When the Federal Trade Commission said on Wednesday it would impose a long-awaited $5 billion penalty against Facebook and sue Cambridge Analytica, it appeared to be closing another chapter on the disgraced data firm that paid for data that had been scraped from 87 million unwitting social media users.
After a series of bombshell revelations last spring—depicted in a dizzying new documentary, The Great Hack—the Trump campaign contractor headed for bankruptcy courts on both sides of the Atlantic, and its former executives went dark, leaving behind a trail of unanswered questions. For instance, what would happen to the companies, their employees, and their assets?
Julian Wheatland, the former CEO of Cambridge Analytica and former director of a number of SCL-connected firms, told Fast Company this week that there were no plans to revive the companies. “I’m pretty sure nobody’s thinking of trying to start it up again under a different guise,” he said.
But the companies’ fate—and the legacy of their expertise and troves of data—remains murky. A corporate filing released this week, along with documents and interviews with former executives and employees, provide new insight into how a shifting, elusive group of directors and owners have strategically managed the unwinding of Cambridge and other firms connected to its London-based parent SCL Group as they face bankruptcy proceedings, investigations, and lawsuits.
Last summer, as some former employees of Cambridge and SCL scattered to a handful of successor firms, the companies’ assets were acquired by a holding company called Emerdata Limited. The company was incorporated in the U.K. in 2017 by former directors of Cambridge Analytica and members of the Mercer family, who provided the initial funding for Analytica four years earlier. Describing its business as “data processing, hosting, and related activities,” Emerdata was originally intended to bring the SCL companies under a single ownership structure for the purpose of refinancing them, Wheatland said.
Since last year, however, Emerdata has been footing the SCL companies’ legal bills amid bankruptcy proceedings, investigations, and lawsuits on both sides of the Atlantic. After both SCL Group and Cambridge Analytica ceased operations and filed for bankruptcy–or, in British parlance, “went into administration”–in May 2018, Emerdata also paid millions to acquire what remained of the companies while they are being liquidated.
According to its latest corporate filing, Emerdata purchased 100% of the share capital of SCL Group for £10,861,339 GBP, equivalent to around $13 million. Emerdata also noted its 89.5% ownership of Cambridge Analytica, just as it reported in previous filings.
A third and final wholly owned subsidiary listed on the document is Anaxi Holdings, a government contractor that was registered in Delaware ten days after the firestorm began to hit the companies last March. Emerdata has not acquired SCL Insight Limited, another government-focused company owned by Nigel Oakes, an SCL Group co-founder.
David Carroll, an American professor who sued Cambridge Analytica to obtain his personal data, has alleged that Emerdata had surreptitiously tried to shield the defunct firms from scrutiny and liability.
“Obviously, anything that you do related to data protection while the company is active becomes moot if they can just go out of business as soon as they get caught,” he said.
An investigation into “disinformation” led a Parliamentary committee to share Carroll’s concerns, as it stated in one of its reports. “The transformation of Cambridge Analytica into Emerdata illustrates how easy it is for discredited companies to reinvent themselves and potentially use the same data and the same tactics to undermine governments, including in the UK,” the panel wrote. “The industry needs cleaning up.”
In court, Carroll’s lawyers claimed that Cambridge’s court-appointed administrators, Crowe U.K. LLP, who were being paid by Emerdata, were acting with prejudice against Carroll when they sought to liquidate assets before a full investigation into the companies could be conducted.
Rather than comply with Carroll’s data request last year, Crowe chose instead to subject SCL to a criminal inquiry by the U.K. Information Commissioner’s Office, or ICO. In January, SCL pled guilty to breaking data laws and was fined a total of $26,000, but was not compelled to give Carroll his data.
In May, a U.K. court finally denied Carroll’s lawsuit, paving the way for SCL Group to legally dissolve without turning over his data. Carroll is now raising money for an appeal, and awaiting the findings of a report by the ICO based on data and passwords it has seized from SCL. Last June, the regulator said it would “look closely at any successor company linked to SCL and Cambridge Analytica or their directors.”
Wheatland, who helped launch Emerdata in 2017 and remains a shareholder, disputed the idea that the holding company was being used to shield the SCL firms from scrutiny. Carroll had “zero understanding” of Emerdata, he said. “It’s all conspiracy theory.”
Contrary to speculation, Wheatland said, “there was never any attempt to transfer data anywhere, either up to Emerdata or to any other organization, and any claims that there were are fanciful.”
The holding company now appears to be largely owned by conservative activist Rebekah Mercer and her sister Jennifer, whose shares are held in trust and via their U.S.-based Cambridge Analytica Holdings LLC, according to Cambridge’s bankruptcy filing in New York. The remaining fifth of Emerdata’s shares are owned by several prior SCL Group minority investors and a number of Hong Kong-based shell companies. Investigative journalist Wendy Siegelman first reported on Emerdata and its links to SCL last year.
Emerdata’s newest director, Jacquelyn James-Varga, has also managed accounting over the last few years for the Mercer Family Foundation, the nonprofit run by Rebekah and her megadonor father, Robert. James-Varga formerly served as treasurer for the Mercer-helmed Make America Number 1 political action committee–a major supporter of both Ted Cruz’s and Donald Trump’s presidential candidacies–as well as for Making America Great, a dormant pro-Trump political action commitee. Representatives for Emerdata and the Mercer family did not respond to requests for comment.
Wheatland declined to discuss the Mercers’ involvement in the firm, but insisted that there were no plans to start a new Cambridge Analytica. “That was an idea that existed in the media,” he said. Asked if the company would cease operating once its subsidiaries’ assets are liquidated, he said, “that would be my expectation, but I also don’t think there’s any rush to do it, either.”
Missing data, potential “claims” against former employees
Wheatland, one of Emerdata’s original directors, resigned earlier this year, he said, because the company “stopped doing anything.” Two other former Cambridge Analytica chief executive officers, Alexander Nix and Alexander Tayler, were also for a time listed as Emerdata directors, and have also since resigned. Nix was suspended by Cambridge Analytica’s board last year after Britain’s Channel 4 published an undercover camera investigation in which he was caught discussing dirty election tricks including blackmailing candidates.
The Financial Times reported last June that Nix had appropriated $8 million from the company’s coffers in its final days. Nix told lawmakers in Parliament that month that the report was inaccurate, but declined to comment further on the matter.
The seven-page Emerdata filing describes a company struggling with missing data–seized by the British data regulator in its raid on SCL’s London office–and uncooperative and unnamed former employees, against whom it said it was considering “claims.”
“Due to [a U.K. Information Commissioner’s Office] raid resulting in company accounting information being seized, and the lack of cooperation shown by former directors, advisors, and employees of the Company (against whom, by virtue of the outright loss of the Company’s investors’ capital, the Company is investigating potential claims), these accounts have been prepared based on limited and incomplete data,” the document reads.
Cambridge’s administrators also lost laptops and other data, according to court documents filed as part of Carroll’s lawsuit against the company. “Employees have refused to return laptops to the Administrators, and others have been stolen from the Administrators’ custody,” Carroll’s lawyers wrote. “Adding to concerns that the Cambridge Analytica business continues to be carried-on under another guise, as [of] November 2018, former employees were apparently still accessing its cloud-based infrastructure.”
Crowe, Cambridge’s administrators in the U.K., declined to comment, citing what a spokesperson said were “ongoing investigative matters relating to the UK Companies now in liquidation.”
Like their assets, the rest of the SCL companies’ remaining data, said to total 700 terabytes, remains under the sole control of Crowe and a U.S. lawyer administrating the company’s bankruptcy proceedings there, said Wheatland. “Emerdata has access to nothing, Emerdata never had access to anything.”
The U.K Information Commissioner is now examining the SCL data as part of its investigation. But even when the data trove is returned, possibly later this year, Wheatland said it will not be sold or destroyed due to “holding orders as a result of regulatory and civil lawsuits.”
The former CEO said the infamous cache of Facebook data had long since been deleted, and no copies remained in the hands of any the companies. After learning last year that a reporter had seen a copy of the data, he said, “I and [former Emerdata director Alexander Tayler,] the chief data officer at SCL, were completely mind-boggled as to what that could be or how that could be.”
However, Wheatland could not dispute the possibility that copies of the data had been made. Apart from former employees, a number of other people had access to versions of the Facebook data set through Aleksandr Kogan, the researcher who collected it.
Its capabilities persist through new entities
As Cambridge Analytica and its related companies continue winding down, the core promises of their much-debated psychological targeting methods persist, both through related entities and a growing interest in merging big data and behavioral science. Some former Cambridge Analytica data experts now work for a new firm, the Texas-based behavioral-science marketing company Data Propria. The company was founded by Matt Oczkowski, a political strategist who served as Cambridge’s head of product during the Trump campaign. Earlier this year, Oczkowski was also tapped to lead the operations of Parscale Digital, a data firm launched by Brad Parscale, who ran digital media for Trump in 2016 and is managing the President’s re-election campaign.
Parscale Digital and Data Propria are both subsidiaries of CloudCommerce, a company in which Parscale holds significant stock and a board seat. Last year, campaign finance experts expressed concern that Parscale firms were receiving funding from a pro-Trump super PAC in advance of Trump’s 2020 campaign, testing rules meant to keep campaigns from coordinating with outside groups.
Last June, the Associated Press reported that Data Propria was also supporting the campaign, but Oczkowski denied doing any work on behalf of Trump. A person familiar with Data Propria’s business said the company worked on polling data for the Republican National Committee ahead of the 2018 midterm elections, but had since decided to halt its political work in favor of commercial clients.
Reports that Data Propria’s methods and staff overlapped with Cambridge Analytica prompted members of Congress last June to seek assurances from the company that it is not using any of Cambridge’s improperly obtained Facebook data. Lawmakers have not heard back from Oczkowski, Data Propria, or CloudCommerce, a spokesperson for the Energy and Commerce committee said. The person familiar with Data Propria contended the company had no access to the Facebook data.
Still, it is nearly impossible to determine which data campaigns are using to target voters, and how they are using it. Even determining which firms are working on political campaigns—especially digital ones—is challenging under existing transparency rules in the US.
“There are a lot of problems with the lack of transparency around subvendor reporting,” said Brendan Fischer, an attorney at the Campaign Legal Center. “The FEC generally doesn’t require disclosure of payments to subvendors, and only requires a minimal description of the purpose of the disbursement, which can allow campaigns to disguise much of their spending.”
Another company launched by former SCL employees, Auspex International, is dedicated to using similar influence methods to provide what a statement called “ethically based” consulting services in the Middle East and Africa. The company’s founder and sole investor, a former Emerdata director named Ahmed Al-Khatib, said the company intended to work on political and health campaigns and on tackling “the spread of extremist ideology, which has poisoned my generation, preying on the minds of disenfranchised youth.”
Only one of SCL’s subsidiaries survives independently of Emerdata: SCL Insight Limited, a government contractor that completed a “data analytics” contract for the U.K. Ministry of Defence in April 2018. Around the same time, in the run-up to its U.S. bankruptcy filing, Cambridge Analytica absorbed its own government-focused subsidiary, Anaxi Solutions. Originally named SCL Group Inc., Anaxi registered as a business entity in Virginia, New York, Delaware, and D.C. during 2017, and was acquired by Emerdata last August.
In the new fiscal filing, Anaxi’s principal activity is claimed as “Provision and communication services for election campaigns.” During its brief year in business, however, Anaxi Solutions appears to have exclusively sought government contracts in the information technology, defense, and law enforcement sectors. A business plan posted online in early 2018 pointed to a number of its contract bids, including those at the Department of Homeland Security and the Marine Corps Forces Special Operations Command.
Anaxi Solutions was led by Josh Weerasinghe, who had previously spent the majority of his career as a civilian worker in the government IT sector. While staffed at the Office of the Director of National Intelligence, Weerasinghe served under Lt. Gen. Michael Flynn, who signed a statement of work with SCL for a month-long period in late 2016. A few months after Cambridge’s initial bankruptcy filings, several of Anaxi’s data and behavioral scientists followed their former CEO to an established government contractor that maintains active federal contracts.
“We didn’t start the ethical bit”
On Wednesday, as the U.S. Federal Trade Commission announced it would issue a record-breaking $5 billion fine to Facebook, the agency also said it filed a lawsuit against Cambridge Analytica over “deceptive practices.” One new issue, the FTC discovered, was that the company was for a time not meeting its obligations under the EU-US Privacy Shield framework, which allows U.S. companies to lawfully process consumer data from European Union countries.
Wheatland said this was the result of an administrative error that occurred in the chaos of the companies’ dissolution. The task of responding to the suit would fall to the company’s trustee in charge of its bankruptcy proceedings, he said.
The lawsuit, or administrative complaint, seeks to impose new requirements on Cambridge, or what remains of the company currently in bankruptcy proceedings: destroy any personal information collected from consumers via the Facebook-scraping app, turn over business documents, and refrain from making false or deceptive statements regarding the extent to which it collects or uses personal information, the FTC said.
The FTC placed similar restrictions on former Cambridge CEO Nix and app developer Kogan as part of separate settlements the agency reached with them. Not named by the FTC was Joseph Chancellor, who helped Kogan gather the Facebook data for Cambridge Analytica shortly before he was hired by Facebook as a researcher. Facebook has not explained how it came to hire Chancellor, who quietly left the company last September.
Emerdata was also not mentioned by name in the complaint, but there may be room for the U.S. to penalize it in the future, given its ownership by the U.S.-based Cambridge Analytica Holdings LLC, Carroll speculated. “That would be great, as it would show that companies cannot so easily evade liability in bankruptcy,” he said.
But while the FTC complaint refers to Cambridge Analytica and its “successors and assigns,” that order is unlikely to apply to other SCL-related companies controlled by Emerdata, Wheatland said. The FTC did not respond to a request for clarification.
While Wheatland kept his head down for months after crisis engulfed his former companies, the former CEO says he is now focused on fostering public conversation around data and privacy and the lessons he learned at Cambridge Analytica. (Like Carroll, he also appears in The Great Hack, and is the only Cambridge executive to sit for an interview.) Just as his former colleagues have done in recent months, Wheatland is now calling for stronger data and election laws but also for more robust ethical corporate standards.
“I draw a distinction between regulatory compliance and ethical management, because they are not the same thing,” he said. At Cambridge Analytica and SCL, “we frankly spent all our time focusing on regulatory compliance, and once we’d done that, we thought we’d done everything we needed to do. And we didn’t start the ethical bit.”