When will ‘scam’ invention marketing firm’s victims start getting refunds?

Nov. 28--By some measures, Tim Adams was one of the lucky ones.

The Northern California resident took his invention idea -- mud flaps with LED directional lights embedded in them -- to the Miami Beach-based World Patent Marketing, just a few months before the company was shut down by the Federal Trade Commission in March 2017.

Now -- made aware of the company's demise by recent news that acting U.S. Attorney General Matthew Whitaker served on the company's advisory board -- Adams is awaiting a partial refund, which would amount to a fraction of the $2,500 he spent. The FTC expects to distribute partial refunds to about 1,500 victims in 2019, after founder and CEO Scott Cooper finishes paying the FTC a $976,330 restitution settlement, including $702,213 from the sale of his Miami Beach home.

FTC spokeswoman Betsy Lordan said victims don't need to get in touch with the agency to be eligible for a reimbursement. Eligible customers will be identified from World Patent Marketing's records, then reimbursed on a pro rata basis depending on their losses.

Many victims lost much more money than Adams, according to FTC court filings that called the operation a "scam." Among them was Chris Seaver, a Pembroke Pines-based surgeon who gave the company $300,000 to market a cellphone case with an attached net that people could use to hold earphones, keys or other accessories.

In all, the FTC said 1,504 victims spent $26 million with the company between November 2014 and March 2017. But after the operation was shut down, investigators found just $349,022 in the company's bank accounts. The rest, according to court-appointed receiver Jonathan Perlman, had gone to expenses, including salaries for employees, leases, equipment and personal spending by Cooper, including a $3.2 million Miami Beach home purchased in April 2016.

Adams said he only recently found out that the FTC shut down the company from news reports that President Donald Trump had appointed Whitaker to serve as the nation's acting attorney general. Adams said he has not yet been contacted by the FTC about his loss.

In late 2018, World Patent Marketing charged him $2,500 for its "Patent and Invention Intelligence Report," which predicted that his idea would have "excellent" popularity and a $24.2 million value if brought to market. The company urged him to spend more to further develop the idea.

"They did an algorithm and milked me for some money, and then wanted to milk me for some more," Adams said via telephone on Monday.

But Adams resisted, figuring he would have a better shot to sell his concept by going to trade shows and personally demonstrating to potential clients how brake lights and turn signals embedded in mud flaps could prevent crashes in low-visibility conditions such as fog and snowstorms.

He still hopes to develop the product and continues to speak with officials of trucking companies and other fleet-based operations, he said. Down the road, he envisions introducing a version for passenger vehicles.

Adams was one of several inventors who recently contacted the Sun Sentinel after the Whitaker appointment put the World Patent Marketing story back in the spotlight. The inventors asked whom they should contact to ensure they would be among the reimbursement recipients. One woman, who didn't give her name, said she lost $12,000 trying to market a machine that affixes hair weaves to users' heads.

The settlement agreement Cooper signed on May 16 OK'ed release of $78,670 in frozen World Patent Marketing funds, and required Cooper to pay $976,330 in cash.

Perlman said he wasn't sure how Cooper planned to pay the remaining $274,117. Failure to pay the agreed-upon amount by Dec. 16 would be a violation of the settlement agreement and render the $26 million judgement in the case "immediately due," the agreement states.

Lordan did not respond to a question asking how much money is expected to be divided among victims after expenses are withdrawn from the $1,055,000 the FTC expects to collect. If the money were divided equally, each victim would receive about $701.

Perlman said he continues to explore other ways to recover money for the victims, including asking former members of the company's advisory board to return any stipends they might have been paid for agreeing to serve on the board.

He said he sent Whitaker a letter asking him to return the $9,375 he was paid but "Whitaker has not, as of yet, returned that money," Perlman said.

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