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Cambridge Analytica files for U.S. bankruptcy after data scandal

(Bloomberg) -- Cambridge Analytica, overwhelmed by a scandal over how it harvested data from Facebook to influence the last U.S. election, filed for bankruptcy in New York.

The U.K.-based political consulting firm had already said it would cease operations and wind down in its home country and the Chapter 7 petition in New York will address issues raised by U.S. creditors. The filing listed estimated liabilities of $1 million to $10 million.

The American proceeding could also shed light on some of the company’s relationships and finances, as U.S. legal proceedings are more transparent than those in the U.K., and creditors can use bankruptcy law to subpoena information and probe asset transfers.

The company, which did work for U.S. President Donald Trump’s 2016 campaign, said in a May 2 statement on its website that it lost “virtually all” customers and suppliers as a result of reports that it improperly obtained information from tens of millions of Facebook Inc. users.

Robert Mercer, the New York hedge fund manager and backer of Trump, has been a financial backer of Cambridge Analytica, along with Steve Bannon and Breitbart News.

CEO Bragging

In March, footage came out of the company’s executives bragging about how prostitutes and former spies could be used to ensnare politicians and influence elections. One segment showed Chief Executive Officer Alexander Nix saying that Ukrainian girls “are very beautiful, I find that works very well.” Nix in a BBC interview later said the allegations were “unfounded and extremely unfair.”

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The verified Twitter Inc. page of Cambridge Analytica, displaying their logo and company name, sit on an Apple Inc. iPhone against a backdrop of the Facebook Inc. sign shown on a computer screen in this arranged photograph in London, U.K., on Thursday, March 22, 2018. Facebook Inc.’s co-founder and chief executive officer Mark Zuckerberg has been called to appear before a House panel as fallout continues from revelations that Cambridge Analytica had siphoned data from some 50 million Facebook users as it built a election-consulting company that boasted it could sway voters in contests all over the world. Photographer: Luke MacGregor/Bloomberg

Cambridge Analytica said in its May 2 statement that it has “been the subject of numerous unfounded accusations” and that it has been vilified for activities that are not only legal, “but also widely accepted as a standard component of online advertising.”

Cambridge Analytica faces lawsuits in the U.S. over the Facebook data collection. One, for example, seeks class action status on behalf of all New York citizens who were Facebook members and whose information was obtained. They say they face ongoing damages because their private data is in the hands of the company.

Whistleblower FirestormFacebook itself has also been sued dozens of times over the data breach, and if it loses suits, could be expected to turn to Cambridge Analytica for damages.

A whistleblower from Cambridge Analytica set off a firestorm in March after he revealed how information was extracted from Facebook and used to influence voters. He testified before a U.K. parliamentary committee, describing the firm as one that dealt with illegal data and hacked material to win elections. He said Trump’s victory was one of the reasons he blew the whistle. House Democrats who met with him in April called his information "disturbing."

--With assistance from Jordan Robertson