WASHINGTON – Federal investigators last year looked into whether Matthew 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.
Whitaker, named this week by President Donald Trump as acting attorney general, occasionally served as an outside legal adviser to the company, World Patent Marketing, writing a series of letters on its behalf, according to people familiar with his role.
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 inventions. 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."
Trump, meanwhile, distanced himself from Whitaker amid intensifying scrutiny of his controversial legal views and business entanglements.
With the White House scrambling to manage public examination of Whitaker's background and resistance to his leadership within the Justice Department, Trump sought to douse speculation that he had installed the partisan loyalist to curtail the probe of Russian interference in the 2016 presidential campaign.
Trump insisted that he had not spoken with Whitaker about the investigation being led by special counsel Robert Mueller. Defiant and testy as he departed the White House, Trump claimed four times that he did not personally know Whitaker, who had been serving as Sessions' chief of staff. "I don't know Matt Whitaker," Trump told reporters, adding that he knew him only by reputation.
That contradicted Trump's earlier comment to Fox in which he said he knew Whitaker, calling him a "great guy.''
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.
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.
At the time, Whitaker was preparing to assume a new post: chief of staff to Attorney General Jeff Sessions.
Another advisory board member who did legal work for the company, New York 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.
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.