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Pederson v Frost et al
Notes for Plaintiff's oral argument
Hearing date: May 29, 2018
Hearing location: Courtroom of Judge Becky Thorson, St. Paul

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Intro slide- no real information

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(breathe)

Your Honor,

My it please the court, I am Lee Pederson and I am acting pro se.

Defendant Phillip Frost and his associates committed many frauds and torts at a company
that was then called BioZone, so I refer to this situation as FrostZone. The frauds in FrostZone
came in many flavors.

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FrostZone

 Fraud against Plaintiff


 Fraud against Dan Fisher
 Fraud against Nian Wu
 Fraud against Alenka Lasic
 Fraud against BZNE shareholders

FrostZone (continued)

 Fraud against BioZone employees


 Fraudulent takeover of BioZone
 Fraudulent asset transfer to Defendant Opko
 Fraudulent asset transfer to MusclePharm
 Fraudulent misrepresentations to the investing public

FrostZone (continued)

 Initial pump and dump fraud at BioZone (September 2013)


 Ongoing pump and dump fraud at Defendant CoCrystal

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The pump and dump fraud is where Defendants Frost, Opko, Keller and others made
enormous illegal profits. The other frauds were either necessary for the Frost gang to carry out
the pump and dump, or were related to the looting of BioZone's assets for additional illegal
profits.

Frost and his associates comprise a white collar gang that has committed similar frauds at
other companies. FrostZone is just one part of the Frost gang's system of market manipulation
and securities fraud.

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Frost gang companies under known SEC investigations

 BioZone / CoCrystal (Defendant)


 MusclePharm
 YesDTC
 MGTI
 MabVax
 RIOT

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The key aspect in the Defendants' fraud against Plaintiff in FrostZone was "The Big Lie."

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The Big Lie

 False promise of $8 million investment for research and development at BioZone


 Manipulation of Plaintiff and others using this false promise
 Hundreds of phone calls and emails between Plaintiff and Keller and Maza

The Big Lie (continued)

 Fraudulent takeover of BioZone


 Fraudulent asset transfers from BioZone to other Frost gang companies
 Preparation of BioZone for a pump and dump securities fraud

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I withdrew from representing BioZone after realizing that the Big Lie was a lie. The
Frost gang expected me to go along with their frauds, but that would have been unethical so I
had no other choice than to withdraw.

This is a complicated situation that took a long time to unfold, so I will provide a step-by-
step overview.
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FrostZone Time Line

1999 Danilo Lasic and Keller invent new drug delivery technology
2000 Plaintiff writes first Qusome® patent for BioZone
2007 Plaintiff begins working for BioZone as a solo attorney in Minnesota
2008 Defendant Keller begins collaboration with Nian Wu

FrostZone Time Line (continued)

2009 Wu invents EquaSome technology


2010 BioZone has developed a huge patent portfolio
2010 BioZone has developed a new world-wide expansion strategy
2010 BioZone seeks funding

FrostZone Time Line (continued)

2011 Meeting with Frost and his gang in Miami


2011 The Big Lie begins
2011 Fraudulent takeover of BioZone
2011 Looting of BioZone's assets begins
2011 BioZone reverse merger
2012 The Big Lie is exposed
2012 Fisher is fired. Pederson withdraws. Wu quits.

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Frost is a billionaire. Other gang members are each worth hundreds of millions of
dollars. Their main motive behind taking control of BioZone had not been revealed when Fisher,
Wu and I left the company, so they took the attitude towards us, … "So sue me." Defendant
Keller even admitted as much to me.

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"So sue me."

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FrostZone Time Line (continued)

2012 Dan Fisher sues the Frost gang and contacts the FBI
2013 Fisher settles and the pump and dump begins
2013 Plaintiff realizes the purpose behind the Big Lie
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2014 Plaintiff resigns from the California bar and contacts Fisher and Wu

FrostZone Time Line (continued)

2014 New litigation between Fisher and the Frost gang


2014 Fisher and Pederson begin working to expose the Frost gang
2014 Pederson begins contact with the FBI
2015 Pederson and Fisher begin direct contact with the SEC

FrostZone Time Line (continued)

2017 Fisher settles second round of litigation


2017 Pederson initiates litigation against the Frost gang
2018 Frost gang frauds continue
2018 Today

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(pause)

Defendants' fraud against me caused financial harm.

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Damages from fraud against Plaintiff

 Loss of expected earnings from BioZone


 Reputational harm from the appearance that I participated in the frauds
 Loss from having to give up my California law license in order to be able to
communicate with victims (different attorney rules than Minnesota)
Damages from fraud against Plaintiff (continued)
 Loss of earnings while investigating FrostZone and Frost gang frauds in order to
rehabilitate my reputation
 Out-of-pocket losses for writing off my bill to Nian Wu
 Reputational harm from BioZone's failure to pay domestic and foreign patent associates
that I engaged on behalf of BioZone

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We are here in court today because the defendants lied to me, misled me and manipulated
me for over a year during the years 2011 and 2012. I was collateral damage in an organized
pump and dump securities fraud for the shares of the predecessor company of defendant
CoCrystal. The details of the frauds and torts against me are described in my Amended
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Complaint. The Amended Complaint refers to specific documentary and testamentary evidence
in my possession that proves my case. I provided the documentary evidence to the Defendants in
Rule 26 disclosures under the Minnesota Rules of Civil Procedure before this case was removed
to Federal court.

(pause)

The Defendants do not want to deal with the real facts about what they have done. So, in
their memoranda supporting their Motions to Dismiss, they made up numerous
misrepresentations and conclusory statements that contradict and ignore the facts.

These slides show some of their misrepresentations to this Court. Defendants have filed
two Motions to Dismiss, one for my original Complaint and one for my Amended Complaint.
Statements that are marked with an asterisk appeared in their first memorandum, but not in the
second. Page numbers are included with the statements that appear in Defendants second
memorandum, which is at issue today.

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Excerpts from Defendants' Memoranda

1. Defendants say, "The only connection between Minnesota and the allegations in the
Complaint is the fact that Plaintiff now happens to reside here." (page 1)

2. Defendants say, "none of the actions purportedly taken in furtherance of the claimed
fraud were directed at Plaintiff." (page 2)

3. Defendants say that Pederson's withdrawal from work with BioZone was "voluntary."
(page 23)

4. Defendants say, "As set forth in the accompanying declarations, no Defendant had
continuous and systematic contacts with the State of Minnesota." (page 12)

Excerpts from Defendants' Memoranda (continued)

5.* Defendants have said, "In short, Plaintiff’s principle jurisdictional allegations are that he
is a resident of Minnesota and that he performed legal services for BioZone in Minnesota."

6.* Defendants have said, "Thus, even if the Court considered the quantity of Defendants’
contacts - which approximates zero - this factor would weigh heavily in favor of the Court
lacking personal jurisdiction."

7.* Defendants have said, "the Complaint is devoid of any allegations that any Defendant
directed any of the conduct that is the subject of this Complaint toward Minnesota."
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8. Defendants say, "Put simply, no Defendant has purposely availed himself or itself of the
privilege of conducting business in Minnesota, such that any Defendant should reasonably
expect to be haled into court in that jurisdiction." (page 17)

Excerpts from Defendants' Memoranda (continued)

9. Defendants say, "The present dispute has no connection whatsoever to Minnesota other
than the fact that Plaintiff is a resident of the state. He was not even providing services under
Minnesota law." (page 18)

10.* Defendants have said, "none of the “facts” in the Complaint point to any allegedly
wrongful conduct in Minnesota."

11. Defendants say, "Absent a compelling showing by Plaintiff to the contrary, it is logical to
assume that all of the witnesses, documents, and other information relevant to the case are
located outside of Minnesota." (page 19)

12.* Defendants have said, "having Minnesota as the forum would be a substantial
inconvenience for Defendants."

Excerpts from Defendants' Memoranda (continued)

13.* Defendants have said, "there is no reason why Defendants should be inconvenienced or
suffer any hardship in having to Defend this lawsuit in Minnesota."

14. Defendants say, "As of 2014, Plaintiff could not continue to represent BioZone due to his
voluntary resignation from the California bar." (page 23)

15. Defendants say, "any alleged damages suffered by Plaintiff were the result of his
voluntary resignation from BioZone." (page 39)

16. Defendants say, "The Amended Complaint is devoid of any allegations that would
establish the necessary elements to establish an agency relationship between Keller or Maza and
OPKO, Frost or CoCrystal." (page 14)

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When the defendants filed a Reply to my Opposition, they again included numerous
misstatements and unsupported conclusory statements. This is my first chance to address the
defendants' new set of misrepresentations.

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Excerpts from Defendants' Reply


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1. Defendants say, "Plaintiff's Opposition does not establish how Plaintiff suffered any
injury-in-fact." (page 2)

2. Defendants say, "Plaintiff cannot show that he suffered any concrete injury." (page 2)

3. Defendants say, "Defendant's actions were not "continuous and systematic enough" for a
finding of general jurisdiction." (page 4)

4. Defendants say, "Here the only connection to Minnesota is that Plaintiff allegedly
suffered harm in Minnesota because he is based there." (page 10)

5. Defendants say, "Plaintiff cannot reasonably allege that he has suffered any injury-in-
fact." (page 11)

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Every aspect of the Defendants' motion is based on misrepresentations. These


misrepresentations attempt to turn the pleading standard completely upside down. Instead of
assuming the truth of Plaintiff's allegations, Defendants are asking this court to accept their false
statements while ignoring the true facts alleged by Plaintiff.

(pause)

At pages 15-17, my Opposition contains lists and descriptions of news media reports of
suspected frauds by Defendants and their associates. These media reports were produced by a
variety of organizations including CNBC television and the Wall Street Journal.

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Recent Press coverage of the Frost gang

 February 9, 2017 Teri Buhl story: SEC and DOJ investigating the "investing and trading
activities" of Phillip Frost, Barry Honig, and Michael Brauser
 January 31, 2018 Wall Street Journal article by Ianthe Dugan on a Frost gang company
called Riot Blockchain (RIOT)
 February 16, 2018 Televised CNBC investigative report on RIOT by Michelle Caruso-
Cabrera
 Follow-up articles by Bloomberg News and the Denver Post
 March 6, 2018 14,000 word Sharesleuth exposé by Chris Carey detailing a network of
illegally paid "pumpers"

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Pages 17-18 of the Opposition include lists and descriptions of publicly available
information about Federal investigations of the activities of Defendants and their associates.
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These investigations are being conducted by the SEC, the FBI and the United States Attorney's
Office. Defendant Frost is deeply involved at three of the companies under investigation,
including defendant CoCrystal.

(pause)

My Opposition was filed on April 1 of 2018. I would like to provide some updates.

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FrostZone updates

On April 18, Frost gang company RIOT Blockchain disclosed that it had received an
SEC subpoena on April 9.

At the peak of the pump and dump in March of 2015, the market capitalization of
Defendant CoCrystal was about one billion dollars. Today it is about 50 million. 950 million of
equity has disappeared.

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(pause)

There are two claims in my complaint: fraud and tortious interference with a business
relationship. Each and every element of both claims is supported by facts alleged and described
in the amended complaint. Defendants cannot even begin to refute a single element of either
claim without resorting to either conclusory statements that ignore the facts or outright
misrepresentation of the facts. Nor are they able to challenge jurisdiction or standing, except by
resorting to conclusory statements that ignore the facts and outright misrepresentation of the
facts. My claims are well-grounded both in law and in fact. Therefore, I request that
Defendants' motion be denied.

(pause)

Thank you, Your Honor.

Notes:

Elements of fraud (page 10)


Elements of Tortious interference (page 12)
Due process (page 21)
Jurisdiction (page 22)
Calder test (page 25)
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Standing (page 25)

7 1/2 pages of citations in Defendants' Memorandum