Inspiring People

Author, Michael Daughtery

Michael Daughtery

Michael Daugherty is President & CEO of LabMD, an Atlanta-based clinical and anatomic medical laboratory with a national client base. LabMD specializes in analysis and diagnosis of blood, urine, and tissue specimens for cancers, micro-organisms and tumor markers. Mike founded LabMD in 1996 after 14 years in surgical device sales with U.S. Surgical Corp. and Mentor Corporation. Outside of LabMD, Michael enjoys playing tennis, traveling, and flying his Cirrus SR22 Turbo single engine aircraft. He is a member of the University of Michigan Alumni Association, the Atlanta Aero Club, and the Cirrus Owners and Pilots Association. Born and raised in Detroit, Michigan, Mike holds a BA in Economics from the University of Michigan-Ann Arbor, and has resided in Atlanta since 1987, when he moved to Atlanta from Portland, Oregon.

Most of us would find it hard to imagine being targeted by the government for seemingly no good reason. Michael Daugherty was a successful businessman, going about an ordinary day when a single phone call came that would change the course of his life. The Devil Inside the Beltway is Michael's detailed account of exactly what happened to him and what he decided to do about it.


CLICK HERE to listen to Dana's interview with Michael Daughtery

DR: Right off the bat I just want to share that the further I go into your story the question that remains in my head is: "Why? Why did this happen to you? So, that is the backdrop for me but I want to start out by asking you: What happened?

MD: I wrote the book The Devil Inside the Beltway, like a narrative and not fiction because I want people to get into the story and I didn't want to be a political yeller and I didn't want it to be a pundit's book of just screaming and yelling. I wanted to transcend the political divide because I think this is a story that is not party driven. So, I had to go learn how to do that.

I learned how to do that from talking to Lisa Cron at UCLA and people at the San Francisco Writer's Conference and all these people I learned from in this sort of new craft which I approached like a science because I have been in science since I got out of college, and because, ultimately I wanted people to understand at the time how fluky this was and how it continually just unfolded into one shock after another so that I too was going, "WHY", and that combined with, "You've got to be kidding me", and just feeling the need to educate people.

I learned so much about myself during this time. I'm fifty-three and I was raised in Detroit by two people that were police officers when they met. My dad was a police officer my entire childhood and my whole life I was around those people and I think (I can only hypothesize), I think that's what gave me a huge sense of moral outrage when something was wrong. This was a government system that was really, really wrong and I was really bugged by it but I didn't want to be seen as like an idealist or conspiracy theorist or something like that. It was difficult and sort of a delicate balance. So, I thought that I just have to tell the facts and show people and not tell them and then let people make up their own mind.

Luckily, so much of this story, which is the big unusual part, is completely provable because this is dealing with the government. I have all these written letters that are open to the public. I have testimony where people can't deny that they said that because it's under oath. It was just dying to be told and so that's really one of the reasons why I did it.

Really the story became so much bigger than me. I kept discovering things and realizing that I really wasn't the first instance. The beginning of the book is just when I became involved but something much bigger had been going on since about six years before, and that was that the government was wondering why so many national security secrets were being leaked out by seemingly good people.

Most people are good. I don't believe most people are bad. Most people at the NSA are good. Most people all over the place, I think, are good. We don't do stupid things, whether they are good or not, of just letting national security secrets just leak out of our work stations so, "what the heck's going on"?

Congress had assigned the Federal Trade Commission to really stop peer-to-peer software from leaking out information. And, hindsight being 20/20, I think the Federal Trade Commission did a horrendously bad job of it. In the mean time, I also learned that some of these government agencies don't communicate with each other. Homeland Security was also wondering what was going on and paid Dartmouth $24 million to find out and to work on a study and then Dartmouth started using the technology of this company called Tiversa in Pennsylvania. They said they can monitor all these files in real-time like no one else can. They talk about how they are three times stronger than Google and there's just all of this macho power talk going on about how large and in charge they are on monitoring and finding all of these files...

DR: Mike, can I back up for a little bit here?

MD: Sure.

DR: You were just a successful businessman going about your daily business, running your company, LabMD down in Atlanta, Georgia...

MD: That's right...

DR: And life was okay, right?

MD: It was good! I mean, it was great!

DR: And then what happened?

MD: And so, I come in right at that point where we are oblivious to all that I just said, and the phone rings and it's the head of Tiversa saying, "Hi. We've got your file. We found it on a peer-to-peer network."

He sent it to us and we discovered that it had 9,000 patients in it. And he said, "Would you like to hire us to remediate"?

It's 2008 and I mean and we had pounded in our heads how important patient data security is. We think we are really good at this so we were like, "What?!". We immediately began calling IT people and the lawyers and the advice of those people was, "This is not okay" because he wouldn't tell us anything unless we hired him and that's what was bothering everybody.

Luckily, right off the bat and I mean off the bat, I just had a sense that this was not okay so I did not talk to him. So I had all of his communications in writing, which are in the book. I certainly didn't know I would be writing a book then but I needed documentation because I had long learned that the written word means way more than the verbal because that's just a whole Pandora's box of "I don't remember". "I didn't say that". Having everything in writing is the end of the "misunderstandings" or the memory failures.

So, we were having a great day and then suddenly we're in a panic and we start wondering what the heck is this? When we got the file and saw it was a billing file. We knew exactly that it had been the billing department and that it was an overall accounts receivable file which means it had to be the managers computer..."We know what this is", and we knew where it was. She had software on her workstation to listen to music. Now, to this day we don't know if that's how it got out but she shouldn't have had it there. It was against company policy. She was mortified. Even if she had it there, she was listening to music. She was not leaking files, but we jumped on that workstation like a fumbled football and immediately killed that software program.

Hindsight being 20/20, it was the right thing to do, I guess, but I would have liked to have kept it on there for analysis but we were just panic-stricken. The door was open and we wanted to slam it shut.

DR: Yes.

MD: Once we made sure everything was clean inside, then we went outside and we were looking out into the world for the file. In the meantime he's emailing us saying, "Are you still interested?" and "Did you see this going on in security"? "Did you see this article in the Post?" My IT people had been working from home, looking for the file and had seen people searching for it which was very creepy because we were the ones that were searching for it.

At that point we felt like this was like a movie. We thought this was weird. So, we just told him to go away and he just wouldn't go away and finally I told him to call our lawyer. Later n 2008, his lawyer called our lawyer and said "We are going to give this to the Federal Trade Commission". He was very accusatory about how we were bad in our security. {I thought} "Who are you to even know what is going on down here"!

The Devil Inside the Beltway

"The Devil Inside the Beltway". This chilling and personal story that reveals, in detail, how the Federal Trade Commission repeatedly bungled a critically important cybersecurity investigation and betrayed the American public.

Michael J. Daugherty, author and CEO of LabMD in Atlanta, uncovers and details an extraordinary government surveillance program that compromised national security and invaded the privacy of tens of millions of online users worldwide.

Background: The FTC, charged with protecting consumers from unfairness and deception, was directed by Congress to investigate software companies in an effort to stop a growing epidemic of file leaks that exposed military, financial and medical data, and the leaks didn't stop there. As a result of numerous missteps, beginning by "working directly with" malware developers, such as Limewire, instead of investigating them, the agency allowed security leaks to continue for years. When summoned before Congressional Oversight three times since 2003, the agency painted a picture of improving security when in fact leaks were worsening. Then, rather than focus on the real problem of stopping the malware, the FTC diverted Congress' attention from the FTC's failure to protect consumers by playing "get the horses back in the barn". How? By attacking small business.

"The Devil Inside the Beltway" is riveting. It begins when an aggressive cybersecurity company, with retired General Wesley Clark on its advisory board, downloads the private health information of thousands of LabMD's patients. The company, Tiversa, campaigns for LabMD to hire them. After numerous failed attempts to procure LabMD's business, Tiversa's lawyer informs LabMD that Tiversa will be handing the downloaded file to the FTC. Within this page turner, Daugherty unveils that Tiversa was already working with Dartmouth, having received a significant portion of a $24,000,000 grant from Homeland Security to monitor for files. The reason for the investigation was this: Peer to peer software companies build back doors into their technology that allows for illicit and unapproved file sharing. When individual files are accessed, as in the case of LabMD, proprietary information can be taken. Tiversa, as part of its assignment, downloaded over 13 million files, many containing financial, medical and top secret military data.

Daugherty's book exposes a systematic and alarming investigation by one of the US Government's most important agencies. The consequences of their actions will plague Americans and their businesses for years.

Click here to buy the book.

DR: So they threatened you with the Federal Trade Commission because they were accusing you of...

MD: The real reason we later found out is because the Federal Trade Commission was talking to them but at the time they said "This is patient information and we feel like we should give it to the government".

Something stunk from the first minute. I am thinking something stunk and the lawyers are just going to look at the law because that's their job. So it wasn't like my lawyers weren't coming to my rescue but we were not in the mood for a fight.

"Go away. We feel like everything is secured. We can't find it out there. There is no one that's been damaged. Go away".

They wouldn't go away and they threatened to go to the Feds.

"Ok. Call the Feds".

About a year and a half later the Feds called.

So now this is almost two years later and the Feds call saying that they were going to start a non-public investigation into this. And we were like, "Fine". I write in the book that I was still in The Stupid Zone thinking "We'll just show you how great we are and you'll just go ‘fine'".

Big mistake.

So we dumped thousands of pages on them. They sent us eleven pages, single-spaced, of questions. We complied. That's when I started coming out of "the zone" and took my head out of the clouds because they weren't being transparent. It was like a chess game. They wouldn't tell us anything. They said that we wouldn't answer their questions but they had pretty much everything. We felt like they were either lazy or they hadn't found what they needed and they wanted to keep digging.

Then we went to Washington, D.C. and when we met them face-to-face my intuition went crazy. I felt like this is bad. This is like a movie. I felt like I was in an episode of CSI and that I was going to have to dig into this myself.

I started to research more. Hindsight is 20/20 and I wonder why I didn't find something right away. But, I found Congressional testimony. I found the head of Tiversa in front of Oversight with Gen. Wesley Clark. I found Gen. Wesley Clark on the advisory board with Howard Schmidt, Obama's head of Cyber-Security. I found the FTC at the same hearing and they are all talking about cyber-security and P2P networks and the Dartmouth guy is talking and my file is in the Congressional record. I can't tell you how surreal that was...

DR: I know! Again, my question, Why?! Why? And part of me, Mike, asks that question because I have to admit that I just feel much more vulnerable than I ever have. I mean, I know that this kind of thing happens to people but it's one thing to know that it happens and it's another thing to know someone that it's happened to. It's a whole other thing too, to know someone who actually stood up and fought back. The more you talk the more vulnerable I feel...

MD: It's weird. Life is a strange thing. I think in a way they picked the wrong guy.

I did actually write on Facebook that it's important to have an interesting life more than a successful life. I have had a very successful and a very interesting life. I was born in Detroit and I grew up in Detroit before it got rioted out. I, and my parents, were cops in Detroit. I went to a great school. I worked in surgery. I started my company...

Now here I am with this thing all because I couldn't get an answer that we did anything wrong and I wasn't going to have my reputation assassinated by "settle because it's the smart thing to do. Just to make them go away". I know companies that do that or "It will ruin your company" and it has gutted us, but the choice we had was a terrible choice. It wasn't just sign on the dotted line and let's have a little hand slap and off we go. It wasn't cut your losses and go. I was going to have to allow the world to think that we had shaky data security practices. From a government agency that has no standards that wants to be able to use their rear view mirror to decide later what's right and wrong.

I'm in a very aggressive business. We do cancer detection. We work for surgeons. We practice medicine here. I have doctors that work for me. This is no joke around here. If you think things are funny you get to work some place else. My competitors are more than happy to send a little doubt my way. The press releases that the Federal Trade Commission sends out about who they get to settle are just so laden - I call it public relations justice where they bury at the bottom "No one admits any wrong doing" and who is going to believe that!? Everyone is going to think that you did something or you wouldn't be in trouble and you wouldn't have signed something. I was having none of it. I had a lot more to lose. I wasn't SONY with billions of dollars that could withstand a $5 million loss and skip on down the road. It's a different situation and I'm trying to make lemonade out of lemons.

DR: I'm curious about how you feel about your patriotism. At this point in your life, do you consider yourself a patriot?

MD: Yes! More patriotic! It's so funny. As a matter of fact, I separated so much my country vs. my government and I've learned so much. I feel like I want to warn my fellow citizens that they exploit our patriotism. Don't let them. It's not the country that is bad or the people that are bad. It's the government.

I have a degree in economics and I've always thought that small is better whether it be small business or small government because of the functionality of gargantuan organizations. Because what happens is you become nameless in a large corporation many times. You become nameless in the government. It's not that they have bad intentions. They have great intentions. They are wrong. They get bad results. But that's what happens. I am not a hypocrite. I intentionally built a small company to diagnose cancer and I could have gone public and I didn't want to. I just wanted to have a good living, which I have, and have meaningful work and not have all that sexy shenanigan stuff which is what is so ironic about why I am sitting here.

So, here I am fighting the Feds on the radio. Life is interesting.

DR: I am getting the impression that you were not actively looking for a fight but rather you had to make a choice...

MD: I knew I was never going to sign a consent decree. I knew I never would but I also knew going to fight right away is not smart. I didn't know. The whole situation seemed so bizarre to so many lawyers and people in the industry and government that the constant advice I got, which was smart advice, was to wait it out and see what they really do. Let them sniff around. Be very nice. Comply completely, which we did, and then see if they'll go away because we are such small potatoes.

Look what's going on. We, at the time, were a forty-employee cancer detection center? A small private business? I mean really? What is the point? Everyone thought they would just go away and so don't provoke them when they could ultimately just go away. They have to pick their battles too! They don't have unlimited resources!

That seemed like a logical thing. Although I always told my lawyers, which you'll read in the book very clearly, "I'm never signing a thing". And I'll go along with this but, make no mistake, if they come at me saying "You've got to do this, the answer is going to be ‘no'." So, that was very clear early but the Federal Trade Commission didn't know it until they were very clear that they were not going away. The second they said they were not going away, then I was like, "Game On!"

DR: And all of this is happening to you pre Snowden too so that must have been...

MD: Bizarre!

DR: It was bizarre that all of a sudden you were legitimized because of Edward Snowden...

MD: It was validating. It was really weird. I felt bad I was so happy about that but not really. In one of the chapters of the book I put "Guess I'm not crazy after all".

I'm a pretty stubborn person and I'm not concerned with conformity. It was okay with me being the only one out there going against the tide, but it was just so amazing before that happened.

When I started writing the book it was before Snowden and I was like "Okay. This book has to be a novel but it has to be footnoted like a thesis because it's too unbelievable..." The irony is {Snowden} happened and now I don't think people pay too much attention to my bibliography because they believe everything I say anyway which was not the case before Snowden and the NSA. So, it's interesting. All that work. All that academic work. Please pay attention!

DR: Please pay attention!

So before Snowden you probably had a certain idea of what you wanted the book to accomplish. Has that changed?

MD: No...You know there are so many good books out, right? The ones that get attention have to fit in. I'm just lucky that it's a national topic now and I can be there educating people because I have lived it and I just want to be as transparent as possible. But it's not going to make me popular with them, boy. They sure don't like transparency when the razor's cuttin' the other way. Trust me.

DR: No doubt...

MD: They're not real happy with me. But that is fine. That's great. In a funny way I need the public now for my survival and our own education anyway, so I embrace it. I have no choice.

There is a difference between "I am fine" and "What happened is not fine". What happened to my employees and my physicians is not fine. But I am a survivor and I'll be fine.

It's Ironic. How can I not love my country more? I get to bitch and moan and write a book about it. That's a great thing.

DR: That is.

MD: I get to talk to all of these people. I've met all these people on The Hill and in business. I'm talking with you. This is an adventure and I've considered my life pretty much an adventure...I will be okay...Small business people can't do this. We have to appreciate small business people. We have to appreciate the fact that our government is way behind the cyber-criminals and the government needs to be on our side getting ahead of them....It's a little creepy. We just have to be careful.

DR: A hundred years from now what do you want to be remembered for?

MD: For having the courage to just keep my eye on the prize and not buckle to their puffery and intimidation.

Thanks Mike!

Michael Daughtery interviewed on Bloomberg TV

Is a Small Business CEO the Victim of U.S. Hacking?


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