Michael J. Daugherty's Blog

 

031 – Resp in Op to MTD (1.21-cv-3525) by Mike Daugherty on Scribd

031 – Resp in Op to MTD (1.21-cv-3525) by Mike Daugherty on Scribd

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Government whistleblower and former CEO of a cancer detection laboratory Michael Daugherty discovered first-hand how the U.S. government has teamed with private enterprise and academia to attack American small business by surveilling networks and picking up Americans’ files. He will update his work on how privacy and security are practically non-existent in this digital age and what can be done about it.

To support Mike’s fight, donate at The Justice Society

 

Entrepreneur seeks to examine FBI’s role in shuttering of cancer research lab after lawsuit survives motion to dismiss
Reposted from Epoch Times article by Ken Silva / April 25, 2022 Updated: April 25, 2022

For more than a decade, LabMD owner Michael Daugherty told his story to anyone willing to listen: An allegedly rogue cybersecurity firm used FBI surveillance software in an attempt to extort him, before colluding with the Federal Trade Commission (FTC) in a malicious enforcement action that financially ruined his cancer research center.

Throughout that time, few people believed Daugherty’s narrative—until December 2019, when an Eleventh Circuit appeals court panel agreed he was the victim of an FTC-enabled shakedown scheme.

Armed with that judgment, the scorned business owner is now aiming to discover the FBI’s role in his lab’s destruction.

To that end, Daugherty said one of his lawsuits survived a motion to dismiss last week in Florida. The case is now in the discovery stage, giving Daugherty the ability to issue subpoenas and take depositions about the FBI’s role in the scandal, he said.

“It’s 2022, so people think this is over,” he told The Epoch Times. “In a big way, everything is just beginning.”

For its part, the cybersecurity firm tied to the scandal—Tiversa and its founder Robert Boback—have repeatedly denied allegations of wrongdoing. According to Boback, Daugherty has been hounding him for years with false accusations, including about his firm’s use of FBI software.

“Fortunately, the courts require facts, not narratives, and recognize that Daugherty has marketed a book about his version of the story,” Boback said. “I have no doubt that the Florida courts will see the same.”

The FTC and FBI declined to comment to The Epoch Times.

 Tiversa, the FBI, and LabMD

Daugherty never intended to spend his career uncovering a government scandal. In 2008, he had a thriving cancer research center serving more than 700,000 patients.

The same year, another business was on the rise.

Then-FBI Director Robert Mueller presents Tiversa founder Robert Boback with an award in 2013. (FBI/Screenshot by Epoch Times)

 

Cybersecurity provider Tiversa had recently worked for the FBI to investigate child pornography and other computer crimes—efforts that were awarded by then-FBI director Robert Mueller, as documented in a 2019 New Yorker profile.

Tiversa’s high-profile work attracted the attention of the FTC, which requested the firm to provide information about private companies’ data security practices. One of those firms ended up being Daugherty’s LabMD.

Tiversa founder Boback contacted Daugherty in 2008 with news that his firm found hundreds of leaked LabMD documents online. Boback told Daugherty his company’s data was compromised because a LabMD employee installed a file-sharing program called Limewire on her work computer.

However, Daugherty later discovered that Tiversa actually used proprietary FBI surveillance software to obtain his company’s data, he said.

“At some point during Tiversa’s engagement, [the FBI] delivered to four Tiversa employees proprietary software with enhanced internet search capabilities developed exclusively for the FBI and for national security purposes,” an ongoing Daugherty lawsuit says.

“Tiversa was instructed to use this software extensively to continue to search the internet for inculpatory materials reflecting child pornography, access the suspect’s computer systems, download the inculpatory files, and turn those files over to the FBI.”

According to Daugherty, Tiversa allegedly disregarded the FBI’s instructions and used its software to boost its private business.

“To the public, Tiversa presented itself as a legitimate cybersecurity business with extraordinarily powerful internet search capabilities,” his lawsuit says. “However, the tool they were using was the FBI’s.”

To this day, Tiversa founder Boback denies that his firm used FBI surveillance tools and continues to dispute the allegation in court.

According to Boback, most firms didn’t have proper cybersecurity practices in place in 2008, which is why their data was frequently breached by antiquated software such as Limewire.

“To put this in context, the LabMD file was found on the P2P (peer-to-peer) networks over 14 years ago, shortly after the very first version of the iPhone came out, and well before Tesla had a single production car on the road,” he told The Epoch Times.

“This was found when Barack Obama was a senator from Illinois. Many companies at that time had inadvertently exposed files on P2P networks during that time.”

Either way, Daugherty declined Boback’s offer to remedy the data breach at a rate of $475 an hour.

 FTC Opens Case Against LabMD

When Daugherty declined, Boback turned the file over to the FTC through a shell entity called the Privacy Institute to keep his illicit scheme hidden, according to Daugherty.

The FTC launched an investigation into LabMD in 2010, filing a formal complaint against the company in 2013 for allegedly shoddy data security practices.

Rather than settling with the FTC, as most companies do, Daugherty decided to contest the complaint.

Pressure mounted when Boback sued Daugherty in September 2013, claiming that Daugherty defamed him with accusations about extortion and collusion with federal government officials.

Embroiled in multiple legal and regulatory disputes, LabMD closed its doors in January 2014—something that haunts Daugherty to this day.

Federal Trade Commission seal is seen at a news conference at FTC headquarters in Washington, on July 24, 2019. (Yuri Gripas/Reuters)

 

“I still cannot get over the fact that this is the cancer detection center with 700,000 patients, and everyone sits around like, ‘Oh, that is terrible; what time’s coffee?’ You know, I mean, people do not understand. I think it is too terrifying,” Daugherty told The Epoch Times.

“I mean, if I said the word ‘hospital’ with 700,000 patients, they would freak out. But, you know, ‘cancer detection center’—they do not know what to do with it.”

With hope seemingly lost, Daugherty caught a break a few months later, in April 2014, when former Tiversa employee Rick Wallace came forward to blow the whistle on the firm’s allegedly nefarious activities.

“Rick Wallace called me as a whistleblower crying, saying he ruined my company and throwing himself on the mercy of the court,” Daugherty said. “He—it all came home to him—what he had done at the hands of Boback.”

Wallace testified in the FTC hearings about Tiversa’s attempted shakedown of LabMD and numerous other companies, also admitting to his company forging documents to make it appear as though LabMD’s patient-information file was found by four different IP addresses—and not hacked by Tiversa.

Wallace’s allegations received national attention, and, in June 2018, LabMD emerged victorious against the FTC.

But the win had little to do with Daugherty’s allegations. Rather, the Eleventh Circuit ruled at the time that the FTC’s enforcement action was too broad and lacked specifics.

For Daugherty, the technical regulatory aspects were of little concern, and he continued to fight the government—and Boback.

Then, Daugherty’s biggest break to date came in January 2020, when the Eleventh Circuit ordered the FTC to pay LabMD $873,000 in legal costs.

“Looking back at all that has transpired in this case, the FTC’s assertion that it had an ‘undisputed factual basis to investigate LabMD’ rings hollow. The FTC only received information about the [customer information file] because LabMD had rejected Tiversa’s shakedown attempt,” said a Special Master that the Eleventh Circuit commissioned for the case.

“The FTC knew, or should have known, how Tiversa was getting its leads on companies it was reporting and should have been suspicious when Tiversa relayed the [customer information file] surreptitiously.”

Daugherty said the ruling provided validation for him after being treated as a pariah in the legal community for years.

Boback, however, criticized the Special Master’s findings.

“The Special Master’s report had little to no input from Tiversa. Tiversa was not a party to that litigation and, therefore, was not able to cross-examine any witness to dispute any testimony,” he told The Epoch Times.

“Tiversa was not a part of any ‘shakedown’ or ‘extortion’ as Daugherty has claimed over the years.”

 Suing the FTC, Probing the FBI

Unsatisfied with his hard-fought victory, Daugherty saw the Eleventh Circuit judgment as a springboard for further litigation.

Daugherty sued the FTC last November for $400 million in damages over its failed enforcement action against LabMD. He has also sought to revive a similar lawsuit against individual FTC employees involved in the scandal.

Those lawsuits have largely languished in court, and the LabMD founder admits that litigating against the US government is an uphill battle. Fortunately for him, he recently had a breakthrough in a lawsuit against Boback, he said.

The origin of the Florida lawsuit is a tale unto itself: In 2017, Daugherty began receiving anonymous emails from someone identifying themselves as “Insider” about Tiversa, the FBI, and the ongoing litigation.

Daugherty believes “Insider” was actually Boback trying to steer his litigation away from Tiversa. Daugherty provided this reporter with the emails, which show Insider accusing the Tiversa whistleblower, Wallace, of being a criminal himself.

The FBI seal is attached to a podium at a news conference at FBI Headquarters in Washington on June 14, 2018. (Mark Wilson/Getty Images)

 

According to the emails from Insider, the FBI had investigated Tiversa without finding wrongdoing. Because Wallace’s accusations about Tiversa were false, the FBI was possibly looking to investigate him, according to the emails.

“I believe, now more than even before, you should try to get Boback on your side,” says a May 2018 email from Insider. “If you lose because you were hitched to Wallace’s false accusations or a lack of focus, we’ve all lost, and the regulatory machine will run wild with endless fines and self-aggrandizement.”

Daugherty said he hired a private investigator, who was allegedly able to determine the emails came from Boback. Daugherty filed a complaint against Boback in Okaloosa County, Florida, circuit court last June for allegedly violating the Florida Communications Fraud Act with his anonymous emails.

Boback, in turn, filed a motion to dismiss in November.

Boback’s motion concentrated on the fact that Daugherty has filed six lawsuits in five jurisdictions against him.

“Daugherty is attempting to get a second bite at the apple by filing a claim under Florida law that arises from the same operative facts raised in the PA Abuse of Process Action,” Boback said in his motion. “Daugherty now alleges that Boback committed a fraud upon a Pennsylvania court and Daugherty, while the parties were engaged in litigation in Pennsylvania … by anonymously providing false information to Daugherty via email.”

The motion to dismiss further said Daugherty’s accusations were “incomprehensible, difficult to follow, do not provide a basis upon which Mr. Boback can formulate a proper response, and fail to state a claim for numerous reasons.”

But after the parties argued the motion on April 20, Circuit Judge John Brown declined to dismiss the case. Daugherty said this is his most significant legal victory since the 2020 Eleventh Circuit decision.

“Now, in this little case in Florida, we have survived and now have discovery. This is huge,” he said.

Along with advancing his litigation against Boback, Daugherty said the nature of the Insider emails means he may subpoena FBI officials in relation to their role in the Tiversa scandal.

However, he also knows the discovery will become contentious when he starts prying into the relationship between Tiversa and the FBI.

The FBI raided Tiversa in 2016, but the Department of Justice discontinued its investigation a year later—the same year the company was acquired by private intelligence firm Kroll, according to the New Yorker profile.

“You know the FBI is going to lie about this and try to cover this up until 2029,” Daugherty said. “This is a huge victory, but the war has just begun.”

 

To contribute to this fight, visit The Justice Society

21-86 Tsac Justice Society by Mike Daugherty on Scribd

China’s lack of transparency has slowed the development of better testing and the ultimate goal of developing a vaccine. Intelligence reports from five countries, including the United States, say China lied about human to human transmission and didn’t hand over virus samples to the West. FOX’s Trey Yingst speaks with Michael Daugherty, the President of LabMD on on how that information delay has hurt the development of a vaccine.

 

Listen to Michael’s 10 minute interview here

The post Global Pandemic: Slow Information Sharing has Delayed Answers appeared first on Michael J. Daugherty.

I founded LabMD, a Georgia medical testing lab, to specialize in diagnosing certain types of cancers.  I believe that the policymakers in Washington, D.C. need to be bold to stamp out cancer.  The government can play a role in promoting innovation in cancer diagnoses.

Innovation and American ingenuity will be the solution to cancer, because the United States has the best doctors, medical entrepreneurs, and researchers.  It can’t come soon enough, but there are some promising breakthroughs right now.  Chimeric Antigen Receptor T-Cell Therapy (CAR-T therapy) is an immunotherapy that has shown some promise in fighting cancer.

It is a sad truth that cancer disproportionately hits the elderly.  Many older Americans are on Medicare and don’t have deep pockets to put toward expensive new innovative therapies that may extend their lives.  Doctors throughout the nation have to make tough decisions every day with the elderly who suffer from cancer and other life-threatening diseases because of cost and the fact that Medicare does not cover all.

Those who are not elderly are unaware that Medicare does not cover everything older Americans need.  Kevin McKechnie of the Health Savings Accounts Council wrote on August 22, 2019 about the gaps in Medicare: “deductibles can be close to $2,000 combined, and other out-of-pocket costs in Medicare are often not a flat co-pay but a percentage of the charges, which makes it difficult to budget and plan ahead.”  He also pointed out that “Medicare does not cover certain important services, such as dental and vision care and hearing aids.”  These are people who have worked hard and deserve quality and inexpensive health care.

The Trump administration is at a crossroads, because it has the power to allow Medicare to cover CAR-T therapy.  These therapies change the blood cells of patients to battle cancer.  Pharmacy Times calls the treatment “Genetically Programming the Immune System to Attack Malignant Cells” and concluded that “gene-modified cell therapy, such as CAR T-cell therapy, is revolutionizing oncology, and this ‘living drug’ model is breathing life into the hopes of patients with cancer and caregivers.”  This therapy has had a large number of good outcomes and shows great promise in the elusive fight to find the cure for all cancers.

The current roadblock is the fact that many hospitals want to use this revolutionary new treatment, yet Medicare is not helping out rural hospitals to afford these treatments.  Because of this urban versus rural hospital disparity, many rural seniors have to travel to big-city hospitals to get Medicare to cover these treatments.  The Trump administration needs to focus on the reimbursement issues and fix them to help the elderly and poor who have cancer.

In 2018, Food and Drug commissioner Scott Gottlieb said, “There are places where I am extremely worried that if we don’t adapt the approach to reimbursement soon, we may foreclose therapeutic opportunities.”  That was a year and a half ago, yet the problem still remains.  Gottlieb pointed out that researchers have been “nimble” and “innovative” in the face of a government that is “ossified” in the procedures used to pay to fight rare disease and cancer.

Like the fight to deploy next-generation 5G technology to get rural areas broadband coverage, the same can be said of the CAR-T therapy.  According to Axios, “Chinese scientists are attempting to develop CAR-T therapies — which genetically engineer a patient’s own immune cells to destroy cancer cells — much faster and with a much cheaper price tag than those in the U.S.”  The Chinese don’t care as much about testing and oversight, so China will not have fully tested these therapies to make sure they do no harm.  The U.S. should not lose the race to deploy CAR-T therapy because of a broken Medicare reimbursements system.

It is time to work to cure cancer and save lives with the aid of Trump administration policies that will reward innovation and sufficiently reimburse hospitals and doctors who are on the cutting edge of deploying this new exciting therapy.

Posted Mar 5th, 2020 in American Thinker.

 

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Mike was on the Atlanta Small Business Network

Discover Why Your Business Should Take Data Security Seriously

Enjoy the clip below:

Video credit of https://www.myasbn.com/interviews/mic...

The post Talking about Data Security: How Michael Daugherty Learned the Hard Way appeared first on Michael J. Daugherty.

The Conflict between LabMD and the FTC

The FTC charged LabMD with a failure to maintain proper cyber security for our patient records. In the final FTC order, the FTC stated that LabMD “did not employ basic risk management techniques and safeguards such as automated intrusion detection systems, file integrity monitoring software or penetration testing, and failed to monitor traffic coming across its firewalls. We knew these charges were false. We had our networks monitored electronically, rather than the FTC’s definition of “monitored”, which they believe should be a person watching files and data move across the network.

We had our log files on auto delete after 10 days, so there was no proof of whether we did or did not have any of these things, but this is where the regulators made things up. They didn’t think we had the proper precautions in place, so they charged us with not having them in place. We never got our day in court to rebut these charges, because we were always in their court answering their many inquiries.

It is very difficult to fight back when you’re always only on defense answering to the power of the Federal Government. And you’re all alone.

If It Bleeds, It Leads. But If Not…

When you’re not famous or you’re not a Fortune 500 company, the media simply ignores you, and they don’t do any investigative work. If it’s not a front page story, you won’t get any media coverage. This lack of reporting was a constant problem because when you say “we didn’t do it”, they might report it, but they don’t believe you and neither does anyone else.

Your name is tarnished based on allegations made by the Federal Government, rather than proof that you did anything wrong. You are, by definition in the court of public opinion, guilty until proven innocent.

The Final Word in Our Favor: Too Late

After 8 years, the 11th circuit came out with their written ruling, but who reads court rulings except for those directly impacted? Furthermore, who reads the most important part of the ruling when it is in the Footnotes of the ruling? Below are the two footnotes from our victorious ruling over the FTC:

LabMD’s program included a compliance program, training, firewalls, network monitoring, password controls, access controls, antivirus and security related inspection.
The record is not clear but we assume the billing manager installed the peer to peer sharing app on her workstation computer.

Nobody Challenges the Federal Government

The truth was finally printed, ten years after the FTC began its systematic destruction of the company called LabMD. Federal regulators had lied and exploited our company. It was in the record – pictures of everything as proof of our actual policies and practices – but nobody reads the record. Nobody doubts the government. They just report what the government says, and the government agencies know this.

So, when the FTC judge says we had the proper systems, policies, and procedures in place, the FTC commissioners overturned it, and said the opposite, when it was all there all the time, in black and white, on the record.

It took years to get the court to say it. Meanwhile LabMD’s reputation is trashed and market doubt is created, while the lawyers make money off of the conflict. Nobody is paying attention any longer because it’s been 10 years, but we were right: we had all the policies, practices, and procedures that the government said we did not have.

LabMD was destroyed based on the false accusations of a Federal Government Agency.

 

The post Guilty Until Proven Innocent appeared first on Michael J. Daugherty.

Turning Point USA’s 4th annual Student Action Summit will be held December 19-22nd, 2018 in West Palm Beach, FL. 5,000 student activists between the ages of 15 and 25 will be invited to attend. Students who attend this retreat will hear from guest speakers, receive first-class activism and leadership training, and participate in a series of networking events with political leaders and top-tier activist organizations. Be part of the largest gathering of young, conservative students!

For a tentative full view of our schedule, please click here.

Student Tickets

At the bottom of this page is the student attendee application form. Upon receiving an invitation to the Summit, attendees will be able to purchase a $30 admission ticket with a heavily subsidized purchase of a hotel room. This includes three (3) nights of on-site lodging and admission to all general sessions and breakout sessions at the conference. Attendees are responsible for covering the cost of travel to/from West Palm Beach, FL and most meals during the conference. TPUSA will have several promotional events to advertise for our 2019 events. To purchase a ticket to one of the lunches, please click here.

Adult Tickets

If you are an adult, non-student, or parent wishing to attend our Student Action Summit, tickets are limited but we would love to have you! To purchase adult tickets follow the link provided here! All students please apply by filling out the application below. * Adult tickets only cover the cost of admission to the conference. TPUSA does not provide lodging or free meals with this ticket.*

VIP Adult Tickets

If you are an adult, non-student, or parent wishing to attend our Student Action Summit as a VIP, tickets are limited but we would love to have you! To purchase adult VIP tickets follow the link provided here! VIPs get special access to our SAS VIP Lounge and activities.

All students please apply by filling out the application below. We also have a limited number of student VIP tickets which are available to purchase upon acceptance.

The Student Action Summit is an invite-only event. Interested attendees must apply using the form below to receive an invitation to the Summit. TPUSA involvement is not required. If you’ve always wanted to be part of Turning Point USA, this is a great place to start!

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The LabMD data security case is anything but dull. An 8-year (and counting) fight with the U.S. Federal Trade Commission, a U.S. House of Representatives Oversight and Government Reform Committee investigation into allegations of government overreach and collusion, a key witness granted governmental immunity and multiple related civil lawsuits scattered around the country. And last week, LabMD – the target of an FTC data security enforcement action – sued a prominent former federal prosecutor over charges of ethics violations and unsealed its False Claims Act lawsuit against a cybersecurity firm, accusing it of falsifying data breaches as a way of landing new business. Over the weekend, LabMD filed a federal lawsuit against the former U.S. Attorney for the Western District of Pennsylvania for alleged violations of the Ethics in Government Act. The 27-page complaint, filed in Manhattan, accuses Mary Beth Buchanan, now in private practice, of participating in the LabMD enforcement action as counsel to a whistleblower, Richard E. Wallace, even though – the complaint charges – she participated “personally and substantially” in the case while the U.S. Attorney.

The complaint alleges that, while the top federal prosecutor in Pittsburgh, Buchanan authorized the FBI “to install a dedicated DSL line in Wallace’s home office … to access and use FBI proprietary surveillance software and equipment to search and seize evidence from the computers of child pornographers.” LabMD claims that “Wallace used the FBI surveillance software … authorized by Buchanan …. to search for, access and download from a LabMD billing computer … a 1,718-page LabMD file containing confidential health information.” That file is the basis of the FTC’s data security enforcement action against LabMD. Wallace was then the director of special operations for Tiversa Inc., a cybersecurity forensics firm.

The LabMD complaint further alleges that Buchanan was eventually retained by Wallace to represent him in the FTC action and the former U.S. attorney and her firm “direct[ed] Wallace not to testify about his prior work with Buchanan, and in particular, not to disclose his use of the FBI surveillance software and equipment authorized by Buchanan to hack into and take from a computer … a [LabMD] file containing confidential information on over 9,000 patients.”

The Ethics in Government Act – passed after the Watergate scandal – places restrictions on former government officials and either prohibits or restricts their participation in matters in which they were involved while in the government.

The LabMD case dates back to 2010 when the Commission began investigating the Atlanta-based cancer detection lab’s data security practices. After years of back-and-forth, an administrative law judge eventually tossed out the FTC’s case. The Commission reversed and reinstated the case. LabMD appealed to the U.S. Court of Appeals for the Eleventh Circuit. The matter was argued last year and a decision is expected soon. We have covered the LabMD case extensively on this blog.

Earlier last week, LabMD’s False Claims Act lawsuit against cybersecurity firm Tiversa was unsealed in New York federal court. The complaint accuses Tiversa of faking data breaches to lure in new clients including the U.S. government. Tiversa engaged in a scheme to defraud the United States Government out of “millions of dollars” by “fabricat[ing]” cybersecurity breaches in order to obtain lucrative federal contracts, according to the suit.

The complaint alleges that Tiversa searched “peer-to-peer” computer networks to locate and seize sensitive information from the federal government and used that information to falsely represent that there was a security breach when, in fact, it was easily remedied by removing the software from the infected computer. To incite urgency, Tiversa allegedly identified IP addresses of known criminals or locations where it would be perceived as problematic for the information to be found, and falsely claimed that it had found copies of the identified files at those addresses as well. According to the complaint, once Tiversa successfully induced the government entity into a contract, it continued to falsify alarming breaches in order to maintain the business relationship.

LabMD further contends that Tiversa employed the scheme on “public and private entities” nationwide, including the Department of Homeland Security, the Department of Defense and the Department of Education, to name only a few.

“It is a classic protection racket, updated for the digital age,” charges LabMD.

Reblogged from here

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