to prevent customers from posting negative reviews online or complaining to the Better Business Bureau.
One customer who persisted with filing a complaint with the bureau was sent an email by one of Cooper’s lawyers accusing her of engaging in activity that could subject her to a “federal extortion charge,” noting the felony is punishable by two years in prison, according to the FTC complaint.
Neither Cooper nor his current attorney responded to requests for comment.
In one August 2015 email contained in court filings, Whitaker threatened one of the company’s critics, emphasizing that he was a former U.S. attorney.
In response to a man who had complained to Cooper about the company and threatened to file a complaint with the Better Business Bureau. Whitaker warned “there could be serious and criminal consequences” if he proceeded. Whitaker noted his previous role as the top federal prosecutor in southern Iowa and included an image of his law firm’s logo.
Four days after Whitaker’s email, the company filed a lawsuit against the man in New York, alleging he had defamed Cooper and attempted to extort him. The company’s suit noted that Whitaker had intervened in the matter at Cooper’s personal request.
The lawsuit was settled out of court in 2016.
Alice Crites, Devlin Barrett and Matt Zapotosky contributed to this report.