A Modern Day Bonnie and Clyde—Former IP General Counsel and His Spouse Accused Of Racketeering, Theft In Alleged $5 Million Patent Search Billing Scheme

invoice paidMary and Jason Throne are not really Bonnie and Clyde. According to a recent lawsuit, however, Jason Throne, who worked for 20 years as a senior patent counsel for Hunter Douglas, and his wife Mary, carried out a fifteen-year fraudulent patent search billing scheme that might have impressed the notorious bank-robbing duo of days yonder. And in the process of allegedly bilking Mr. Thrones’ employer out of millions of dollars in bogus expenses, the Thrones accomplished their theft without firing a single shot. On the contrary, all they allegedly needed were a fax machine, a pen, and a post office box. Hunter Douglas, Inc. v. Jason T. Throne, et al., No. 14-cv-01807-RPM (D. Col.).

The lawsuit alleges that since 2001, Mr. Throne worked for Hunter Douglas as “Intellectual Property General Counsel.” The title reflected Mr. Throne’s supervisory authority over Hunter Douglas’ intellectual property portfolio. As its sole in-house dedicated patent counsel, Mr. Throne was an important and high-ranking member of the company’s legal department. Part of his responsibilities included overseeing routine patent searches, including “state of the art” patent searches, patent infringement searches, and patent validity searches.

The complaint alleges that beginning in 1999, Throne and his wife created a company called Patent Services Group Inc. (PSG), a purported patent search firm allegedly based in Maine. PSG was a ruse; it did no work and performed no services. Nevertheless, using his position within Hunter Douglas, Mr. Throne allegedly had PSG bill Hunter Douglas for monthly patent search services that were never performed.

Between 2000 and 2014, PSG billed Hunter Douglas on average between $30,000 and $40,000 per month, alleges the complaint. The lawsuit alleges that the Thrones would fax invoices addressed to Mr. Throne at Hunter Douglas purporting to be from PSG. After Mr. Throne received the PSG invoices, he would approve the invoices and submit them to accounting for payment.  For fifteen years, the alleged scam worked without a hitch.

The complaint alleges the couple rented a post office box in Colorado, where the Hunter Douglas payments were mailed. The Thrones would then periodically travel from Maine to Colorado to pick up the checks. Between 2000 and April 2014, annual payments from Hunter Douglas to PSG were substantial:

2000 – $285,272.87

2001 – $374,068.64

2002 – $346,373.38

2003 – $276,167.41

2004 – $250,357.52

2005 – $237,355.84

2006 – $272,180.09

2007 – $306,216.81

2008 – $253,893.55

2009 – $341,821.78

2010 – $402,663.67

2011 – $419,761.30

2012 – $444,723.94

2013 – $476,716.63

2014 – $153,572.66

Whether these alleged “earnings” were ever reported on any income tax returns is unclear. What is clear, however, is that the Thrones purchased, allegedly with their ill-gotten gains, a $2 million home in Maine, another home in Steamboat Springs, Colorado, various automobiles, and a boat.

The lawsuit alleges that in 2000, PSG billed $285,272.87 at a purported billing rate of $125 per hour. If that work really had been performed, it would have meant that PSG worked nearly 2,300 hours during that year performing patent search services solely for Hunter Douglas. In 2001, PSG billed $374,068.64 at a purported billing rate of $125 per hour, which would have worked out to 3,000 hours of work.  Why no red flags were raised is unclear.

It was not until late 2013 before anyone at Hunter Douglas took notice. A patent engineer started asking questions about the “astronomical” charges from PSG, the lawsuit states. The engineer said she had never heard of the company but was assured by Mr. Throne that it was a legitimate business which he had used for years. Eventually, Hunter Douglas figured out what was really happening, and on June 12, 2014, Mr. Throne was fired for cause.

The brazenness of the alleged conduct was apparantly enabled by the failure of the company to maintain any type of institutional oversight over Mr. Throne. Simply put, there were no checks or balances put in place, and Mr. Throne was given unfettered discretion to approve payments to PSG. According to the complaint, Throne was able to carry on this “business” without any written agreement that documented the business relationship between Hunter Douglas and PSG, without any itemized billing statements of PSG’s work, without any email traffic related to PSG, and without a single work file or report from PSG.

The complaint alleges claims for civil federal RICO violations, violations of the Colorado Organized Crime Control Act, and common law causes of action for conspiracy, civil theft, conversion, fraudulent concealment, fraudulent inducement, breach of contract, breach of fiduciary duty, and unjust enrichment. The case is just getting started, and the district court recently denied the Thrones’ motion for transfer to the District of Maine.

Obviously, the complaint is just a complaint. The Thrones’ story—whatever that may be—has yet to be told. Given the very serious nature of the allegations, it appears certain that criminal charges are forthcoming if they have not already been filed. Presumably, Mr. Throne, a registered patent attorney, will one day also have to answer to bar counsel, including the USPTO’s Office of Enrollment and Discipline. At this stage, if the allegations are proven, professional discipline is probably not too high on either Mary or Jason’s list of priorities.

2 thoughts on “A Modern Day Bonnie and Clyde—Former IP General Counsel and His Spouse Accused Of Racketeering, Theft In Alleged $5 Million Patent Search Billing Scheme”

  1. Pingback: Day of Reckoning Arrives For Thieving IP Attorney | IPethics & INsights

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