Acting AG Matthew Whitaker on advisory board of company accused of scam

Last Updated Nov 10, 2018 11:03 AM EST

The nation's new acting attorney general served as a paid adviser to a Florida company shut down by a federal judge earlier this year and fined almost $26 million for allegedly running an invention-promotion scam. 

Matthew G. Whitaker, the acting attorney general and a former U.S. attorney in Iowa, joined the advisory board of World Patent Marketing in the fall of 2014. His involvement with the now-defunct company is attracting attention after President Trump picked him to fill in for Jeff Sessions, forced out as attorney general earlier this week.

Indeed, the FBI's Miami office has been conducting a criminal investigation of World Patent Marketing during the period it paid Whitaker as an adviser while it allegedly scammed millions of dollars from customers, the Wall Street Journal reported Friday. Whitaker oversees the FBI in his newly elevated role as acting attorney general.  

Closed down by a federal judge in May, World Patent Marketing "bilked thousands of consumers out of millions of dollars" by promising inventors lucrative patent agreements, according to a complaint filed by the Federal Trade Commission in March 2017. The company did not admit or deny wrongdoing in the settlement.

Consumers were told by World Patent Marketing that they had to spend about $3,000 for a "Global Invention Royalty Analysis" to start the process of obtaining a patent. After the initial payment, customers were then offered varying packages that ran from $8,000 to about $65,000, the FTC complaint said.

Once consumers paid the company money, they were typically ignored, then threatened or scolded when they requested information or asked for their money back, according to the agency. 

"Defendants and their lawyers have threatened consumers with lawsuits and even criminal charges and imprisonment for making any kind of complaint," the FTC 's complaint said.

In at least one court documented case, the company used Whitaker's prior role as a federal prosecutor to rebuke customers.

"World Patent Marketing has become a trusted partner to many inventors that believe in the American Dream," Whitaker stated in a news release touting his new role. "I have always admired World Patent Marketing and its innovative products and dynamic leadership team.  It's an honor to join the World Patent Marketing board."

"As a former U.S. attorney, I would only align myself with a first class organization," Whitaker stated in another news release issued two months later by the company. 

The following year, footage uploaded to Vimeo shows Whitaker evaluating an invention designed to curb razor-blade cuts.

A spokesperson for the Justice Department told CBS MoneyWatch: "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 the patent company was first reported by the Miami News Times.