Washington, DC -- (ReleaseWire) -- 03/30/2015 --DAWN BENNETT: Michael Daugherty is president & CEO of LabMD, an Atlanta-based clinical and anatomic medical laboratory with a national base. His 2013 book The Devil Inside the Beltway: The Shocking Expose of the U.S. Government's Surveillance and Overreach into Cyber-security, Medicine, and Small Business, is a great story in which he uncovers and details an extraordinary government surveillance program that compromised national security and invaded the privacy of tens of millions of online users worldwide. The Devil Inside the Beltway begins with an aggressive, real-world security company, Tiversa, which has the retired General Wesley Clark on its advisory board, and they download the private health information of thousands of LabMD's patients, then campaign for LabMD to hire them. Michael, welcome to Financial Myth Busting.
DAUGHERTY: Good morning and welcome to my world.
BENNETT: Wow. You run a medical testing clinic called LabMD, and you are also a government whistleblower. Can you talk to my listeners about your story? What exactly happened? It sounds like the FTC is so underhanded.
DAUGHERTY: They are very underhanded and the way they get away with it is that they exploit our patriotism and the busyness of business people working on their careers and running their companies or medical facilities. So they wear you down and try to get you to sign, so you will make them go away, and you are under the illusion that all will be peaceful and wonderful. And a lot of companies do that and I don't begrudge companies that are in the sort of reality with a government which is so tough and abusive. It's the only way to survive.
Unfortunately, when you're a medical facility and you've got a company that's going to rip your reputation status with false allegations of losing patient information and what you do for business is diagnose cancer—and the government on their side playing with that, I had no choice but to fight. Now, I've enjoyed the fight. It's been very high priced. The company stopped operating a year ago as far as treating patients. But this is a very, very, very big deal and the book is very timely. I actually think a little bit ahead of its time. When this all started happening to me, which is 2008, there was no Snowden, there was no WikiLeaks, there was no Assange. People thought I was a little crazy to be saying these things. It was a new experience, and everyone completely believed it off the bat. Which is very sad.
BENNETT: So, Tiversa received $24 million from Homeland security?
DAUGHERTY: Well, they were working with Dartmouth and Dartmouth received the money, and they work behind the scenes and offer their technology to them and work with them. So they had the contract with Dartmouth since 2005. And they went out and they love the word 'monitor' instead of 'surveillance.'
And they did a press release about this and they monitored 4.5 million workstations worldwide and they said they were downloading 14 million files that were not music in this study; that they do 1.3 billion searches per day. And I just scratched my head when I wrote this thinking, "How is the private company allowed to this? And why are they sitting in front of Congress talking about it, acting like it is all OK, when they are coming in and taking my property?"
And yet, we were so ignorant five or six years ago about this. I was the lonely person out there just screaming. I wanted them to just go away. And they wouldn't go away. And when we wouldn't hire them they kicked this over to the Federal Trade Commission who then, shockingly, started investigating us. And I still want the Federal Trade Commission to go away. I mean, lawyers were charging us a fortune, but they were saying, "This is ridiculous. You have 40 employees, you diagnose cancer, you do good work. There's no proof that's out there. That's going to go away."
So that took us to the end of 2011 and it wouldn't go away. In 2013 they sued us and about 2011, when they started asking us to agree to be audited for twenty years at our own expense and they even put out a press release saying we agreed to this, which of course—you know, who pays attention to press releases, right? There is no one that's going to think that, because we've agreed to be audited for two decades by a government agency, that we are innocent of anything. So that was not happening. And these arrogant bureaucrats and these very dangerous lawyers, who, by the way, have extremely little technology experience. They're just on the hunt, went after us, and I wrote a book.
And the book really—I can tell you, folks, the power of the pen and the First Amendment. If you write it the right way and you don't sound like you are too far out there, and if you are very factual and professional. I wrote the book like a novel. I wanted to pull people into this story. There is humor and sadness and scary stuff, but it is written like a novel because I want to educate people about the realities of how the government is working.
The government we were taught about in the civic class in school stopped operating like that in the early twentieth century. These agencies are out of control and they play "gun to the head" negotiations with everybody and it's tough stuff. These are not good people and I think were realizing it now that as we see how they're playing the game in ObamaCare and the FTC and cyber security. All of this stuff's going on and nothing is getting better.
BENNETT: Has anyone been disciplined in response to your expose? Have people been fired? Has anyone been held accountable?
DAUGHERTY: Well, accountability is the last thing the government does quickly. It's moving in the right direction. Because I wrote the book, House Oversight started an investigation. Actually they didn't start because of the book, they started it because the book brought out someone from inside Tiversa who blew the whistle; it was talked about at Oversight for months before that. But that finally made it much bigger than just what happened to me. This has been happening to a lot of government agencies and corporations. Oversight put their foot down, started an investigation. I had to testify in front of Darrell Issa's full committee in July of last year. We got immunity from the Department of Justice for this whistleblower last November and the trial's starting again in May. What is terrifying, I mean, it's really disheartening to me—how much it's taken to get the attention of the media is unbelievable. And I am writing another book about what happened since they've sued me.
The book ends when the FTC sued me. What's happened since—how they bullied us, how they bullied internal employees of the company just by terrifying them with long depositions and alike, it's pretty amazing. And the pushback from the Left inside Congress and the head of the FTC sending communications to congressman's staff to try to mess up this hearing, was dumbfounding.
And the press's lack of attention. Because, honestly in all defense of everyone, this is so unbelievable that it's hard to believe it. But I've got it all in writing and I just keep telling the story. And because of what happened with the FTC I think we are all waking up to how these people behave. And it is time to put our foot down because we're getting worse off in the last phase because we are not better off.
BENNETT: What happened at the end of your case?
DAUGHERTY: The case isn't done. When the whistleblower came in, he pleaded the Fifth and the judge immediately stopped. He waited for Congress to see if this gentleman can get the immunity to testify. And the Democrats would not allow a vote to happen in Oversight. For the committee to give immunity you have to have two thirds of the votes and Elijah Cummings would not let it come to a vote. There was no way the Democrats would allow it, even though they saw forensic evidence, which is truly terrifying. But they are protecting the brand. 'The government is all good', instead of holding it accountable. And they are so used to not being held accountable.
What goes on behind the scenes is, unfortunately, believable but terrible. Now, because Congress failed, the Justice Department intervened and did award immunity, but not until November. So the case was was stalled last June and we thought we would settle for Christmas and now we are not starting until May because there is all sorts of things that are going on. And FTC is really screaming.
But the headline really is this: the Federal Trade Commission came after a company without any verified evidence. Our file was never out there all over cyberspace like they alleged. But they are such zealots, they are such powerful people without specific knowledge of what they are trying to regulate, and they are so used to not being held accountable. People do not push back. When you don't hold people accountable, they get lazy and abusive. It is not a big surprise. But accountability is coming and it's because the truth will come.
The thing is, they just wear you down. I mean, this has taken 7 years of my life so far and it has destroyed my organization and destroyed really my income and all the people lost their jobs. We had several hundred thousand patients that we treated, couple of hundred doctors who worked with us. And they created such a huge scary shift. Again, the size of their behavior is so hard to take in and I'm just starting to get asked to speak. It just takes a while.
BENNETT: Your company LabMD is not open anymore, is that correct?
DAUGHERTY: Correct. They drained us dry. And honestly, I knew it was going to happen no matter what, because they wouldn't leave us alone. The fact of the matter in the human condition really is that we don't like controversy. We want to believe the government is good. And in my book, I write a chapter called "The Endless Climb Up Judicial Mountain" because to climb justice mountain is extremely expensive and very time consuming and before you get to the verdict, while you're in the middle of it, people stay quiet. They are not sure if you are guilty or not. They don't want to get involved and it's really quite a lonely existence especially when you actually done nothing wrong.
And it's so hard to believe. We don't want to believe our government these days would do this. But the agencies do. The federal agencies that are regulatory like the FTC and FCC, absolutely. This is their playbook and it has just got so extreme, and only now we are starting to really see it.
BENNETT: Do you think it's extreme because of the Obama administration?
DAUGHERTY: I think the Obama administration put a lot of gas on the fire and they put people in positions of power that really were the zealots. But it has been going on for a long time. The FTC just celebrated one hundredth anniversary. It didn't start with the Obama administration, but they turned up the heat when they came. And these people are just not accountable.
For example, the people he put in power at the Federal Trade Commission, these are people—yes, they come out of high-end law schools. They work for the government. They have that adolescent attitude about business from undergrad and law school days, and don't have any real world experience with it. They want to have a great resumes and peak career experiences in their government work and that means that they are going to go after someone and save the day.
And they go after business, they go after healthcare—they go after whoever their area is. If they don't grab someone, they are not considered successful. These people used to be reined in pretty much, but it's gotten extremely out of hand. So we have bureaucrats running medicine that have no medical background; we've got the FCC, the FTC, and Homeland security fighting over who is going to run the Internet. Very few of them work in technology. So this is why we have all these great pie-in-the-sky theories that come out of our politicians mouths right now on how this is going to help things.
But when the reality strikes, it's a mess, and we are having massive cyber-security breaches all the time. Attacking companies instead of helping them does nothing but create a worse situation. There's no way that we had any intention of having our patients' information vulnerable and it wasn't out there. And they started a whole case for years saying what? The amount of work I had to go to prove that's wrong has been terrifying. But we have to realize if we don't push back, it's going to get worse. It's not going to go away just by ignoring it and it's gotten so big that you have to take a stand.
BENNETT: This is an expensive stand to take. How are you funding it?
DAUGHERTY: Actually, again, the power of the pen. I mean, it's terrible frankly that a little guy like me has got so much going on. Cause of Action is a government oversight law firm that's a nonprofit in Washington D.C. and they started covering all the legal expenses the second the FTC sued me because when you are a medical facility, we have been really heavy in medical malpractice insurance. You don't get so heavy in general liability. And this is an expensive case. In that case against the FTC specifically, we were kind of underinsured. And just who thought that elephant is going to show up on the porch. We have been fortunate because this is, again, a much bigger deal. The FTC has gotten fifty companies to break and sign consent degrees. Only Wyndham and LabMD are fighting them. But I am the only one that really has the soap opera. Wyndham—they are fighting a legal interpretation in jurisdiction and they've got a lot of money to do it and they are doing a great job. My story is more about how this group operates and what happens with zealots there. They cheat to win.
BENNETT: Oh yes. It's not the only agency in the government that's doing that, unfortunately. But you said that you think there is going to be progress. What are you seeing that's actually making you think that there might be a change?
DAUGHERTY: Well, when this whistleblower testifies and then a lot of things that I can't say right now will come out about what they've done. The court of public opinion will be slamming their reputation. I think the media will finally pay attention, because we're getting it. We are getting it.
BENNETT: You can find Michael Daugherty's book The Devil Inside the Beltway on Amazon.com. Thank you, Michael.
All data sourced through Bloomberg
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About Dawn Bennett
Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com
She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.
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