COURT NEWS: Suit alleges that St. Mary’s Judge, Prosecutor embezzled Millions, committed Federal Tax Fraud, civil Rico violations, mail fraud, and theft in roles as executives in federal litigation; alleges that IT director attempted extortion and stole key domain and technology

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THE CHESAPEAKE TODAY – ALL CRIME ALL THE TIME – Copyright 2020

UPDATE: ASK THE SUPERINTENDENT OF THE MARYLAND STATE POLICE:

Colonel Woodrow Jones, Superintendent of the Maryland State Police. THE CHESAPEAKE TODAY photo

ANSWER FROM THE SUPERINTENDENT:

LT George White is currently assigned to Forestville Barrack. Many of the allegations have been investigated and subsequently determined to be unfounded. MSP is reviewing the matter to determine whether an additional investigation is warranted.

NOTICE TO OUR READERS: On February 25, 2022, Maryland State Police Captain Robert Iman, Commander of the Washington Troop, consisting of the State Police Barracks around the Washington metro area and supervisor of Lt. George White made inquiries to THE CHESAPEAKE TODAY as to the sources of information into the story below. Capt. Iman was directed to the public record as referenced in the news story.

Concierge George and his $28,000 tip from the taxpayers for his gambling joint

Lt.-George-White-Commander-of-Forestville-Barrack-of-Maryland-State-Police

UPDATE: ASK THE CHIEF JUDGE:

Judge Getty
Court of Appeals
Annapolis, Maryland

Dear Judge Getty;
Please provide a comment on this article in regards to two Maryland Judges who are mentioned in the article. Specifically, will either or both of the Judges be suspended pending an investigation?

Chief Judge Getty with Gov. Larry Hogan

Response from Judge Getty

THE CHIEF JUDGE OF MARYLAND COURT OF APPEALS has been asked to respond to whether or not Montgomery County Circuit Court Judge Rachel McGuckian, appointed to the court by Maryland Governor Larry Hogan, will be suspended pending an investigation by the Maryland Judicial Disabilities Commission due to her alleged involvement with the theft of millions of dollars, tax fraud, stolen trade secrets and other criminal acts of those involved in the federal lawsuit filed by Compass Marketing. McGuckian is noted in the legal action in the following:

Defendant Flywheel is a Maryland limited liability company licensed to do business in the State of Maryland. Its principal place of business is located at 1801 Porter St., Suite 300, Baltimore, MD 21230. Flywheel is an eCommerce marketing company built using Compass’s stolen trade secrets and proprietary information and know-how, as well as built upon information and belief in whole or in part on funds embezzled from Compass. DiPaula and Miller incorporated Flywheel on September 3, 2014, the day before they both resigned from Compass. On information and belief, since its formation through the present, Flywheel’s Board of Governors and/or registered agents have been comprised by individual defendants DiPaula and Miller, Ascential CEO Duncan Painter, and Ascential CFO Mandy Gradden, as well as non-party individuals Dayna Acevedo, Shiwen Xu, and Rachel McGuckian.

Rachel McGuckian, Platinum Sponsor Chip DiPaula, Raeanne Hytone, Platinum Sponsor Susan C. Schwab, Steve Ceurvorst, and Tom Paese #SigGala— at Embassy of Italy.

Filing a Complaint about either Judge Michael White or Judge Rachel McGuckian

To file a complaint with the Commission, you should first review the topics on this webpage titled Frequently Asked Questions and Rules/Statutes Governing the Commission, as well as the detailed instructions on the Complaint Form. CLICK HERE TO ACCESS THE COMPLAINT FORM

Maryland Gov. Larry Hogan. THE CHESAPEAKE TODAY photo

Feb. 25, 2022: No response from Gov. Larry Hogan on when investigations into the conduct of James C. “Chip” DiPaula Jr, Judge Michael White, St. Mary’s Deputy States Attorney Daniel White or Maryland State Police Lt. George White will get underway.

UPDATE: ASK THE GOVERNOR

The following email was sent to the press secretary of Governor Larry Hogan, Shareece Churchill requesting an answer to these questions

Governor Larry Hogan
Annapolis, Maryland
1. Are you going to require James C. DiPaula Jr. to take a suspended period from his post on the University of Maryland Medical System Board of Directors as the Office of The State Prosecutor and or other officials investigate the actions of those involved with the alleged criminal conduct directed against Compass Marketing, or any other crimes, including Orphans Court Judge Michael White and St. Mary’s Deputy States Attorney Daniel White?
2.  Will the Maryland State Police investigate allegations that Lt. George White attempted to extort Compass Marketing?

COURT NEWS: Suit alleges that St. Mary’s Judge, Prosecutor embezzled Millions, committed Federal Tax Fraud, civil Rico violations, mail fraud, and theft in roles as executives in federal litigation; alleges that IT director attempted extortion and stole key domain and technology

By Ken Rossignol

THE CHESAPEAKE TODAY

News Analysis

BALTIMORE, MD. –

When a family firm is rendered asunder by allegations and lawsuits with claims of criminal conduct, the drama usually doesn’t involve parties that hold public office.  In the case of Compass Marketing, a successful firm involved in the creation of retail and e-commerce for large national firms, a breakup detailed in a federal lawsuit may quickly turn into criminal charges that can affect the defendants; a Judge, a prosecutor, and a police officer.

John-White-CEO-of-Compass-Marketing-plaintiff-in-federal-litigation-against-his-brothers-and-others

Litigation filed in the United States District Court for the District of Maryland alleges that a St. Mary’s County prosecutor and a judge, both brothers, engaged in criminal conduct of theft of trade secrets, federal tax fraud, ghost employees, embezzlement of millions of dollars, and attempted extortion involved with an Annapolis firm which both have been associated with at the same time they have been public officials.

St. Mary’s County Circuit Courthouse Leonardtown. THE CHESAPEAKE TODAY

 St. Mary’s Orphans Court Judge Michael White and Deputy States Attorney Daniel White are two of five individuals and two firms named as defendants in the action.  

Lt.-George-White-Commander-of-Forestville-Barrack-of-Maryland-State-Police

A third defendant is the son of Judge Michael White, Maryland State Trooper George White, who was the full-time IT director of the plaintiff in addition to working full time as a trooper. George White is accused of attempting to extort the plaintiff and then making off with the property of the plaintiff.

Chief Judge Michael White of the St. Mary’s Orphans Court

Honorable Michael White, of Mechanicsville, is the Chief Judge of the St. Mary’s Orphans Court and is a retired Maryland State Police detective who was elected to the position of Orphans Court Judge in 2014 and reelected in 2018.  Judge White is currently seeking another term in the 2022 election.

Deputy-States-Attorney-Daniel-White.

Deputy States Attorney Daniel White, of Leonardtown, was appointed as an Assistant States Attorney by St. Mary’s States Attorney Richard Fritz in 2002.  According to the website of the state’s attorney office; White is a graduate of the George Washington University School of Law and he prosecutes violent felonies and firearms violations. In court documents, Daniel White claimed that he could not sit for scheduled depositions due to having to conduct felony trials in St. Mary’s Circuit Court.

DAN WHITE PAID FOR NON-RELATIVE JULIE WHITE’S VACATION

The action filed in Federal Court by one White against his White brothers and their alleged conspirators contains allegations of fake loans and even titillating facts of possible office romance.

The lawsuit alleges that a former colleague of Dan White, Julie White,  a subordinate in the states attorney’s office since 2006, took a vacation that was paid for by Dan White. Julie is not a relative of Dan White and no longer works in the office.  On January 22, 2020, Julie White was appointed as an Assistant United States Attorney in West Virginia.

James-C.-Chip-DiPaula-was-chief-of-staff-to-Maryland-Gov.-Robert-Ehrlich and presided over the University of Maryland Medical System’s bonanza of scandal.

Another defendant in the significant charges of the explosive lawsuit involves James C. Chip DiPaula. DiPaula managed the successful campaign of Congressman Robert Ehrlich to become governor of Maryland in 2002, winning the election. Governor Ehrlich appointed DiPaula his budget director and then his chief of staff. Following the election of 2006 when Martin O’Malley beat Ehrlich in the election for governor, DiPaula played a key role in passing the same-sex marriage bill in the Maryland General Assembly and was interviewed in the Washington Post about the battle to uphold the new law.

DiPaula is chairman of the University of Maryland Medical Systems Board that became involved in one of the most outrageous scams of public money in decades, a very low standard in the State of Maryland’s famed ‘Culture of Corruption’.

Baltimore City Police Police Commissioner De Sousa and Mayor Pugh. He is in jail following his conviction of failing to file federal taxes over a span of several years; she is in prison.

 The board was funneling hundreds of thousands of dollars to the crooked mayor of Baltimore, Catherine Pugh, who was convicted and sent to prison and involved in the self-dealing scandal involving the awarding of contracts that were never put out for bid.

DiPaula told the Baltimore Sun that he knew nothing about it.

The Sun reported: Board chairman James “Chip” DiPaula Jr. and vice-chairman Alexander Williams Jr., who also are nominated to return to the board, similarly denied knowledge of the insider deals.

“It was completely unknown to the board,” DiPaula said. “Management did not bring that to the board.”

According to the UMMS website, DiPaula is still the chair of the Board of Directors, appointed by Gov. Larry Hogan to a term ending in 2026.

The Sun reported in 2020 that the UMMS was racked in scandal involving public money divvied out to members of the board of directors.

University of Maryland Medical System paid $115M to companies tied to 27 board members, state review reveals

COMMENTS FROM THE ACCUSED

Judge Michael White has been requested to provide his response to this lawsuit or have his attorney provide a comment. When and if the response is received, the response will be provided here for our readers.

Maryland State Police Superintendent Col. Woodrow Jones was asked to comment on the status of Trooper George White who is accused of attempted extortion in the lawsuit. 

The spokeswoman for the Maryland State Police, Media Director Elena Wendell-Russo responded: “Lt. George White is the Barrack Commander at Forestville. There are no open internal investigations in reference to Lt. White.”

St. Mary’s County States Attorney Richard Fritz has been requested to provide a comment on the accusations against the Deputy States Attorney Daniel White.

Bruce Marcus, attorney for Daniel White, has been requested to provide a response and comment to the lawsuit and this article. When Marcus provides a reply, it will be provided here for the information of our readers.

HIGHLIGHTS

Highlights of the allegations in the legal action filed in Federal Court are listed below with the entire lawsuit contained in a PDF file posted at the end of this story. 

The ALLEGATIONS

  • Embezzlement of millions
  • Theft of intellectual Property and Company Trade Secrets
  • Committing tax fraud, wire fraud and money laundering.
  • Attempted Extortion
  • Anonymous campaign
  • RICO conspiracy

THE PARTIES

14. Plaintiff Compass is incorporated in the Commonwealth of Virginia and is a foreign corporation registered with the state of Maryland. Its principal place of business is located at 105 Eastern Avenue, Annapolis, Maryland, 21403. At all relevant times herein, Compass has been in good standing with the Commonwealth of Virginia and the State of Maryland.

15. Defendant Flywheel is a Maryland limited liability company licensed to do business in the State of Maryland. Its principal place of business is located at 1801 Porter St., Suite 300, Baltimore, MD 21230.

Flywheel is an eCommerce marketing company built using Compass’s stolen trade secrets and proprietary information and know-how, as well as built upon information and belief in whole or in part on funds embezzled from Compass. DiPaula and Miller incorporated Flywheel on September 3, 2014, the day before they both resigned from Compass.

On information and belief, since its formation through the present, Flywheel’s Board of Governors and/or registered agents have been comprised by individual defendants DiPaula and Miller, Ascential CEO Duncan Painter, and Ascential CFO Mandy Gradden, as well as non-party individuals Dayna Acevedo, Shiwen Xu, and Rachel McGuckian.

16. Defendant Chip DiPaula is an individual and resident of Baltimore County, Maryland. DiPaula served as Senior Vice President of the Compass International Division from March 1, 2010, to 2012, and as Executive Vice President managing the Compass eCommerce team from 2012 until he resigned from the company on September 4, 2014. While still employed at Compass, DiPaula founded Flywheel with Patrick Miller.

17. Defendant Patrick Miller is an individual and resident of Anne Arundel County, Maryland. Miller was Vice President of Digital Strategy for the Compass eCommerce team from January 31, 2011, until he resigned from the company on September 4, 2014. While still employed at Compass, Miller founded Flywheel with DiPaula.

Deputy-States-Attorney-Daniel-White.

18. Defendant Daniel White is an individual and resident of St. Mary’s County, Maryland. Daniel served as Compass legal counsel and acted as its General Counsel from 1998 to November 23, 2018, and was a member of the Compass Board of Directors from 1998 to February 14, 2019. Daniel currently owns 150 shares of Compass, which represents a 16.6% ownership stake in the company. Daniel is the brother of Compass’s Executive Chairman John White, and of individual Defendant Michael White.

19. Defendant Michael White is an individual and a resident of St. Mary’s County, Maryland. Michael was Vice President of Operations and Comptroller of Compass from 2011 to November 23, 2018, and was a member of the Compass Board of Directors from 2011 until February 14, 2019. Michael currently owns 150 shares of Compass, which represents a 16.6 ownership stake in the company.

20. Defendant George White is an individual and resident of Charles County, Maryland. George worked at Compass managing Compass’s IT systems from January 1, 2004, to April 29, 2019. George is the son of individual defendant Michael White.

21. Defendant Ascential is a public limited company in the United Kingdom, with its principal place of business at The Prow, 1 Wilder Walk, London, England W1B 5AP. Ascential operates offices internationally and throughout the United States, including in Maryland. Ascential acquired Flywheel on or around November 1, 2018.

1. This lawsuit seeks redress for extensive, pervasive, wrongful, and actionable misconduct committed by each of the named defendants, including years of covert trade secret theft, that has inflicted grievous financial harm on Compass. Individual Defendants DiPaula and Miller are former Compass executives who were given the opportunity to run the best-in-class electronic commerce (“eCommerce”) marketing arm for Compass. DiPaula and Miller were trusted with, and permitted to immerse themselves in, Compass’s most sensitive trade secret information and proprietary business know how that Compass had been developing for more than a decade. Unbeknownst to Compass, DiPaula and Miller secretly secured embezzled Compass funds from former Compass directors Daniel White and Michael White, and launched and thereafter operated a competing company, Defendant Flywheel. Flywheel has competed with Compass ever since and has done so by misusing stolen trade secrets and proprietary information while poaching Compass’s clients and leveraging myriad former Compass eCommerce employees. Defendants DiPaula, Miller, Michael White, and Daniel White have conspired to conceal their misappropriation and cover up their actionable misconduct. Their acts in furtherance of this conspiracy continue to present, as set forth in detail in this Complaint.

#10 of Complaint: British firm paid $400 million for firm alleged to have been built on stolen secrets of Annapolis firm

In just a few years, the startup Flywheel turned its theft into a company that was acquired by the United Kingdom-based, international conglomerate Ascential. Ascential either knew or should have known of the genesis of Flywheel’s brazen origins, or it acted in reckless disregard of facts that it should have investigated in connection with its due diligence, or it took a “see no evil, hear no evil, focus on financial upside” approach to the acquisition. Ascential rewarded the theft and misconduct by paying up to $400 million to acquire Flywheel, with an upfront payment of $60 million and the possibility of as much as an additional $340 million based on contingencies tied to aggressive growth performance metrics. The structure and payment terms of the Ascential acquisition of Flywheel created a strong financial incentive and motive for Flywheel to continue its fraudulent concealment and its poaching of Compass clients. Ascential has had to restate its estimated acquisition cost because of the extraordinary growth of Flywheel since the purchase, based on core intellectual property stolen from Compass. Further, Ascential has pivoted its 100-year-old company, according to its most recent interim report, to focus virtually exclusively on the CPG and eCommerce markets, since its acquisition of Flywheel.

93. As Vice President of Operations and Comptroller of Compass, Michael was the sole administrator of Compass’s payroll and served as the sole trustee of the company’s 401(k) plan. His responsibilities included overseeing the bookkeeping and financial accounts. Michael also worked with Daniel and an outside CPA to prepare and file Compass’s annual income tax returns. Accordingly, Daniel and Michael each owed a fiduciary duty to Compass.

94. On October 25, 2018, only five days before the November 1, 2018 publicly announced sale of Flywheel to Ascential, Michael White sent out a company-wide email disparaging John White, and suggesting that the Compass Board of Directors and others would be meeting soon to address issues. On November 20 and 21, 2018, Michael White and DiPaula exchanged phone calls with one another. On November 23, 2018, John White fired Daniel and Michael, though each remained on the Compass Board of Directors and each maintained a minority ownership interest in Compass.

95. On February 14, 2019, the Compass Board of Directors held a special meeting and removed Daniel and Michael from the Board. They were replaced by Jerry Cain and Todd Mitchell.

96. After the termination and removal, Compass hired criminal investigator Ron Bateman (“Bateman”) to investigate Daniel’s and Michael’s conduct as Compass officers. Compass also hired Luis Fernandez (“Fernandez”), a certified forensic fraud examiner as its new Controller. As part of his onboarding, Fernandez examined Compass’s books and records.

97. The investigation and examination uncovered 14 years of substantial mail and wire fraud, money laundering, embezzlement, and attempted extortion perpetrated by Daniel and Michael.

Daniel and Michael exploited Compass and used Company funds to finance a life of luxury for themselves and their immediate family members.

Lawsuit

98. It is clear from the schemes discovered and detailed below that Daniel and Michael exploited Compass and used Company funds to finance a life of luxury for themselves and their immediate family members. Daniel and Michael repeatedly violated their fiduciary duties to Compass and elevated their own wants and conveniences above what was in the best interest of Compass, its clients, and its many employees. After Compass removed Daniel and Michael as directors and employees, Daniel and Michael orchestrated a far-reaching cover-up of their wrongdoing, and they set out on a revenge campaign intended to destroy the Company and punish their brother John for removing them from Compass.  

JUDGE WHITE EMBEZZLED MILLIONS IN IRS TAX SCHEME

123. In 2018, Michael processed $270,000 in 100% tax withholding payments to himself, and $230,000 to Daniel.

124. Daniel and Michael also used the IRS Tax Check Scheme to benefit their families. In 2017, Michael processed $20,000 in 100% tax withholding payments for Debra and another $20,000 for Kelly, although neither was ever employed by Compass.

125. As a result of the IRS Tax Check Scheme, Michael and Daniel knowingly funneled money through the IRS through payroll disbursements that far exceeded their normal federal payroll tax withholdings to obtain large refunds, thereby embezzling millions of dollars from Compass.

PROSECUTOR WHITE ENGAGED IN CREATING GHOST EMPLOYEE TO BENEFIT HIS DAUGHTER  

142. In an e-mail dated August 21, 2017, that Compass recently discovered in connection with its internal investigation into this wrongdoing, Daniel White wrote the following to Michael White regarding setting up Emile White as a ghost employee: “Anything she makes can come out of my BS loan.”

Check-issued-out-of-Compass-account-for-65000-to-Daniel-White-

204. On December 1, 2015, nearly 15 months after DiPaula and Miller resigned from Compass, Michael White secretly issued to Daniel White a check from Compass’s M&T bank account for $65,000. The memo portion of the check read “Final Payments to James DiPaula and Patrick Miller.”

READ THE COMPLETE COMPLAINT

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