25 Nov LabMD CEO Speaks About FTC Legal Battle

Michael was interviewed, drop by the post and listen to the interview here

After seven contentious years, LabMD won a major victory in its legal battle with the Federal Trade Commission. But CEO Michael Daugherty says his recent triumph could be short-lived, and he’s hoping – long term – that he case shines a new light on FTC’s data security enforcement practices.


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23 Nov What are they saying about Michael and LabMD’s win?

Here’s a selection of quotes from Michael and LabMD’s win against the FTC.



Screen Shot 2015-11-23 at 10.00.23 AMThe Wall Street Journal: “The Federal Trade Commission’s Data-Security Enforcement Efforts Have Received A Setback—At The Hands Of The Commission’s Own In-House Judge. Administrative Law Judge D. Michael Chappell late Friday dismissed a long-running and sometimes bitter case involving LabMD, a former medical testing  company the FTC accused of failing to provide reasonable or appropriate cybersecurity protections for patient data.”(Brent Kendall, “Federal Trade Commission Loses Data Security Ruling,”



Screen Shot 2015-11-23 at 10.23.03 AM“In A Data Security Enforcement Action That Some Have Characterized As A Modern Version Of David Vs. Goliath, David Won Today, And The FTC Lost.It was an enforcement action that the FTC never should have commenced, as I’ve argued repeatedly, and today’s loss may actually make future enforcement actions more difficult for them as the standard for demonstrating likelihood of substantial injury has now been addressed in this ruling.”(Dissent, “FTC V. LabMD Ruling Issued: FTC Loses Data Security Enforcement Case,”Databreaches.Net, 11/13/15)



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21 Nov Michael Daugherty CEO of LabMD speaks for the first time after landmark FTC Ruling


Reblogged from here

Michael Daugherty Founder President and CEO of LabMD speaks to Government and IT Business Leaders for the first time after landmark court ruling at November 2015 GTRA Council Meeting.


GTRA November 17 2015 – Founder President and CEO of LabMD and author Michael Daugherty discussed his major win against the Federal Trade Commission at GTRA’s SecureGOV summit yesterday. After seven years of litigation court battles and testimonials ALJ ruled in favor of LabMD determining that the FTC failed to provide substantial evidence of any theft-related or emotional harm in the aftermath of an alleged security breach.


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28 Sep Closing Argument: The FTC dismisses their behavior as irrelevant


On September 16, 2015, closing arguments were held in FTC Administrative court in Washington, DC.

This is the court Congress created over a century ago. They allowed this court to be subject to FTC rules. Rules that are stacked way in the FTC’s favor. And because Congress created the beast there is very little the courts can do about what goes down here.

When you read the transcript you will immediately note the judge going after the FTC. You’ll note his frustration as he grapples with the fact that the FTC argues that their behavior before they sued LabMD is irrelevant.

Working with thieves, not cooperating with a congressional investigation, not verifying evidence, refusing to tell the court or the world what standards and rules exist for cybersecurity compliance, destroying a medical facility, allowing hearsay, recusing a commissioner, speaking to the press, knowingly relying on tainted evidence and still moving forward, and helping create a third party shell company to deceive the public….none of this matters.

At least until they want to use some of it to lie about LabMD.

And because they write the rules, stack the deck, and lie to win….they just might just get away with it. Morality and truth isn’t on the table here. Only shredded reality. Please think hard if this is who you want our government regulating cybersecurity.

The FTC IS CHOCKED FULL OF LAWYERS who don’t care what carnage they wreak on the backs of consumers.

Our cyberdefences are way down and that’s due to their bully idiocy.  Enjoy the show…but their tactics will not create a safer world.

May 5, 2015 PUBLIC Final Trial Transcript

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17 Sep New Comic Strip Highlights The Story Of How Washington Caused A Successful Small Business To Close

Screen shot 2013-11-06 at 8.39.52 PM


Comic debuts as LabMD makes final arguments in its years-long legal battle against the Federal Trade Commission



WASHINGTON – Cause of Action, a nonpartisan strategic oversight group committed to ensuring that government decision-making is open, honest, and fair, is releasing a comic strip today outlining the case of LabMD vs. the Federal Trade Commission (FTC).


Click here to view the full comic strip.


The FTC’s complaint against LabMD, a small, but successful cancer detection facility based in Georgia, relied on faulty allegations made by Tiversa, Inc., a data security company with a direct financial interest in FTC enforcement action against LabMD and others.


The toll of the lawsuit eventually destroyed LabMD, which is making closing arguments in the case today.


Cause of Action Executive Director Daniel Epstein issued the following statement:


“The comic is funny, but the sad reality is that this comic outlines a common example of what happens when the government colludes with crony companies to target the little guy. What may seem like a complicated and convoluted legal case is actually a very simple case of cronyism and federal overreach at its worst.”


Cause of Action is a non-profit, nonpartisan government accountability organization that fights to protect economic opportunity when federal regulations, spending and cronyism threaten it. For more information,

FOR IMMEDIATE RELEASE: September 16, 2015

Media Contact: Geoff Holtzman | | 703-405-3511


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22 Jun The FTC Goes Whistling Past the Graveyard


The FTC has decided not to oppose LabMD’s request for a criminal investigation into Tiversa’s behavior…AS THEY SPIT IN THE FACE OF JUSTICE. They have enabled crime, ignored evidence, and are now sitting on the sidelines. These are hypocritical tyrants as they boast they are out to protect consumers. Their energy is being spent on keeping their incompetent and corrupt culture under wraps.

Not this time.

Look at the facts.

It’s unbelievable but sadly true.


LabMD – Mtn Referral 6 19 15

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10 May Bombshell Testimony as FTC Fails to Verify Evidence

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Grab your popcorn and turn off House of Cards because it doesn’t get better than this.

The testimony of former Tiversa employee Rick Wallace is bombshell transparent testimony.

It took over a year to get Rick on the stand with criminal immunity. This is no “he said she said” game, criminal immunity isn’t easily approved by the Justice Department, but the consistency and forensic evidence provided to Chairman Darreell Issa and the Justice Department must have done the trick.

Tsk Tsk Tsk, if the FTC had only verified evidence before embarking on their shameless seek and destroy fishing expedition.

Download it if you like…and grab a highlighter.

May 5, 2015 PUBLIC Final Trial Transcript

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07 May Whistleblower accuses cybersecurity company of extorting clients – CNN Money


As reported in CNN Money today by   @Jose_Pagliery

A cybersecurity company faked hacks and extorted clients to buy its services, according to an ex-employee.
In a federal court this week, Richard Wallace, a former investigator at cybersecurity company Tiversa, said the company routinely engaged in fraud — and mafia-style shakedowns.

To scare potential clients, Tiversa would typically make up fake data breaches, Wallace said. Then it pressured firms to pay up.
“Hire us or face the music,” Wallace said on Tuesday at a federal courtroom in Washington, D.C.

CNNMoney obtained a transcript of the hearing.

The results were disastrous for at least one company that stood up to Tiversa and refused to pay.

In 2010, Tiversa scammed LabMD, a cancer testing center in Atlanta, Wallace testified. Wallace said he tapped into LabMD’s computers and pulled the medical records.

The cybersecurity firm then alerted LabMD it had been hacked. Tiversa offered it emergency “incident response” cybersecurity services. After the lab refused the offer, Tiversa threatened to tip off federal regulators about the “data breach.”

When LabMD still refused, Tiversa let the Federal Trade Commission know about the “hack.”

The FTC went after the lab, giving the company a choice: sign a consent decree (basically a plea deal which means years of audits and a nasty public statement) or fight in court. The CEO of LabMD, Michael Daugherty, chose to fight, because a plea deal would have tarnished his reputation and killed the business anyway, he said.

Daugherty lost that battle in 2014, having run out of steam. The lawsuit killed LabMD, which was forced to fire its 40 employees last year.

“We were a small company,” he said. “It’s not like we had millions of dollars to fight this and tons of employees.”

“The fight with the government was psychological warfare,” he told CNNMoney. “There was reputation assassination. There was intimidation. We thought we were extorted. My staff and management team was demoralized. My VP left. My lawyer left.”

Daugherty launched a website and wrote a book about the ordeal. Cause of Action, a government watchdog group, picked up his case.

Wallace’s testimony casts doubt on the FTC’s case against LabMD. If Wallace is telling the truth, the FTC aggressively prosecuted a company based on bogus evidence.

The FTC declined to comment, citing an ongoing lawsuit against LabMD, which still hasn’t reached its conclusion.

LabMD wasn’t the first time Tiversa’s false hacks made national news, Wallace said. He claimed that Tiversa also made up information in 2009 pointing to Iran for supposedly stealing blueprints for President Obama’s helicopter, Marine One. That scare that led to several news stories published byNBC, Fox, CNET and others.

According to Wallace, Tiversa did this by using phony IP addresses — on the orders of Tiversa’s CEO, Bob Boback. The company, which works closely with law enforcement, would look up the Internet addresses that were used by known criminals or identity thieves, then claim that those IP addresses were sharing stolen files online. Wallace said it was a scare tactic that added “spread” to the supposed damage — and “wow factor.”

“So, to boil this down, you would make the data breach appear to be much worse than it actually had been?” FTC Administrative Judge Michael Chappell asked.

“That’s correct,” Wallace responded.

Tiversa denies Wallace’s allegations. On Thursday, Tiversa’s CEO told CNNMoney that the recent revelations were “baseless” and came from an ex-employee still angry for being fired.

“This is an overblown case of a terminated employee seeking revenge,” Boback said. “Tiversa has received multiple awards from law enforcement for our continued efforts to help support them in cyber activities.”

Tiversa is a small cybersecurity consultancy based in Pittsburgh. Its board members include several highly-decorated experts in the security and privacy fields, including the retired four-star U.S. Army General Wesley K. Clark (formerly NATO’s Supreme Allied Commander in Europe) and Larry Ponemon (founder of the Ponemon Institute, a pro-privacy think tank).

U.S. Rep. Darrell Issa, chairman of the House Oversight Committee, demanded last year that the FTC look into allegations of “corporate blackmail” by Tiversa. In a letter to the FTC in December, Issa noted that Tiversa assisted the FTC on data leak investigations of “nearly 100 companies.” This link potentially taints evidence in those cases too.

To see the original article, click HERE

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