The U.S. Department of Justice is Hurting Small Businesses

The Institute for Complexity Management

Making the complex simple

March 25, 2016


A Message from the Executive Director:

The U.S. Department of Justice is Hurting Small Businesses

I am a 30 year veteran of the USG [United States Government] bureaucracy. I worked in nuclear safeguards, security, and intelligence jobs for the first 15 years of my career with the Department of Energy (DOE) and headed up technology transfer for Defense Programs for the last half of my career. I was assigned by Secretary Watkins to work for Senator Domenici on Capitol Hill writing technology transfer and non-proliferation legislation.  After that, I returned from Capitol Hill to DOE to manage a multimillion dollar program of non-proliferation cooperation with the former Soviet Union. I retired from DOE in 2004.

After my retirement I had a dream. I wanted to help people. I decided to start-up my own small business to revolutionize how the nation protects the food supply. I wanted to shift things in the direction of preventing food poisoning before the fact instead of just reacting to the consequences. I cleaned out my bank account of every penny I had to start my business.  In the end, I would invest nearly six million dollars of my own cash and sweat equity to build the most advanced predictive analytic food safety software of its kind.  Others in the company also made great sacrifices as we worked together to try and start-up the new business.

I was also a doctoral student at GWU [The George Washington University] during this time. My doctoral dissertation involved predictive analytics and protecting the safety of the food supply.  After I graduated, I received a patent for the ideas in my dissertation.  Then I learned that the Food and Drug Administration (FDA) plagiarized my doctoral dissertation and used it to write their National Food Protection Plan.  I also learned that FDA was using my patents and trade secrets to duplicate my food risk management tools.

The matter was turned over to the Department of Health and Human Services (DHHS) Office of General Counsel (OGC) for an investigation. The investigation was riddled with conflicts of interest and turned out to be a legal defense of the FDA’s own misdeeds and nothing but a cover-up. I filed a complaint with the National Ombudsman for Small Business who was powerless to protect us from retaliation, and my company and personnel were “blackballed” by the FDA for ever daring to file a complaint against them. The National Ombudsman for Small Business (NOSB) at the Small Business Administration (SBA) finally referred the matter to the Inspector General (IG) over at DHHS, but only after I sent a series of highly embarrassing e-mail blasts to his national advisory committee stating that the NOSB was not living up to their promises.  But the IG did absolutely nothing.

Seeing that no actions were being taken by anyone, I wrote up a comprehensive investigation showing widespread USG criminal RICO [Racketeer Influenced and Corrupt Organizations Act] and gave the report to the Federal Bureau of Investigation (FBI).  I asked the FBI to investigate FDA and its contractors who were involved in misappropriating my technology. I filed FOIA requests with both DHHS and FDA only to learn from our own internal tracking software that FDA destroyed over 600 e-mails showing that they blackballed me and my company throughout the rest of the USG and the food industry.  I reported these criminal activities to the Office of Government Information Services (OGIS) of the National Archives, the General Accounting Office (GAO), the Federal Trade Commission (FTC), the Office of Government Ethics (OGE) and anyone else I could think of but everyone said they did not have the jurisdiction to investigate.

I reported the criminal activities of DHHS and the FDA broadly on Capitol Hill, only to be told go away and stop being a pest since Congress does not get involved in “legal matters.” After a while, congressional offices just hung up the phone on me or stopped returning my phone calls altogether. In one case, the head of the whistleblower hotline of a major committee on the Hill hung up the phone in my ear and told me to get lost.  Everyone thought I was just some type of disgruntled nut case.

Nonetheless, I continued to report the criminal RICO activities of DHHS and the FDA to the Department of Justice (DOJ) including the Antitrust Division (ATD), U.S. Attorneys (USA), the Office of Inspector General (OIG) and the Frederick and Baltimore Maryland Offices of the FBI. I never received even a single meaningful response to any of my letters. The FBI never responded at all to my letters asking for an investigation.  They too must have concluded that I was just another nut case. It wasn’t until my congressman (Chris Van Hollen) requested a report directly from Director Comey that Mike Gavin, head of the FBI’s Criminal Division, reported back to him that the FBI does not have the time or the resources to investigate matters like mine.

With my business now in ruins and with no one willing to help me, I decided to dedicate my retirement years trying to help others.  I started two new divisions of my non-profit organization, the Institute for Complexity Management (ICM).  One division is called the John Galt Program for Investigative Studies (JGPIS) where I help other victims of USG predatory and anticompetitive conduct. The other is called the National School Safety Collaboratory (NSSC) that is dedicated to using my technology to improve the safety of our kids at school.

Then this last summer, I applied for another grant–this time through the DOJ’s Office of Justice Programs (OJP).  The proposal I submitted was sweeping and called for the installation of an advanced predictive analytic school safety software at schools across the country.  An important part of the proposal called for the development of simple school security and safety self-assessment applications.  My grant proposal was rejected.  Six months after my proposal was submitted to DOJ, I got the word from a friend at the Maryland Emergency Management Agency (MEMA) that he had just seen my software at DOJ’s JUSTNET website and on You-Tube, being given away to schools across the country.  I later learned that Lockheed Martin was the DOJ’s prime contractor for their JUSTNET program. This is important because before we filed for the OJP grant, we filed a separate but very similar grant proposal to the philanthropic arm of Lockheed Martin.

So I wrote a letter to OJP requesting an investigation and asking that the software be immediately pulled off the web. But when OJP told me over the telephone that they would be referring the resolution of the matter to their legal counsel we immediately wrote to the DOJ-Inspector General (IG) requesting an independent investigation to avoid the legal conflicts of interest, i.e., an organization investigating its own possible misdeeds, we had already experienced in our prior battles with the FDA. Four months later, I finally received a letter from the Office of General Counsel at OJP saying that the matter was referred to them by the DOJ-IG for resolution.  I immediately wrote them a letter telling them that there was a conflict of interest and to please “re-refer” the matter right back to the DOJ-IG for an independent investigation.  I haven’t heard a word from anyone at the Justice Department since. But the sad fact of the matter is that the duplicate software containing our trade secrets was never taken off the web and its competitive value to ICM is now completely gone.  The damage is already done.

Since I established JGPIS, I have picked up two significant cases similar in many ways to my own situation. The first case was actually referred to me by a USG employee who told me about a small company that was being prevented from commercializing their technology by unfair USG competition.  The small company was called Demodulation. The Demodulation case involves a USG RICO enterprise involving the Department of Energy (DOE), the Department of Defense, the National Security Agency and others within New York State, the State University of New York (SUNY) and large corporations operating in New York.  In this case, the USG misappropriated the small company’s patented ideas and trade secrets under cover of the state secrets privilege and worked with other members of the enterprise to duplicate their products for intelligence and military uses.

The second case involved a small business entrepreneur who developed a new type of drinking system to protect American troops from nuclear, chemical, and biological contamination on the battlefield. His patented ideas and products were misappropriated by the U.S. Army in a case that involves both U.S. Army counsel and judicial misconduct.

There are thousands of other small businesses out there who are the victims of USG RICO enterprises that engage in similar criminal conduct.  But because my resources are so limited (we are a 501 c3 nonprofit charitable organization) I have been overwhelmed just working on these two cases.  I spend all of my time and much of my own money trying to help these two victims.  I consider them to be the “poster children” of USG anticompetitive conduct against small businesses in America. Based on the evidence in these two cases, and my own experience, it is now evident that the problems facing small businesses are systemic and based on the failure of the DOJ and the FBI to equally enforce the law. Instead of preventing the problem they have become key members of a USG RICO scheme designed to steal the intellectual property of small business entrepreneurs.  But without enforcement of criminal RICO laws there can be no deterrence.  Without deterrence agencies of our own government just keep doing “it” over and over again.

We are now working to expand our services and have just started a new fundraising campaign to help other businesses who have become the victims of USG anticompetitive conduct, and expose the problem.  As part of this new initiative we have started the Small Business Legal Defense Network (SBLDN) that allows us to refer worthy cases to the right lawyers to help them protect their rights in ways that entrepreneurs can afford.  So, if you can spare even a dime to help us please take the time to visit our website and donate whatever you can to JGPIS.  Every dollar you give to JGPIS goes directly to our efforts to help small business victims.

John's Signature

John Hnatio, EdD, PhD

Executive Director

Investigating Complex Issues