Open Letter from Lee Pederson re ​Kesner v Baker Botts​ Lawsuit

January 30, 2020

To: DOJ (FBI and US Attorneys) agents (bcc)

SEC agents (bcc)
SEC OIG
Harvey Kesner (via Twitter @HarveyKesner)
Phillip Frost (℅ attorney Joe Dixon)
Journalists and business writers (bcc)
Baker Botts (Brian.Lee@bakerbotts.com)
Block and Leviton (Jason Leviton, ​jason@blockesq.com​)
Dan Fisher (℅ attorney Vytas Rimas)
Other interested persons (bcc)

All,

1- Harvey Kesner and the Frost gang

Billionaire Phillip Frost is the leader of a white-collar gang that specializes in market
manipulation and securities fraud,1 especially pump and dump (P&D) securities frauds. Harvey
Kesner is the primary SEC attorney in the Frost gang. Kesner has played a key role in many
P&Ds by preparing and filing documents that arranged for Frost gang members and entities
(including Kesner’s own entities) to obtain cheap or free shares that could later be sold into the
P&D for illegal profits.

2- ​SEC v Honig
On September 7, 2018, after a lengthy investigation, the SEC brought civil securities
fraud charges against 10 individuals and 10 entities, all with ties to the Frost gang. The lawsuit
describes P&D securities frauds at three companies: BioZone, MGT Capital and MabVax. The
complaints in the case detailed illegal promotions, illegal control groups, illegal swap trades, and
illegal profits by the Frost gang. Court filings indicate that the SEC collected over 7 million
documents and interviewed many witnesses during their investigation. The SEC prosecuted
charges against 18 Frost gang individuals and entities for the BioZone P&D.2 All of those 18
Frost gang defendants have now reached complete, partial, or proposed settlements with the
SEC. There is no reasonable doubt that the Frost gang carried out P&D securities frauds at
BioZone, MGT and MabVax.
Despite his central role in the BioZone P&D, as well as the other Frost gang securities
frauds, the SEC has not yet filed charges against Harvey Kesner. I speculate that this may be
because the SEC did not want to complicate discovery in ​SEC v Honig ​with claims of
attorney/client privilege between the defendants.

1
Securities fraud is a federal crime punishable by up to 20 years in prison.
2
Defendant Robert Ladd was involved with MGT, but not BioZone. Defendant entity Southern Biotech
had been dissolved prior to the charges being filed.

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3- Other Frost gang securities frauds
In addition to the P&D securities frauds at BioZone, MGT and MabVax, the Frost gang is
suspected of securities frauds at dozens of other companies. Investigations are ongoing. It is
publicly known that the SEC has issued subpoenas for suspected frauds at PolarityTE, Riot
Blockchain,3 and Cool Holdings. Kesner was involved in almost all of the Frost gang’s
suspected frauds.

4- Public information describing the Frost gang

I have been investigating and/or litigating against the Frost gang since 2012, when I
learned that members of the gang had been lying to me as they prepared for the P&D at
BioZone. I have prepared many public documents that describe the results of my
investigations. These public documents include:

A- Frost gang Report Version 10.1, January 18, 2020 (34 pp)
https://www.scribd.com/document/443427062/Frost-Gang-Report-Version-10-0-Jan-18-2020

B- Phillip Frost’s Legal Quagmire, January 6, 2020 (10 pp)

https://www.scribd.com/document/441899691/200106-Phillip-Frost-s-Legal-Quagmire

C- Letter from Lee Pederson re John Lemak and the Frost gang , January 20, 2020 (6 pp)
https://www.scribd.com/document/443606513/RE-John-Lemak-and-the-Frost-Gang

The documents listed above provide detailed descriptions, references and links to the
material covered or mentioned in this letter. Many of the linked public documents relate to
litigation involving the Frost gang, including court filings in ​SEC v Honig​. Because of the
complexity of the Frost gang’s frauds and the sheer number of them, much of this background
and context is not detailed in this letter.

5- My own experiences with Harvey Kesner at BioZone

I met Harvey Kesner in about February of 2011 at the start of the fraudulent takeover of
BioZone by the Frost gang. I was one of five BioZone representatives at a series of meetings in
Phillip Frost’s IVAX building in Miami. The meeting sessions were at a conference table just
outside Frost’s office. Kesner sat in for the first day of the meetings.
The fraudulent takeover of BioZone involved many entities and many ownership
interests. Entities included the BioZone entities (BioZone Labs, Equilan, EquiChem) and Frost
gang entities (Aero, Baker Cummings, International Surf Resorts, Frost Honig Brauser Group).
Individuals included both BioZone owners and Frost gang members. Kesner put the BZNE
stock structure together with the goal of optimizing Frost gang ownership and control for the
P&D. After the initial P&D, Kesner represented both sides of the transaction in the fraudulent

3
OnJanuary 30, 2020, Riot Blockchain announced that the SEC had closed its investigation without
bringing an enforcement action.

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transfer of BioZone assets to another Frost gang company (MusclePharm). Kesner performed
all these legal functions without disclosing his true role as the attorney for the Frost gang.

6- The Frost gang’s present predicament

The Frost gang acted with complete impunity during the BioZone P&D. They behaved
as if federal law agencies(SEC and DOJ) could not or would not enforce the securities fraud
laws against them. They committed frauds against individuals (including Dan Fisher and me)
with a “So sue me” attitude, backed up by Frost’s wealth, reputation and armies of lawyers.
They silenced critics with litigation and the threat of litigation.
Beginning in 2012, Dan Fisher’s federal court litigation against the Frost gang began to
make the truth about the gang public. In late 2013, a report called “Opko Health: The Placebo
Effect” brought attention to the connections between Phillip Frost, Michael Brauser and Barry
Honig at a number of companies. Fisher’s Garcia Properties litigation brought further
information to light. The FBI began investigating the Frost gang at least as early as 2014.4 The
SEC began investigating the BioZone P&D in the second half of 2015. That investigation
quickly expanded to include an investigation of MGT Capital. Journalist Teri Buhl reported on
these developments, despite two lawsuits intended to silence her. Also during the 2015-2016
time frame, various business writers published “short reports” on several Frost gang companies.
However, increasing public scrutiny did not deter the Frost gang at that point. Instead, the gang
launched ambitious new P&D’s, including a P&D at PolarityTE.
Teri Buhl continued her reporting on the Frost gang, but she was often alone in breaking
new stories. Then in January of 2018, Ianthe Jeanne Dugan wrote about Barry Honig and Riot
Blockchain in the ​Wall Street Journal​. A CNBC report by Michele Caruso-Cabrera brought
further awareness to the Riot Blockchain story in February. Chris Carey detailed the Frost
gang’s “stealth promotion network” in a long detailed article published March 6, 2018. Ozgur
Ogut and “Research Noir” wrote about the scientific frauds at PolarityTE later in 2018.
The filing of ​SEC v Honig​ on September 7, 2018 really turned the tide against the Frost
gang. A week later, Frost issued a press release in which he said, “​I intend to fight the charges
that have been brought against me and will fight to clear my name.” However, Frost soon
buckled under the weight of the evidence and settled with the SEC.
Written articles by Teri Buhl, Bill Alpert and Chris Carey have since continued to expose
new details about Frost gang operations. Buhl has written about dealer/broker fraud at Laidlaw
& Company and possible illegal short-selling by the Frost gang, among other topics. Alpert
wrote that ​SEC v Honig​ might just be the “tip of the iceberg” for Frost. Alpert also wrote about
Kesner being “The Lawyer at the Center of SEC Pump-and-Dump Case.” Carey detailed Frost
gang P&D frauds at PolarityTE, Marathon Patent Group, Riot Blockchain and U.S. Gold. New
stories continue to emerge.
The Frost gang’s position has completely turned around since 2011 when the gang
began preparing for the BioZone P&D. Members of the gang have been labeled as “fraudsters”

4
The FBI was investigating Honig for his role in the YesDTC P&D prior to their investigation of the Frost
gang.

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by the SEC, they are embroiled in a multitude of litigation, they are under investigation by the
FBI, and they know that the most serious consequences for their illegal acts still lie ahead.

7- The flood of Frost gang litigation and the gang’s response

After the filing of SEC v Honig, what had been a trickle of Frost gang litigation quickly
turned into a flood. Much of this litigation is outlined at the document described in section 4.B
above.
Settlements with the SEC in ​SEC v Honig h ​ ave delayed the public presentation of the
primary evidence collected by the SEC. However, other civil cases are trying to get at the same
or similar evidence. Notably, ​MabVax v Honig,​ ​MabVax v Sichenzia​, the BioZone class action,
the PolarityTE class action, and the Opko class action are all likely to produce evidence that
might aid criminal prosecutions against members of the Frost gang. Most of these lawsuits are
still in their early phases.
Where the Frost gang had previously been able to take aggressive legal positions
against its critics, that option has now been diminished in light of the fact that just about
everyone knows that they are a gang of fraudsters. However, the Frost gang is still trying to pull
a few tricks out of its sleave:
A- The Mabvax class action has been voluntarily dismissed under conditions that seem
suspicious. This situation is described in the document referred to in section 4.C above, and
also in section 9 below.
B- The Frost gang has repeatedly accused its critics of being motivated by and participating in
illegal short-selling of Frost gang stocks.
C- Kesner has sued Buhl and Alpert, accusing them of defamation and illegal short-seliing.5
D- Kesner filed ​Kesner v Baker Botts o ​ n about January 21, 2020.

8- ​Kesner v Baker Botts

​ t al on about January 21, 2020. The 58-page
Harvey Kesner filed ​Kesner v Baker Botts e
complaint can be seen at:
https://www.scribd.com/document/444959626/Kesner-v-BB

Kesner’s legal claims are directed at the Baker Botts firm and attorney Jonathon
Shapiro, but the complaint alleges a broad illegal conspiracy including Baker Botts, Shapiro,
Block & Leviton, Teri Buhl, Bill Alpert and myself. Such allegations are absurd. I posted my
initial response to the lawsuit on Twitter on January 28:

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Kesner v Barron’s

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 As my tweet indicates, Kesner pretended to quote from my ​Pederson v Frost II
complaint, but he added the word “inaccurate” to distort my communication. This allegation by
in ​Kesner v Baker Botts​ is easily proven to be false by comparing two public court filings. Many
of Kesner’s other allegations in ​Kesner v Baker Botts​ are also simply made up of thin air.
Others have also responded to ​Kesner v Baker Botts​ via Twitter:

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 By alleging RICO (racketeering) violations and with its claims for $35 million in damages,
Kesner’s suit against Baker Botts has drawn some media attention. I suspect the following
motives are behind the filing of this lawsuit:

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A- To add confusion to an already complicated situation
B- To demonstrate legal aggression by a Frost gang member who has not yet been publicly
labeled as a “fraudster” by the SEC
C- To pressure Baker Botts into settling the case of ​MabVax v Honig
As mentioned above in section 7, the civil cases involving the Frost gang will likely
produce the cumulative effect of a mountain of evidence and information that prove the illegal
acts of gang members. In this respect, ​MabVax v Honig​ is potentially one of the most damaging
cases to the Frost gang. ​Mabvax v Honig ​names many Frost gang members as defendants,
including Frost,6 Brauser and Honig. These individuals are subject to depositions. The time
frame of the MabVax securities fraud is still within the statute of limitations for criminal securities
fraud prosecutions. Evidence developed in ​MabVax v Honig​ could be damning to many
members of the Frost gang, including Kesner.

9- Harvey Kesner, John Lemak and MabVax

John Lemak participated in the P&D at MabVax. Lemak’s involvement at MabVax is
briefly described in the document referenced at section 4.C above. For convenience, I include a
link to the document here, also:
:​https://www.scribd.com/document/443606513/RE-John-Lemak-and-the-Frost-Gang

This document outlines (i) that Lemak was involved with various Frost gang companies,
including involvement in the P&Ds at MabVax and MGT Capital that were described in ​SEC v
Honig​;7 and (ii) Lemak’s suspicious role in the dismissal of the MabVax class action lawsuit. In
brief, Lemak participated with the Frost gang in the MabVax P&D. Then Lemak somehow
became lead plaintiff in the class action lawsuit alleging damages from the MabVax P&D. Then
the MabVax class action was voluntarily dismissed, despite have the “deep pockets” of Frost
Gamma Investment Trust, Barry Honig, and other defendants to go after.
The dismissal of the MabVax class action indicates to me that the Frost gang may go to
extreme measures in trying to get the ​MabVax v Honig​ lawsuit to go away. ​Kesner v Baker
Botts ​may be one such extreme measure.

10- Conclusion
It is impossible to track all the actions of the Frost gang, or to always accurately
determine the motives behind their actions. It is clear that their actions have included profiting
from securities frauds, and their motives now include trying to avoid consequences for their
frauds. This document is meant to add to the cumulative knowledge of those of us trying to see
justice done: journalists and writers, litigators and parties to Frost gang litigation, and federal
law enforcement agents.

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FGIT
7
The document describes connections between Lemak and the Frost gang at the following companies:
Chromadex, BeActive Holdings, PolariyTE, MabVax, MGT Capital, Towerstream, and Spherix. Since
preparing that document, I have learned of connections between Lemak and Harvey Kesner at the
following companies: Silverhorn Mining, Pershing Gold, Orbital Tracking, MusclePharm, Document
Security Systems, Medical Alarm Concept, Cell Source, Marathon Patent Group and Tonix Pharma.

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This document is posted on Scribd.com with a link from Twitter.

Signed,

Lee Pederson