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TRADE SECRETS THEFT SAGA: Kidnapping Attempt of Compass Marketing CEO John White Causes Him to be Moved to Undisclosed Location Just Before Expected Ruling in RICO Case by Federal Judge
SEASON TWO – EPISODE #6
BY KEN ROSSIGNOL
THE CHESAPEAKE TODAY
ANNAPOLIS, MD. – An attempt to kidnap or harm John White as he walked near his office was a near miss as White became aware of a man following him on a side street in Eastport. White told THE CHESAPEAKE TODAY that he spotted a man following him and tried to step behind a large pole as he quickly moved around a corner. At that time, a van pulled up next to him, and White ran for his life, eluding both strangers in a scene straight out of a movie.
In a series of texts and telephone conversations, White confirmed that he had left Maryland as he was whisked away by his full-time security team. The security for White has been in place since he discovered an unauthorized life insurance policy on him placed by his brothers, St. Mary’s Orphans Court Judge Michael White and St. Mary’s Deputy States Attorney Daniel White. John White immediately filed a report with the Annapolis Police Department about the kidnapping attempt that took place on November 30, 2022. He provided a screenshot of the business card with the case number given to him by the police.
In the most recent courtroom development, defendant Daniel White, one of the defendants in the $400 million trade secrets and embezzlement action brought in Federal Court, Compass Marketing Inc. Vs. Flywheel Digital LLC filed in Virginia Court to dissolve the corporation that brought the litigation in Maryland District Federal Court last February.
Judge George L. Russell is expected to rule soon on whether or not to dismiss the suit as requested by the defendants – Michael White, George White, Daniel White, James C. “Chip” DiPaula, former chief of staff for Gov. Robert Ehrlich, and appointed by Gov. Larry Hogan to clean up the corruption of the University of Maryland Medical System. Also named as defendants are: Patrick Miller, Flywheel Digital and Ascential PLC.
DiPaula suddenly resigned from his post at the UMMS following the publication in THE CHESAPEAKE TODAY of his participation in the allegations about Flywheel Digital in the litigation brought by Compass Marketing.
Daniel White filed the action in Virginia himself, pro se, instead of using the law firm representing him in the federal case, which could be news to them.
Compass Marketing Inc is represented by some of the nation’s most formidable attorneys: Natalie Bennett and Michael J. Abelson, Steven Andrew Luxton, Rachel A. Ward, Troy S. Brown, and James J. Kritsas with Morgan Lewis and Bockius LLP; Mark Steven Brown, and former Deputy United States Attorney General Rod J. Rosenstein, Mark Steven Brown, of King & Spalding LLP.
DiPaula, Miller, Flywheel Digital, and Ascential are represented by Arthur Kutoroff, Rebecca J. Martin of Fried Frank Harris Shriver, and Jacobson LLP of New York. G. Stewart Webb Jr and Anthony J. Vitti Jr of Venable LLP also have filed to represent these defendants.
Daniel White is represented by noted Maryland attorney Bruce Bonsib of MarcusBonsib LLC of Greenbelt, Md, while George and Michael White are represented by Jeffrey M. Schwaber of Rockville, Md.
The most recent docket filings in the case are motions to dismiss filed on May 31 and June 1, 2022, by defendants Michael White, George White, and Daniel White.
Highlights of the response by Compass Marketing to the call to dismiss the litigation by the defendants Michael White, Daniel White, and George White are as follows:
The Ghost Employee Scheme:
Michael and Daniel White added several family members and friends to the Compass payroll and benefits programs, none of whom were employees. See id. ¶¶ 108-18. “Michael intentionally covered up these ghost employees in the Compass payroll system by creating fictitious spreadsheets and reports to provide to corporate leadership . . . . Michael’s falsified records prevented Compass from discovering the ghost employee scheme until Compass later initiated an investigation following the removal of Daniel and Michael from their roles at Compass.” Id. ¶ 118.
IRS Tax Check Scheme:
Michael White manipulated Compass’s payroll system so that millions of dollars were sent to the IRS as “tax withholding” payments for Michael White, Daniel White, and their spouses, with the intention that these individuals would later claim those overpayments from the IRS as “tax refunds.” Id. ¶¶ 119-25. This allowed Michael and Daniel White to embezzle millions of dollars from Compass, while concealing those sums in ordinary payments Compass made to the IRS each month, such that a reasonably diligent review of Compass’s accounting records would not have uncovered the malfeasance. See id.
The Shareholder Loan Scheme:
Michael and Daniel White embezzled more than $1 million in direct payments from Compass, which they disguised as principal and interest payments on shareholder loans they purportedly had made to the company. See id. ¶¶ 126-43. A reasonably diligent review of Compass’s accounting records would not have been sufficient to determine that these payments were fraudulent in nature, and not legitimate installment payments on outstanding debt. See id.
Personal Use of Company Credit Cards:
Compass issues American Express cards to its employees but uses a platform called “Expensables” to ensure that the cards are only used for legitimate business expenses. See id. ¶¶ 172-73. The employee responsible for reviewing and approving credit card charges was Michael White. See id. Michael White terminated the link between his and Daniel White’s corporate credit cards and Expensables so that Compass would not be able to learn that they had been using the company credit cards for personal expenses. See id. ¶¶ 174, 178.
Aiding and Abetting the Flywheel Defendants’ Theft of Trade Secrets and Unfairly Competing Enterprise:
In late 2015, when the Flywheel Defendants were building their competing business venture based on trade secrets and proprietary information stolen from Compass, Michael and Daniel White stole tens of thousands of dollars from Compass and transferred it to the Flywheel Defendants. See id. ¶¶ 202-08. The payments to the Flywheel Defendants were made as cashiers’ checks, using funds drawn from personal checking accounts, meaning they were unknown to Compass. See id. The theft of funds from Compass was disguised as a severance payment and was not paid directly to its intended recipients (Defendants DiPaula and Miller) but rather to an intermediary (Daniel White), meaning a reasonably diligent review of Compass’s accounting records would not have been sufficient to determine the improper nature of the transaction.