U.S. SEC Charges ‘Scan Patent Troll’ MPHJ Technology Investments with Seeking to ‘Cheat Small Business Owners’

Notorious “patent-troll” law firm MPHJ Technology Investments – which over the last several years has involved in extensive litigation related to its attempts to seek payment from various businesses’ use of MFPs’ scan function – is again in hot water. According to New York Law Journal, in May 2016, the U.S. Securities & Exchange Commission (SEC) filed a lawsuit against Jay Mac Rust in the Southern District of New York. Rust is a Texas-based lawyer who owns MPHJ Technology Investments. The SEC also included Christopher Breen, also a Texas-based lawyer, in the lawsuit.

According to New York Law Journal:

“The SEC alleges that Rust and Brenner perpetuated a fraud by Atlantic Rim Funding, a purported loan company operated by ‘a convicted felon and recidivist securities law violator’ who is identified in the complaint as “Individual X.” (The suit indicates that Individual X is serving a 20-year prison sentence following an unrelated criminal securities fraud prosecution.)

According to the SEC, Atlantic Rim engaged the two lawyers at different points to serve as escrow agents—Rust was allegedly involved from December 2010 to August 2011, while Brenner’s involvement spanned from September 2011 to March 2012. As part of the scheme, the two lawyers allegedly helped coax deposits out of small business owners that were looking for commercial loans through Atlantic Rim.”

According to the complaint, about 29 small businesses deposited about $13.8 million into the supposed escrow accounts, and victims of the alleged scheme lost more than $6 million.

Rust and Brenner are said to have assured the small businesses that their deposits would be held safe in escrow accounts and then used to purchase government-backed securities that Atlantic Rim said it planned to leverage to obtain commercial loans.

However, the SEC stated that the deposits were never used to secure loans, and that Rust and Brenner diverted the funds into investments in “risky derivatives and, in some instances, the lawyers allegedly stole money outright.” Rust is alleged to have taken $662,000, while Brenner allegedly took $595,000 to pay themselves and others.

“We allege that these attorneys betrayed the trust of their clients by luring them with promises of small business loans that never materialized. They continued to recruit new escrow clients to repay earlier clients and did everything but keep client money safe as they represented they would,” stated Andrew Calamari, director of the SEC’s New York regional office.

More Resources

• September 2015: Judge: Vermont Can Proceed with Case Against MPHJ for Allegedly Violating Consumer-Protection Laws
• August 2015: Big Win for Lexmark, Ricoh, Xerox, as Patent Board Finds Eight of MPHJ’s Scan Patents Unpatentable
• June 2015: Lexmark, Ricoh, Xerox ‘Blast’ MPHJ’s Claimed Scan Patents Before U.S. Patent & Trademark Office
• September 2014: Judge Dismisses MPHJ Technology’s Lawsuit Against Federal Trade Commission
• August 2014: Vermont AG Suit against ‘Patent Troll’ MPHJ Technology to Proceed
• November 2014: FTC: MPHJ Can Continue to Send Demand Letters for Use of Scan Patents
• March 2014: Ricoh, Xerox, Lexmark File Petition with U.S. Patent Office to Invalidate MPHJ’s Scan-Patent Claims
• January 2014: Judge: MPHJ Technology can Continue Sending Cease-and-Desist Scan-Patent Enforcement Letters
• January 2014: MPHJ Technology Files Scan-Patent Infringement Lawsuits against Four Companies, Including Coca-Cola and Dillard’s
• November 2013: MPHJ Sues First Company over Alleged Scan-to-email Patent Violations
• August 2013: In a First, MPHJ Technology Agrees to Stop Scan to eMail ‘Patent Trolling’ in a U.S. State
• June 2013: Canon Works Out Agreement with MPHJ to Shield Canon Customers from Scan to email Patent-Infringement Lawsuits
• May 2013: MPHJ Lawyers Defend Scan to Email Lawsuits: “We’re Not Trying to Harass People”
• May 2013: HP Joins the Fray Against MPHJ Technology, Says its Own Products Pre-Date Scan Patents