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1 JONATHAN A.

SHAPIRO (SBN 257199)


jonathan.shapiro@bakerbotts.com
2 TANIA RICE (SBN 294387)
tania.rice@bakerbotts.com
3 KATHRYN CHRISTOPHERSON (SBN 322289)
kathryn.christopherson@bakerbotts.com
4 BAKER BOTTS LLP
101 California Street, Suite 3600
5 San Francisco, CA 94111
Telephone: 415.291.6200
6 Facsimile: 415.291.6300

7 BRIAN C. KERR (pro hac vice)


brian.kerr@bakerbotts.com
8 BAKER BOTTS LLP
30 Rockefeller Plaza
9 New York, NY 10112
Telephone: 212.408.2543
10 Facsimile: 212.259.2543

11 Attorneys for Plaintiff


MABVAX THERAPEUTICS HOLDINGS, INC.
12
SUPERIOR COURT OF CALIFORNIA
13
COUNTY OF SAN DIEGO
14

15
MABVAX THERAPEUTICS HOLDINGS, INC., a CASE NO. 37-2019-00018398-CU-SL-CTL
16 Delaware corporation,
FIRST AMENDED COMPLAINT FOR
17 Plaintiff, DAMAGES

18 v. 1. Market Manipulation
2. Market Manipulation
19 BARRY HONIG, et al., 3. Unlawful Business Practices
4. Fraud
20 Defendants. 5. Fraudulent Concealment/Omission
6. Constructive Fraud
21 7. Negligent Misrepresentation
8. Breach of Fiduciary Duty
22 9. Restitution for Unjust Enrichment

23 JURY TRIAL DEMANDED

24

25

26

27

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL


1 Plaintiff MabVax Therapeutics Holdings, Inc. (“MabVax” or “the Company”) files this first

2 amended complaint (“Complaint”) against Defendants Barry Honig (“Honig”); John Stetson

3 (“Stetson”); Michael Brauser (“Brauser”); John O’Rourke, III (“O’Rourke”); Phillip Frost (“Frost”);

4 Mark Groussman (“Groussman”); Steven Rubin (“Rubin”); John H. Ford (“Ford”); 1 Robert Prag

5 (“Prag”); Robert Haag; and Andrew Haag (collectively, the “Individual Defendants”); and against a

6 number of entities affiliated with the Individual Defendants:

7  Entities affiliated with Honig (collectively with Honig, the “Honig Defendants”): GRQ

8 Consultants, Inc. (“GRQ”); GRQ Consultants, Inc. 401K (“GRQ 401K”); GRQ

9 Consultants, Inc. Roth 401K FBO Barry Honig (“GRQ Roth 401K Honig”); GRQ

10 Consultants, Inc. Roth 401K FBO Renee Honig (“GRQ Roth 401K Renee”); Barry and

11 Renee Honig Charitable Foundation, Inc.; Southern Biotech, Inc. (“Southern Biotech”).

12  Entities affiliated with Stetson (collectively with Stetson, the “Stetson Defendants”):

13 HS Contrarian Investments, LLC (“HSCI”).

14  Entities affiliated with Brauser (collectively with Brauser, the “Brauser Defendants”):

15 Grander Holdings, Inc. (“Grander”); Grander Holdings Inc. 401K (“Grander 401K”).

16  Entities affiliated with O’Rourke (collectively with O’Rourke, the “O’Rourke

17 Defendants”): ATG Capital, LLC (“ATG”); Airy Properties and 11 East Airy Street

18 Partnership (the “Airy Defendants”).

19  Entities affiliated with Frost and Rubin (collectively with Frost and Rubin, the “Frost

20 Defendants”): OPKO Health, Inc. (“OPKO”); Frost Gamma Investments Trust

21 (“FGIT”).

22  Entities affiliated with Groussman (collectively with Groussman, the “Groussman

23 Defendants”): Melechdavid, Inc. (“Melechdavid”); Melechdavid, Inc. Retirement Plan

24
1
25 Since the filing of the initial complaint, MabVax has entered into a settlement agreement with
Defendant John Ford. Ford is still included as a named defendant in this first amended complaint
26 because the parties’ settlement is still subject to bankruptcy court approval.

27 MabVax has also notified the U.S. District Court for the Southern District of California (Hayes, J.)
that it has entered into a settlement, also subject to the approval of the bankruptcy court, in the parallel
28 lawsuit against Sichenzia and Harvey Kesner, who as noted infra was retained as MabVax’s counsel
at the behest of Defendants, and acted for the benefit of the group. See Mabvax Therapeutics Holdings,
Inc. v. Sichenzia Ross Ference LLP, et al., Case No. 3:18-cv-02494-WQH-MSB (S.D. Cal.).
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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 (“Melechdavid Retirement”).

2  Entities affiliated with Prag (collectively with Prag, the “Prag Defendants”): The Del

3 Mar Consulting Group, Inc. (“DMCG”); The Del Mar Consulting Group, Inc.

4 Retirement Plan Trust (“DMCG Retirement”).

5  Entities affiliated with Andrew Haag and Robert Haag (collectively with Andrew Haag

6 and Robert Haag, the “Haag Defendants”): IRTH Communications, LLC (“IRTH”).

7 INTRODUCTION

8 1. MabVax is a clinical-stage biotechnology company that is developing treatments for

9 certain insidious cancers, including pancreatic cancer, soft tissue cancer, and ovarian cancer. MabVax

10 was founded in San Diego more than a decade ago by leading pharmaceutical researchers, clinicians,

11 and entrepreneurs, including the head of the Laboratory of Tumor Vaccinology at the renowned

12 Memorial Sloan Kettering Cancer Center in New York. Since then, the MabVax team has brought its

13 promising therapies into clinical trials in conjunction with traditional chemotherapy and collaborated

14 with others here and abroad—including Memorial Sloan Kettering—in the fight to find effective

15 treatments for these diseases. Along the way, MabVax matured from a local start-up financed by a

16 few generous patrons into a public company with its stock traded on the Nasdaq Stock Market.

17 2. The Company’s clinical research has been exhausting and expensive. Like other

18 clinical-stage biotechnology companies, MabVax cannot earn product revenue until it (or its

19 collaborative partners) complete clinical trials, obtain regulatory approval, and successfully

20 commercialize one or more of its products. As a result, the Company has incurred, and will likely

21 continue to incur, substantial operating losses. In order to continue its vitally important work, MabVax

22 has raised, and, if it can carry on, will have to continue to raise, money through debt and equity

23 financing. Unfettered access to the public capital markets has been, therefore, of critical importance

24 to the Company—as are honest transactions in those markets.

25 3. In 2014, however, MabVax’s promising future was cast into peril, after a group of

26 market manipulators, organized by Honig, accumulated a controlling position in the Company’s stock.

27 Defendants pretended they sought legitimate returns by investing in MabVax’s life-saving

28 innovations, but instead defrauded the Company through illicit transactions for their enormous profit

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 to the detriment of MabVax. It is now clear that, from the get-go, Defendants sought to manipulate

2 the Company—in March 2015, Honig assured Defendants Frost, Brauser, and Stetson that MabVax

3 was a “really good opportunity,” and that the group would “make $35 million conservatively in 4

4 months and our money out [in] 4 weeks …” And in an April 2015 email, Stetson was explicit that the

5 group was acting to gain “control of the board” in ways that they would never disclose as required

6 by the securities laws. The Defendants concealed their beneficial ownership of MabVax for years in

7 false public SEC filings—and in many instances simply failing to file required ownership reports at

8 all even though each one of them had an individual, non-delegable duty under explicit federal law to

9 publicly disclose their true holdings. As a consequence of Defendants’ egregious misconduct,

10 MabVax was, among other things: deceived into issuing Defendants tens of millions of dollars’ worth

11 of common stock, cut off from legitimate investors; confronted with an expensive investigation by the

12 U.S. Securities and Exchange Commission (“SEC”); and forced to publicly disclaim reliance on past

13 financial statements that had been rendered inaccurate by Defendants’ concealment of their

14 coordinated investment, trading, and manipulation of the Company’s stock—resulting in beneficial

15 ownership and control of at least 53.95% of MabVax by late 2018, more than ten times greater than

16 the 4.99% (or less) that some of them falsely disclosed. In addition, directly related to Defendants’

17 actions, the Company was delisted from trading on the Nasdaq, thereby strangling its access to the

18 capital markets. The Company now is bankrupt.

19 4. The SEC has ultimately commenced a federal court enforcement action against the

20 investor group for its illicit control and victimization of MabVax and two other issuers, bringing

21 securities fraud and market manipulation claims against Defendants Honig, Brauser, Stetson,

22 O’Rourke, Groussman, Frost, Ford, Alpha, ATG, FGIT, GRQ, HSCI, Grander, Melechdavid, OPKO,

23 and Southern Biotech. See Securities and Exchange Commission v. Honig, et al., 1:18-cv-08175

24 (S.D.N.Y.) (“SEC Action”). The SEC has detailed the fraud in a 100-page complaint (as subsequently

25 amended), which it has described as a “brazen market manipulation” and a “classic pump and

26 dump” in statements reported by the Wall Street Journal and other national media. Most Defendants

27 have already resolved the SEC action by agreeing to substantial monetary payments—more than $10

28 million with more amounts forthcoming—and entry of judgments against by a federal court enjoining

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 against any future violations of the securities laws or even any future personal investments in

2 vulnerable smaller public companies like MabVax:

3  Honig consented to a bifurcated settlement under which he will be enjoined from violating
the federal securities laws, consented to a penny stock bar, and further consented to conduct-
4 based injunctions. The settlement reserves the issues of any additional remedies, including
disgorgement, prejudgment interest, and civil penalties, for further determination by the court
5 upon motion of the SEC.
6  Brauser consented to entry of a judgment ordering him to pay over $1.1 million
(disgorgement of $844,914.32, prejudgment interest of $170,853.84, and a civil penalty of
7 $160,000), enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934,
Section 17(a) of the Securities Act of 1933, Section 5 of the Securities Act of 1933, and Section
8 13(d) of the Securities Exchange Act, and barring him from the purchase or sale of penny
stocks.
9
 O’Rourke consented to entry of a judgment ordering him to pay over $1.1 million
10 (disgorgement of $765,128, prejudgment interest of $128,198, and a civil penalty of
$260,000), enjoining him from violating Section 10(b) of the Securities Exchange Act of
11 1934, Section 17(a) of the Securities Act of 1933, Sections 9(a)(1) and (a)(2) of the
Securities Exchange Act of 1934, and Section 13(d) of the Securities Exchange Act, and
12 barring him from the purchase or sale of penny stocks.
13  Stetson consented to entry of a judgment ordering him to pay over $1.1 million
(disgorgement of $837,509.98, prejudgment interest of $157,159.30, and a civil penalty of
14 $160,000), enjoining him from violating Section 10(b) of the Securities Exchange Act of
1934, Section 17(a) of the Securities Act of 1933, and Section 13(d) of the Securities
15 Exchange Act, and barring him from the purchase or sale of penny stocks.
16  Groussman consented to entry of a judgment ordering him to pay over $1.3 million
(disgorgement of $1,051,360, prejudgment interest of $170,554.78, and a civil penalty of
17 160,000), enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934,
Section 17(a) of the Securities Act of 1933, and Section 5 of the Securities Act of 1933, and
18 barring him from the purchase or sale of penny stocks.
19  Frost consented to entry of a judgment ordering him to pay over $5.5 million (disgorgement
of $433,181.06, prejudgment interest of $90,206.46, and a civil penalty of $5,000,000),
20 enjoining him from violating Section 17(a)(2) of the Securities Act of 1933, Section 13(d) of
the Securities Exchange Act of 1934, and Sections 5(a) and (c) of the Securities Act of 1933,
21 and barring him from the purchase or sale of penny stocks.
22  OPKO consented to entry of a judgment ordering it to pay a civil penalty of $100,000 and
enjoining it from violating Section 13(d) of the Securities Exchange Act of 1934.
23
 FGIT consented to entry of a judgment enjoining it from violating Section 17(a)(2) of the
24 Securities Act of 1933 and barring it from participating in the purchase or sale of penny stocks.
25  Melechdavid consented to entry of a judgment enjoining it from violating Section 10(b) of
the Securities Exchange Act of 1934, Section 17(a) of the Securities Act of 1933, Section 5
26 of the Securities Act of 1933, and Section 13(d) of the Securities Exchange Act of 1934, and
barring it from the purchase or sale of penny stocks.
27
 Grander consented to entry of a judgment enjoining it from violating Section 10(b) of the
28 Securities Exchange Act of 1934, Section 17(a) of the Securities Act of 1933, Section 5 of the

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 Securities Act of 1933, and Section 13(d) of the Securities Exchange Act of 1934, and barring
it from the purchase or sale of penny stocks.
2
 ATG consented to entry of a judgment enjoining him from violating Section 10(b) of the
3 Securities Exchange Act of 1934, Section 17(a) of the Securities Act of 1933, Sections
9(a)(1) and (a)(2) of the Securities Exchange Act of 1934, and Section 13(d) of the Securities
4 Exchange Act, and barring him from the purchase or sale of penny stocks.

5 5. More recently, the SEC charged Defendants IRTH and Andrew Haag with failing to

6 disclose the source or amount of compensation IRTH had been paid to publish tweets promoting the

7 securities of IRTH’s clients. In re IRTH Communications, LLC, SEC Administrative Proceeding No.

8 3-19890. The SEC’s order found that IRTH, at Haag’s direction, tweeted or retweeted 23 positive

9 news articles describing the business, products, and securities of nine clients, and that IRTH failed to

10 disclose that it had received approximately $35,000 in compensation from these nine clients for these

11 tweets. See In re IRTH, Cease and Desist Order dated July 22, 2020. The SEC’s order also found that

12 IRTH and Haag violated the anti-touting provision of Section 17(b) of the Securities Act of 1933. Id.

13 The SEC’s order requires IRTH to cease and desist from any violations and future violations of this

14 provision and to pay disgorgement of $35,000, prejudgment interest of $4,233.71, and a civil penalty

15 of $35,000. Id. In addition, the order requires Haag to cease and desist from any violations and future

16 violations of this provision and orders him to pay a civil penalty of $7,500. Id.

17 6. Last year, during the course of the SEC proceedings, some of the Defendants disclosed

18 to that court that there is a pending parallel criminal investigation being conducted by the U.S.

19 Attorney’s Office for the Northern District of California. See SEC v. Honig et al., Case No. 18 CV

20 8175 (S.D.N.Y.) at Dkt. No. 127 p. 9-10 (“there's a criminal investigation in San Francisco into the

21 very allegations that has been ongoing”); Dkt. No. 198 at p. 24 (“THE COURT: Remind me, is [Honig]

22 under criminal investigation? Has he been indicted? Has he been convicted? [SEC TRIAL COUNSEL

23 NANCY] BROWN: I've seen no public record of his criminal status, but he has become a

24 cooperator.”). According to filings in the SEC action, there are official FBI file memoranda of

25 meetings involving Ford on January 26, June 14, and March 30, 2018; Stetson on February 14, 2019;

26 and Honig on April 23, 2019. Id. at Dkt. No. 185-1 p. 8. The SEC also indicated that it had produced

27

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1 approximately 600,000 documents related to the defendants’ conduct.2 See id. at Dkt. No. 127 at pp.

2 13-14.

3 7. Frost and OPKO have also been sued by investors in class and derivative litigation in

4 multiple jurisdictions for damaging OPKO’s investors through their misconduct against MabVax and

5 the other two victimized companies in the SEC Action, with just one of those cases thus far resulting

6 in settlements exceeding $16 million. See Steinberg v. OPKO Health, Inc., et al., Case No. 1:18-cv-

7 23786 (S.D. Fla.), at Dkt. No. 112. Although, years ago, Frost may have had a reputation as

8 pharmaceutical industry innovator, he has more recently been known for what Barron’s has

9 characterized as Frost’s “penny-stock collaborations” with Honig and other Defendants herein. See

10 “SEC Charges Against Phillip Frost Might Just Be the Tip of the Iceberg,” available at

11 https://www.barrons.com/articles/sec-charges-phillip-frost-1536608366.

12 8. Ultimately, Defendants destroyed MabVax—but not before fraudulently inducing it to

13 issue more than 2.6 million shares of common stock (worth roughly $22 million at the time) that the

14 Company would have been prohibited from issuing had the true facts been disclosed; defrauding it out

15 of millions more on vendors—and even lawyers—who were secretly part of the pump and dump

16 scheme orchestrated behind the Company’s back; and infecting its capitalization table and alienating

17 legitimate investors to the point that MabVax has been delisted with no prospects for the financing it

18 needs to bring its cancer treatments to market. Further, as conditions of financings, the Company was

19 required by Defendants to issue to Defendants and their affiliates shares of its preferred stock for free

20 as “inducement shares.” In total, these “inducement shares” of MabVax stock were convertible into

21 over 2.8 million shares of common stock (worth over $8.3 million at the times of issuance), of which

22 Defendants personally took the great majority. By October 15, 2018, MabVax learned that

23 Defendants’ estimated beneficial ownership was “at least 9,447,685” shares, or “at least 53.95%” of

24 the entire ownership of MabVax.

25 9. As a result of Defendants’ scheme, MabVax received the protection of the U.S.

26 Bankruptcy Court for the District of Delaware, explicitly citing the Defendants’ actions herein as the

27 basis for the business failure, and resultant inability to satisfy its obligations to the Memorial Sloan

28 2
Those documents are also the subject of outstanding, unfulfilled discovery requests that MabVax
has served on the Defendants in this action.
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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 Kettering Cancer Center in New York and many others. It was forced to sell off key components of

2 its promising clinical program on a “best offer” basis. This action was commenced in an effort to

3 allow MabVax to repay creditors, following the Bankruptcy Court’s appointment of special counsel

4 to do so.

5 PARTIES

6 10. Plaintiff MabVax Therapeutics Holdings, Inc. is, and at all times mentioned in the

7 Complaint was, a Delaware corporation, with its principal place of business in San Diego County,

8 California.

9 Individual Defendants

10 11. Honig is a resident of Boca Raton, Florida and, at all relevant times, worked at an office

11 in Boca Raton with Stetson and O’Rourke, and previously Brauser. Honig owns GRQ. Honig also

12 owns a majority stake in HSCI, of which Stetson is the named managing member. Honig was also the

13 president and one-third owner of Southern Biotech, a now-dissolved Nevada entity. Honig also is the

14 president of Barry and Renee Honig Charitable Foundation. Honig also is the trustee of GRQ 401K,

15 and of GRQ Roth 401K Honig, and in such capacity has voting and dispositive power over the

16 securities held by GRQ, and GRQ Roth 401K Honig. The SEC has brought fraud and other securities

17 claims against Honig and affiliated entities GRQ and HSCI in connection with MabVax and other

18 issuers in the SEC Action (see Paragraph 4).

19 12. Brauser is a resident of Lighthouse Point, Florida. He owns Grander, is the trustee of

20 Grander 401K, and owned one-third of Southern Biotech. The SEC has brought fraud and other

21 securities claims against Brauser and Grander in connection with MabVax and other issuers in the

22 SEC Action, in which Brauser has agreed to entry of judgment against him (see Paragraph 4).

23 13. Stetson is a resident of Fort Lauderdale, Florida and, at all relevant times, worked at

24 an office in Boca Raton with Honig and O’Rourke. Stetson has a minority investment in HSCI, of

25 which he is the named managing member. The SEC has brought fraud and other securities claims

26 against Stetson in connection with MabVax and other issuers in the SEC Action, in which Stetson has

27 agreed to entry of judgment against him (see Paragraph 4).

28

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1 14. O’Rourke is a resident of Fort Lauderdale, Florida and, at all relevant times, worked

2 at an office in Boca Raton with Honig and Stetson. O’Rourke owns Airy Properties and ATG Capital

3 LLC. He also controls 11 East Airy Street Partnership through both voting and dispositive power.

4 The SEC has brought fraud and other securities claims against O’Rourke and ATG in connection with

5 MabVax and other issuers in the SEC Action, in which O’Rourke has agreed to entry of judgment

6 against him (see Paragraph 4).

7 15. Frost is a resident of Miami Beach, Florida. Frost founded OPKO, Inc., and is its CEO.

8 Frost is also the trustee for FGIT. Frost also was the undisclosed one-third owner of Southern Biotech.

9 Frost enjoys a reputation as a successful biotech investor. The SEC brought fraud and other securities

10 claims against Frost in connection with MabVax and other issuers in the SEC Action, in which Frost

11 has agreed to entry of judgment against him (see Paragraph 4).

12 16. Groussman is a resident of Miami Beach, Florida and occasionally works at an office

13 in Boca Raton with Honig, Stetson, and O’Rourke. Groussman owns Melechdavid and is the trustee

14 of Melechdavid Retirement. The SEC has brought fraud and other securities claims against

15 Groussman and Melechdavid in connection with MabVax and other issuers in the SEC Action, in

16 which Groussman has agreed to entry of judgment against him (see Paragraph 4).

17 17. Rubin is believed to be a resident of Miami, Florida. He is the Executive Vice

18 President for Administration of OPKO, Inc., as well as a member of its Board of Directors. Rubin

19 also is an attorney.

20 18. Ford is a resident of Bolinas, California. The SEC has brought fraud and other

21 securities claims against Ford in connection with MabVax and other issuers, which Ford has settled

22 by agreeing to pay disgorgement to be determined by a federal court at a later date, and to entry of a

23 federal court injunction against further violations of the securities laws and from even investing in

24 smaller public companies like MabVax.

25 19. Robert Prag is believed to be a resident of Del Mar, California. He is the founder,

26 owner, and principal of DMCG, an investor relations firm, located in Del Mar, California, and is the

27 trustee of DMCG Retirement.

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1 20. Robert Haag is believed to be a resident of Santa Monica, California. He is the

2 Managing Director and Partner of IRTH, located in Santa Monica.

3 21. Andrew Haag is believed to be a resident of Santa Monica, California. He is the

4 Founder and Managing Partner of IRTH, located in Santa Monica.

5 Entity Defendants

6 22. 11 East Airy Street Partnership is a Pennsylvania corporation that O’Rourke controls

7 through both voting and dispositive power. 11 East Airy Street Partnership was incorporated in or

8 around 1984.

9 23. Airy Properties is a Pennsylvania corporation that O’Rourke controls through both

10 voting and dispositive power. Airy Properties was incorporated in or around 1972.

11 24. ATG is a Florida corporation that O’Rourke owns and operates with its principal place

12 of business in Florida. ATG was incorporated in or around 2012. The SEC has brought fraud and

13 other securities claims against ATG in connection with MabVax and other issuers in the SEC Action,

14 in which ATG has consented to entry of judgment against it (see Paragraph 4).

15 25. Barry and Renee Honig Charitable Foundation, Inc. is a Florida not for profit

16 corporation that Honig owns and operates with its principal place of business in Florida. Barry and

17 Renee Honig Charitable Foundation, Inc. was incorporated in or around 2008.

18 26. DMCG is a California corporation that Prag owns and operates with its principal place

19 of business in California. DMCG was incorporated in or around 1999. Defendants required MabVax

20 to use DMCG for investors relations services.

21 27. DMCG Retirement is a California trust. Prag is the trustee of DMCG Retirement.

22 28. FGIT is a Florida trust that was formed in or around 2002. Frost is FGIT’s Trustee.

23 The SEC has brought fraud and other securities claims against FGIT in connection with MabVax and

24 other issuers in the SEC Action, in which FGIT has agreed to a judgment against it (see Paragraph 4).

25 29. Grander is a Florida corporation that Brauser owns and operates with its principal

26 place of business in Florida. Grander was incorporated in or around 2010. The SEC has brought fraud

27 and other securities claims against Grander in connection with MabVax and other issuers in the SEC

28 Action. Grander received shares of MabVax preferred stock convertible into 26,667 shares of common

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1 stock valued $144,000 at the time of issuance as a “co-lead investor” fee in connection with a public

2 offering conducted by an investment bank.

3 30. Grander 401K is a Florida trust. Brauser is the trustee of Grander 401K.

4 31. GRQ is a Florida corporation that Honig owns and operates with its principal place of

5 business in Florida. GRQ was incorporated in or around 2004. The SEC has brought fraud and other

6 securities claims against GRQ in connection with MabVax and other issuers in the SEC Action.

7 32. GRQ 401K is organized in the State of Florida. Honig is GRQ 401K’s trustee, and in

8 such capacity has voting and dispositive power over the securities held by GRQ 401K.

9 33. GRQ Roth 401K Honig is organized in the State of Florida. Honig is GRQ Roth 401K

10 Honig’s trustee, and in such capacity has voting and dispositive power over the securities held by GRQ

11 Roth 401K Honig.

12 34. GRQ Roth 401K Renee is organized in the State of Florida. Honig’s wife is GRQ

13 Roth 401K Renee’s Trustee.

14 35. HSCI is a Delaware corporation that Honig and Stetson co-own and of which Stetson

15 is the managing member, with its principal place of business in Florida. HSCI was established in or

16 around 2011. The SEC has brought fraud and other securities claims against HSCI in connection with

17 MabVax and other issuers in the SEC Action. HSCI received MabVax preferred stock, convertible

18 into 70,000 shares of common stock valued $378,000 at the time of issuance as a “co-lead investor”

19 fee in connection with a public offering conducted by an investment bank.

20 36. IRTH is a Nevada Corporation with its principal place of business in California.

21 Andrew Haag is its founder and managing partner, and Robert Haag is its managing director and

22 partner. Defendants required MabVax to use IRTH for investor relations services as a condition of

23 financing.

24 37. Melechdavid is a Florida corporation that Groussman owns and operates with its

25 principal place of business in Florida. Melechdavid was incorporated in or around 2006. The SEC

26 has brought fraud and other securities claims against Melechdavid in connection with MabVax and

27 other issuers in the SEC Action, in which Melechdavid agreed to an entry of judgment against it (see

28 Paragraph 4).

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1 38. Melechdavid Retirement is a Florida trust. Groussman is the trustee of Melechdavid

2 Retirement.

3 39. OPKO is a Delaware corporation. Its principal place of business is in Florida. Frost

4 is OPKO’s CEO. OPKO was incorporated in or around 2007. The SEC brought fraud and other

5 securities claims against OPKO in connection with MabVax and other issuers in the SEC Action, in

6 which OPKO agreed to a judgment against it (see Paragraph 4).

7 40. Southern Biotech is a now-dissolved Nevada corporation that Honig operated and co-

8 owned with Brauser and Frost, and also managed by Stetson, as a sham entity to disguise their true

9 positions in MabVax, with a purported principal place of business in Florida. Southern Biotech was

10 incorporated in or around 2014. The SEC brought fraud and other securities claims against Southern

11 Biotech in connection with MabVax and other issuers in the SEC Action, but has dropped its claims

12 as Southern Biotech was recently dissolved.

13 41. MabVax is informed and believes that in doing the wrongful, illegal, tortious, and

14 intentional acts hereinafter alleged, Defendants, and each of them, acted as the agents and co-

15 conspirators of the other Defendants, acted within the course and scope of said agency, and acted with

16 the knowledge, consent, and approval of the other Defendants.

17 JURISDICTION

18 42. Jurisdiction and venue are proper because Defendants’ wrongful conduct was directed

19 to and caused MabVax injury in the County of San Diego and Defendants’ false and misleading

20 communications were directed to, received in, and had a significant economic impact in the County

21 of San Diego. Certain Defendants, including DMCG and DMCG Retirement, also reside in San

22 Diego County.

23 43. This Court has already ruled that several of the Defendants are subject to personal

24 jurisdiction in this County. The court denied the motions to quash for lack of personal jurisdiction

25 brought by the OPKO Defendants, the Groussman Defendants, and the Brauser Defendants, finding

26 that those Defendants’ “suit-related conduct creates a substantial connection with California.” (See

27 March 16, 2020 and July 31, 2020 Minute Orders.) 3

28 3
The OPKO and Groussman Defendants filed writ petitions in the Court of Appeal (and the
Groussman Defendants filed a writ petition in the Supreme Court) related to those orders, which
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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 44. Throughout the period relevant to this Complaint, Defendants called, emailed, and met

2 with MabVax in this County, knowing that the Company was headquartered in the County of San

3 Diego and knowing that the effects of their misconduct would be, and were, felt in San Diego.

4 45. Among other things, Defendants Honig, Stetson, Brauser, O’Rourke, Groussman, and

5 Prag sent to MabVax in San Diego the fraudulent requests for conversion of convertible preferred

6 stock into common stock that in part form the basis for this action. Since April 2015, the total value

7 of the common stock issued to Defendants and their family members on the dates of conversions

8 amounted to over $22 million, representing nearly 99% of all preferred stock that was converted

9 during that period. Those Defendants, and also Frost, FGIT, and, OPKO, all sent to MabVax in San

10 Diego investor certifications and other documents that fraudulently omitted their true beneficial

11 ownership of the Company’s stock.

12 46. Honig and Stetson physically came to California to meet with MabVax, including to

13 solicit and negotiate investment in the Company, including repeated meetings at the Beverly Hills

14 Hotel, Dana Point, and San Diego.

15 47. At all relevant times, Ford lived in California. As detailed below, unbeknownst to the

16 Company, O’Rourke directed Ford to perform certain fraudulent actions in California, at the behest

17 of other Defendants.

18 48. At all relevant times, Prag, Robert Haag, and Andrew Haag lived in California, and

19 DMCG, DMCG Retirement, and IRTH are all California entities. As detailed below these defendants

20 worked in concert with the other defendants as part of Defendants’ collective effort to achieve the

21 illicit objectives.

22 49. Rubin entered into a purported consulting agreement with MabVax in California,

23 communicated with Company personnel in California, and was issued shares by the Company in

24 California.

25

26

27

28
were summarily denied.
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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 OVERVIEW OF DEFENDANTS’ INVESTMENT SCHEME

2 The Partnership Among Honig, Brauser, Stetson, O’Rourke, Groussman, and Frost

3 50. Honig, Brauer, Stetson and O’Rourke, individually and/or through their entities, and

4 including Kesner, invested alongside one another in at least 19 issuers at or about the same time, from

5 2011 to the present. While this action concerns one of those issuers (MabVax), in most cases in

6 which Honig, Brauser, Stetson and O’Rourke co-invested, the investments followed the same pattern:

7 Honig or Brauser would identify a target company and arrange a financing (or financings) that would

8 give them and their chosen co-investors (including Stetson and O’Rourke, among others) a

9 controlling position in the company’s outstanding common stock at below market prices. Honig,

10 Brauser, Stetson and O’Rourke would then exercise that control by dictating terms of the company’s

11 material management decisions and policies, and voting together to direct the company’s major

12 business decisions. When the group determined that the time had arrived to exit the investment, they

13 would engineer a publicity-generating event that would both drive the price of the stock higher, and

14 also create market demand and trading volume that would allow them to sell their position. Typically,

15 Honig, Brauser, Stetson and O’Rourke would dictate some kind of transaction for management to

16 undertake—e.g., an acquisition, merger, or a new investment by a well-known investor, like Frost—

17 and paid writers, bloggers, or other public relations professionals to write about it. Once the publicity

18 had its intended effect on the stock’s price and trading volume, Honig, Brauser, Stetson and O’Rourke

19 (as well as the other hand-picked co-investors) would sell their respective positions—generally

20 staggered over a course of weeks—into the artificially inflated market.

21 51. The national business press, including Barron’s, has generally considered Honig to be

22 the “primary strategist” of the group’s schemes against MabVax and other victimized companies and,

23 as reported and set forth below, he also undertook these “penny-stock collaborations with the

24 billionaire [Defendant Philip] Frost.” Frost was a particularly active “collaborator” in the

25 exploitation of MabVax, with direct involve in press releases that “pumped” the stock (complete with

26 Frost-supplied quotations), presiding over in-person meetings about MabVax with Honig, Brauser,

27 and Stetson at the Frost office in the OPKO building, where he works alongside Defendant Rubin,

28 who the group required MabVax to pay $500,000 for doing nothing. According to a 2018 forensic

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 financial research report, Frost and OPKO are “an integral part” of the group’s manipulation of

2 MabVax, which is what Hindenburg Research also characterized as Frost and OPKO’s aid of

3 “multiple pump & dump schemes led by notorious penny stock financier Barry Honig,” to the point

4 where Frost personally has “mortgaged his reputation . . . as a means of providing credibility” to

5 the pump-and-dumps.

6 52. Throughout these stages, Honig, Stetson and O’Rourke were in nearly daily contact

7 because they worked out of the same office and were in frequent email and telephone contact, at times

8 purposefully moving their conversations to the less permanent medium of text or instant messaging.

9 53. Honig, Brauser, Stetson and O’Rourke even obtained their interests in these issuers at

10 the same time, and agreed to act as a group in holding, disposing and voting the stock they acquired,

11 with Honig leading the combined effort. As O’Rourke put it in a February 3, 2014 email to the officer

12 of a potential merger target, “Barry Honig is the principal investor of our small group.” Honig

13 carefully controlled his “small group’s” participants in the financings he arranged so that shares were

14 held only by individuals and entities that (1) permitted Honig to direct how they voted their shares

15 and/or acquiesced in Honig’s control of the management of the company, and (2) refrained from

16 selling their shares until the optimal time for group members to profit from the planned “pump and

17 dump.”

18 54. Honig and Stetson worked together to ensure that members of their groups voted their

19 shares in unison. At times, members of the group reached out to Stetson to find out how they should

20 vote on various proposals. For example, with respect to one of the issuers in which they had co-

21 invested, in July 2015, Brauser forwarded an email request from a co-investor’s staffer to Stetson,

22 asking whether to vote for or against a proposal. Stetson, in an email that same day, copying Honig,

23 replied, “Yes, vote ‘For.’” In a November 2016 email to members of a Honig group of investors in

24 another issue, Stetson responded to a request for “instructions to vote” with “[v]oting in favor of [two

25 named directors]. Against all other members and actions.”

26 55. While Honig was the primary architect of the scheme detailed below, email traffic

27 among Honig, Brauser, Stetson and O’Rourke demonstrates the various key roles each of these

28 Defendants played in the typical Honig-led investment, and as noted Frost and OPKO were “an

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 integral part” by not only directly participating in the “pump” by also by lending the façade of Frost’s

2 reputation as the (unverified) “billionaire” behind OPKO to bring faux legitimacy to what the Wall

3 Street Journal reported as “brazen market manipulation” and a “classic pump and dump” that the

4 SEC exposed publicly in late 2018.4

5 56. Brauser is a long-time co-investor with Honig, investing (individually, through his

6 entities Grander and Grander 401K, or through family members’ accounts) alongside Honig (and/or

7 a Honig entity) in more than 40 issuers between approximately 2011 and mid-2018. From at least

8 October 2010 to approximately 2013, Brauser rented an office at 4400 Biscayne Boulevard in Miami,

9 Florida, a building that serves as the headquarters from OPKO and is owned by a Frost entity.

10 57. For some of the issuers in which Brauser co-invested alongside Honig, Brauser took

11 an active role, at times directing the issuer’s management, finding and negotiating transactions for

12 the issuer or bringing in additional investors. In others—particularly while Honig and Brauser

13 worked through one of their periodic disputes about who owed whom money—Brauser was content

14 to let Honig direct the steps in the scheme; since Brauser had been closely involved with respect to

15 the other issuers in which he had co-invested with Honig, he was well-familiar with the playbook,

16 knew that Honig would follow it, and understood that Honig would signal to Brauser when it was

17 time to sell his shares.

18 58. Stetson shared office space with Honig and O’Rourke at all relevant times.

19 Individually, or through HSCI (the vehicle he nominally controlled), Stetson invested alongside

20 Honig (and/or a Honig entity) in more than 65 issuers between 2011 and August 2018. In connection

21 with most of these investments, Stetson executed Honig’s directions, managed the administrative

22 aspects of the Honig’s group’s investments, and performed pre-investment due diligence. For

23 example, Stetson communicated with brokers to effect Honig’s trades, deposited Honig’s shares with

24 brokers, communicated investment terms and wire instructions to investors Honig had lined up,

25 tracked the ownership of each group member in a particular issuer, corralled shareholder votes from

26
4
27 OPKO is itself controlled by Frost and related entities, with Defendant Rubin the third largest
stockholder, and has come under government and investor scrutiny, repeatedly, for a wide range of
28 conduct, including in an False Claims Act investigation by the Southern District of New York that
has been pending since at least April 2017 for claims of improperly billing Medicare, and also
shareholder litigation based on the misconduct that targeted MabVax.
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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 co-investors (and, in some cases, even told co-investors how to vote), prepared financial analysis of

2 proposed investments and conveyed Honig’s instructions to issuer management. From 2012 to 2013,

3 Stetson also frequently managed Honig’s arrangements with Ford to write paid promotional articles

4 about issuers in which Honig and his group invested. With respect to MabVax, Stetson was a central

5 person responsible for setting the terms of financing (with Honig’s direction and consent), bringing

6 the approved set of investors into the group, and allocating the amount of investment and shares

7 (either purchased or free incentive shares) among the pool of investors.

8 59. O’Rourke shared office space with Honig and Stetson at all relevant times, beginning

9 in 2012. Through his entity, ATG, or individually, O’Rourke invested alongside Honig (and/or a

10 Honig entity) in over 75 issuers between 2011 and August 2018. Beginning in 2013, O’Rourke

11 managed the Honig group’s promotional efforts by working with writers and bloggers to publish

12 favorable articles and posts about issuers the Honig group controlled. He arranged for those writers

13 to be compensated for their promotional pieces. For example, in 2013 and 2014, O’Rourke

14 compensated one individual for writing positive promotional articles, making payments through

15 personal checks and/or sham stock purchases, designed to disguise the true purpose of the

16 compensation. O’Rourke knew, or was reckless in not knowing, that this individual did not disclose

17 these payments in the promotional pieces he published on these issuers.

18 60. At times, and with Honig’s knowledge and consent, or at his direction, O’Rourke

19 himself wrote and published promotional articles. O’Rourke used a pseudonym for the byline and

20 did not disclose his relationship to the issue being promoted or the compensation Honig was paying

21 him for the articles.

22 61. Frost invested alongside Honig (or a Honig entity) in several issues from 2011. For

23 Honig and his co-investors, Frost’s participation in a deal brought an aura of legitimacy, important

24 publicity for the issuer, and—most helpful in creating market interest in the particular issuer—his

25 substantial following among retail investors. As a consequence, Honig and Brauser frequently sought

26 to persuade Frost to invest alongside them. As Stetson put it in a 2015 email to MabVax’s CEO, the

27 “following of Dr. Frost is worth its weight and [sic] gold.”

28

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 Honig’s Efforts to Conceal the Extent of His Entire Group’s Investments

2 62. Honig typically sought to conceal the size of his and his group’s investments in issuers.

3 To that end, Honig set up various investment vehicles through which he could invest indirectly and

4 surreptitiously—the very point of which was to conceal his ownership—which included the

5 beneficial ownership of the entire group—to avoid the very disclosure required by the Williams Act

6 amendments to the Securities Exchange Act of 1934, which under Section 13(d) in particular was

7 enacted to require disclosure when investors—just like all Defendants, acting as coordinated illicit

8 group—began “accumulating large blocks of equity securities of publicly held companies.” In the

9 case of MabVax, Defendants’ illicit group had amassed a staggering control position of “at least

10 9,447,685” shares -- or “at least 53.95%” of the entire ownership of MabVax – that not one of

11 them ever disclosed despite individual, compulsory and never-delegable obligation under Section

12 13(d) to publicly disclose and file on reports with the SEC (generally, within 10 days).

13 63. One such oblique Honig investment vehicle was HSCI, a limited liability company set

14 up by Honig and Stetson in 2011. While Honig and Stetson named Stetson as HSCI’s sole managing

15 member, Honig controlled 94% of its membership interests and directed many of HSCI’s investment

16 decisions, including the size of the allocation HSCI would take in a particular financing, the timing

17 of when HSCI would deposit shares or sell its position, and the brokers HSCI would use for its

18 transactions. For example:

19  In a November 20, 2013 email, Honig directed Stetston to “convert, deposit and purchase
20 [shares in a particular issuer] . . . from HS[CI].”

21  In a January 5, 2014 email, Honig directed Stetson to wire $1.7 million from HSCI to
accounts at his broker and bank.
22
 In a June 1, 2014 email in which Honig laid out a list of tasks for Stetson, Honig directed
23
Stetson to “change warrants to HS[CI]. Have HS[CI} buy it for $1000.”
24
 On June 17, 2014, Honig instructed Stetson to “wire out of hs[ci] and then get money wired
25 bac [sic] to me.”
26  In July 2015, Honig directed Stetson to transfer Honig’s MabVax shares and those held by
27 HSCI to an investment relations consultant (in reality, a pumper) he wanted involved in the
promotion of MabVax.
28

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1  In October 2016, Honig negotiated terms for an investment in an issuer that, according to an
October 7, 2016 Honig email, included at $650,000 investment “from me and or my
2 assignees and I get 100,000 shares for due diligence and structuring fee.” While Stetson
had no part in the negotiations, when the issue sent the final deal documents, both the
3
subscription agreement and the consulting agreement for “due diligence services” were in the
4 name of HSCI, and Stetson signed them both on behalf of HSCI.

5 64. Honig treated HSCI as his own entity in other ways as well. For example, Honig

6 directed Stetson to pay through HSCI certain of Honig’s own expenses, including airfare, a private

7 jet rental, and a 2015 $75,000 payment to one of the boxers in the stable of professional boxers Honig

8 promoted.

9 65. Stetson understood that HSCI was Honig’s investment vehicle. When Honig asked

10 Stetson to list Honig’s various positions in issuers, Stetson would reply with a list that included

11 HSCI’s position. But both Stetson and Honig worked to hide that fact from others. In a March 9,

12 2011 application to open a brokerage account for HSCI, where the questionnaire asked Stetson for “a

13 list of all principals and beneficial ownership percentage,” Stetson failed to identify Honig at all,

14 writing instead “John Stetson 100%.”

15 66. HSCI was not the only vehicle Honig used to conceal his investments. Honig used

16 Southern Biotech as an entity through which he, Brauser and Frost could each funnel their

17 investments in issuers, including MabVax, thus shielding the size of their individual investments from

18 disclosure. As noted, OPKO was a supposedly legitimate face for the group. That Honig was using

19 these vehicles to disguise the extent of his and others’ investments was a goal he acknowledged in

20 2016 in connection with his efforts to set up yet another corporate investment vehicle. In a November

21 2016 email among Honig, O’Rourke and others, including Honig’s brother, concerning the setup of

22 a corporation as an investment vehicle, Honig agreed that “[t]he goal is to stop people from knowing

23 what Barry [Honig] invests in . . .” even though federal law since 1968 requires “people [to]

24 know[]” what investors are buying, with whom, when, and why to avoid companies like MabVax

25 from stealth control.

26 The Concealed Agreement with Stock Promoter Ford

27 67. Honig first met Ford in the summer of 2012 in San Francisco, California, after having

28 read articles Ford had written promoting investments in public companies. By 2012, Ford had

developed an investor following for his reports on various issuers posted on the Seeking Alpha
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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 investor website. During their meeting, Honig asked Ford how much he was paid to write an article

2 about a publicly traded company. Ford answered that his rate was $45,000 per article – he was

3 literally paid each time he “pumped” a company’s stock under the fraudulent pretext of investor

4 “research.” Honig proposed that he could compensate Ford to write articles for his issuers by inviting

5 him to participate in the private placement financings with his chosen group of investors that he

6 negotiated with issuers. Ford understood the value of that opportunity, since Honig hand-picked the

7 investors invited to participate, the private placement shares were valued below market, and Honig’s

8 track record of “successful” investments (i.e., frauds) meant that the shares Ford obtained would

9 likely rise in value. Ford also understood that Honig’s invitation to participate in his group of

10 investors would be contingent on Ford’s agreement to write favorable articles about issuers at

11 Honig’s, Stetson’s and O’Rourke’s requests. By the end of the meeting, Honig and Ford had agreed

12 that Honig would secretly compensate Ford to write about companies that Honig introduced to him,

13 and that Ford would not publicly disclose that compensation so that investors would believe Ford’s

14 articles to be the product of his independent analysis and free from any conflict of interest.

15 68. During their first meeting, Honig presented Ford with a riskless transaction that Ford

16 understood was Honig’s way of enticing Ford to participate in the scheme. Honig proposed that Ford

17 purchase securities of a certain issuer (in which Honig, Stetson and O’Rourke were also invested) in

18 a private transaction with a designated third party, and then immediately sell the securities at a higher

19 price to another designated party.

20 69. Ford agreed to participate in the transaction and coordinated the specific details over

21 email with Stetson in July 2012. In an email on July 27, 2012, Stetson told Ford the amount of the

22 purchase wires and the information Ford should put in the reference line for the purchase wires. In

23 that same email, Stetson informed Ford that a $125,000 wire had been deposited into Ford’s account,

24 even though Ford had yet to purchase the stock for which he was receiving the funds. On August 7,

25 2012, Stetson sent Ford the purchase agreement for the shares he had “purchased two weeks ago.”

26 Ultimately Ford earned profits of approximately $90,000.

27 70. Pursuant to the agreement Ford and Honig reached in their summer 2012 meeting in

28 California, Ford began writing articles at Honig’s behest, with assistance initially provided by

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 Stetson, and later by O’Rourke. For example, in September 2012, Stetson arranged for Ford to

2 conduct an interview for a promotional article Ford was writing on Opko.

3 71. During the period 2012-2015, Ford wrote and published seemingly independent

4 articles about various companies in which Honig and his co-investors had an interest. He did so at

5 Honig’s direction—often communicated through Stetson or O’Rourke—and in return for the right to

6 participate in off-market securities transactions or Honig-led private placements. He also received at

7 least $125,000 in cash payments during this period. Honig structured the cash payments to Ford to

8 disguise their source by enlisting third-party Honig associates to enter into sham consulting

9 agreements with Ford, and funneling the payments to Ford through the associates, ostensibly pursuant

10 to those agreements.

11 72. Ford communicated with Honig, Stetson and O’Rourke about the companies,

12 compensation and articles, Honig, Stetson and O’Rourke knew that Ford was writing the favorable

13 articles because he was being compensated for doing so, and all three knew that Ford was not

14 disclosing this compensation to the public. Indeed, all three understood that if Ford had disclosed

15 that he was being paid, investors would have discounted the independence of his analysis and would

16 have been less likely to follow Ford’s recommendations.

17 73. Brauser also knew, or was reckless in not knowing, that Honig was paying Ford to

18 write promotional pieces without disclosing their arrangement. For example, in November 2013,

19 Honig copied Brauser and O’Rourke on an email outlining a promotional plan for OPKO, which

20 included the publication of a Ford article. Honig noted in this email that “we were assisting” on the

21 drafting of the “John Ford article.” In December 2013, O’Rourke sent Brauser an email linking

22 Ford’s Opko article, which did not disclose that Ford had been paid to write it. More basically,

23 Brauser (like Stetson and O’Rourke) knew, or was reckless in not knowing, that each participant in

24 Honig private placement deals—i.e., Honig’s “following” —had been invited to participate in these

25 private transactions in exchange for something of value that each could bring to the deal, and that

26 Ford was no different. Brauser understood, for example, that Frost brought his retail investor

27 following and reputation as a successful investor to provide liquidity when the participants wished to

28 sell. Brauser knew that others brought needed cash and a willingness to follow Honig’s directions on

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 how to vote or when to sell. Because Honig was inviting Ford to participate in these transactions,

2 Brauser knew, or was reckless in not knowing, that Ford was providing value to the group in authoring

3 favorable articles on issuers in which the group was invested.

4 74. Brauser, like Honig, Stetson and O’Rourke, also regularly followed news and articles

5 written about the companies in which they were invested. As a result, each of them knew, or was

6 reckless in not knowing, that Ford’s promotional articles did not disclose his compensation

7 arrangement with Honig.

8 75. Critically, these and the other group activity—whereby each of the defendants worked

9 together, and at times on their own to advance the overall group objectives of amassing controlling

10 beneficial ownership, required each of them to honestly report the group’s collective ownership—

11 reports that none of them once made—under the Williams Act and SEC Rule 13d‐1 promulgated

12 thereunder.

13 MABVAX IS FRAUDULENTLY INDUCED INTO


A RELATIONSHIP WITH DEFENDANTS—STARTING WITH A SHAM INVITATION
14 OSTENSIBLY FROM A CHILDREN’S CANCER CHARITY
15
76. By the end of 2013, MabVax was a privately-held company that had been in business
16
for five years and was looking for funding for its research and development efforts in cancer therapies
17
and diagnostic products, having reached the point where its committed existing private investors,
18
founders, friends, and family could no longer shoulder the crushing expense of bringing new cancer
19
treatments to market. At the same time, and unbeknownst to MabVax, Honig and his group—who
20
had no relationship with the Company and were not known to its management—were searching for a
21
new public company to victimize for another pump and dump scheme, just as Defendants had
22
orchestrated on dozens of prior occasions—including not only the two other issuers that are the subject
23
of the SEC Action, who, on information and belief, are CoCrystal Pharma, Inc. (f/k/a BioZone
24
Pharmaceuticals, Inc.), and MGT Capital Investments, Inc., but also, on information and belief,
25
including Riot Blockchain (f/k/a Bioptix, Inc.), 5 Pershing Gold Corporation (f/k/a Sagebrush Gold,
26
Ltd.; f/k/a The Empire Sports & Entertainment Holding Co.; f/k/a Excel Global, Inc.), 6 and U.S. Gold
27
5
Until 2017, Bioptix, Inc. made diagnostic machinery for the biotech industry. In the fall of 2017, Bioptix
28 changed its name to Riot Blockchain, and became a cryptocurrency mining company.
6
According to its February 5, 2013 S-1/A, Excel Global, Inc., founded in 2007, “operated as a web-based
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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 Corporation (f/k/a Dataram Corporation).7 Although Honig had already found a publicly-traded shell

2 company that could be purchased inexpensively and then manipulated, Defendants had a major

3 problem: the shell company had no investment-worthy business and, for this reason, they needed to

4 find a promising private company (like MabVax) that could quickly be taken public—through a so-

5 called “reverse merger” with the moribund shell—in order to launch the pump and dump scheme.

6 77. In early 2014, Defendants’ reverse merger problem was solved by the identification of

7 MabVax with the assistance of a hedge fund and its affiliates with whom Honig and other Defendants

8 frequently collaborated (“Entity H”). Entity H did not have any prior relationship with MabVax. Nor

9 did Entity H directly reach out to MabVax. Instead, MabVax was invited to come to New York to

10 give a presentation about its clinical work to a non-profit charity (“Charity H”), which claimed it

11 wanted to award the Company a much-needed $500,000 grant to research childhood cancer treatment.

12 Charity H scheduled MabVax’s presentation to take place at Entity H’s offices in midtown Manhattan.

13 78. MabVax’s senior leadership predictably accepted Charity H’s invitation to present as a

14 condition of receiving the research grant, and, as requested, traveled to Entity H’s offices. Following

15 the presentation, a principal of Entity H introduced himself to MabVax’s CEO and shared disarmingly

16 personal details about a family loss from childhood cancer. Entity H’s principal told MabVax that he

17 was so impressed with its clinical program that Entity H was interested in investing in the Company,

18 and even taking it public.

19 79. MabVax never received the research “grant” from Charity H that had lured it into Entity

20 H’s New York offices.8 Entity H, however, promptly followed up with MabVax about its enthusiasm

21 for the Company and its potential to go public. Soon thereafter, Entity H proposed a $6 million

22
service provider and consulting company.” After changing its name to The Empire Sports & Entertainment
23 Holdings Co. in September 2010, the company “commenced the promotion and production of sports and
entertainment events as [its] sole line of business.” On May 16, 2011, the company changed its name to
24 Sagebrush Gold Ltd., and focused on gold mining. It continued to be a gold mining company when it changed
its name to Pershing Gold Corporation in 2012.
25 7
Dataram Corporation was a manufacturer of memory products. In June 2017 the company changed its name
26 to U.S. Gold Corporation to reflect its pivot into gold mining.
8
Only after the New York presentation—and the seemingly fortuitous introduction to Entity H—did MabVax
27 learn that the terms of Charity H’s purported $500,000 research “grant” were so onerous that, as if by design,
it would have been economically irrational for MabVax to accept such a grant. (Charity H’s IRS filings also
28 make clear that, in 2014, its total grants were less than $450,000, with the largest grant of $115,000, and with
every grant made to a hospital or university—never to a private company like MabVax.)
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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 investment in MabVax, to be made in two tranches of $3 million. The first tranche would be made

2 up-front because MabVax desperately needed financing, with a second tranche of $3 million to come

3 several months later only if MabVax became a public company (which Entity H committed to

4 assisting, which was Defendants’ goal in identifying MabVax in the first instance). Entity H’s

5 financing proposal was essentially non-negotiable.

6 80. As the first tranche of the financing was closing and MabVax was preparing to

7 distribute shares, Entity H sent an investor list that, to MabVax’s surprise, revealed Entity H was not

8 the only investor. Roughly $1 million was being invested by HSCI—a company that MabVax had

9 never heard of. Even that belated disclosure was dishonest; Stetson falsely identified HSCI as his own

10 company to MabVax’s CEO, even though Honig (whom MabVax also had never heard of) owned the

11 great majority of HSCI and actually directed and controlled HSCI’s investment decisions. At no time

12 did Entity H disclose its many years of collaboration with Honig, Stetson, and other Defendants.

13 81. Soon thereafter, Entity H told MabVax that it had found a public shell company that

14 MabVax should enter into a reverse merger with—thereby going public. This was the shell company

15 Honig had found—something that Entity H also had not disclosed to MabVax at the time. MabVax

16 agreed to pursue the merger. However, just before the merger between MabVax and the public shell

17 was finalized, Defendants and Entity H committed to make a substantial investment in the public shell

18 knowing that, following the planned reverse merger, their investment would be in MabVax. This

19 investment was structured without involvement of, much less fair disclosure, to MabVax, using

20 nominee or other straw holders in ways that obscured the true ownership of the shell that MabVax was

21 acquiring. On information and belief, and according to the SEC Action, the undisclosed Defendants

22 who invested in the shell, and thus in MabVax, preferred to remain in the shadows with respect to their

23 illicitly concealed controlling positions, avoiding compliance with the Williams Act, the Securities

24 Act of 1934, and SEC regulations. At the same time, Entity H further burdened the shell company

25 with a “Consent Right” whereby Entity H could block, for any reason or no reason at all, many kinds

26 of transactions, including the issuance of additional shares, any change of control, and other significant

27 corporate actions. MabVax closed the reverse merger on July 8, 2014, thereby becoming subject to

28 obligations to Defendants whom it never knew existed, and also subject to the Consent Right.

-23-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 82. As MabVax was preparing to go public, in approximately April 2014, Entity H

2 scheduled a call with MabVax’s CEO ostensibly to discuss the investor relations and public relations

3 efforts necessary as the Company matured. When MabVax’s CEO joined the call, however, he was

4 surprised that both Stetson and Honig were on the call, and that Entity H had essentially no role.

5 MabVax’s CEO had never heard of Honig, who shockingly announced, in words or substance: “I’m

6 the owner of your company. You better do what I tell you to do.” Honig did not, however, disclose

7 his relationship with Entity H, his control over HSCI, or how it was that he claimed to “own” MabVax.

8 Still more surprising to MabVax’s CEO was Entity H’s officers’ irrelevance during the call, and their

9 deference to Stetson and Honig as if this was all known to them, and normal.

10 83. Honig worked with Stetson to exert his influence over management. As early as May

11 18, 2014, for example, Stetson emailed MabVax’s CEO to get updates on “IR and PR.” Stetson was

12 referring to investor relations (“IR”) and public relations (“PR”), and was pressing his and Honig’s

13 demand that MabVax begin aggressively marketing itself and paying promoters to do so. Honig added

14 to the discussion the topic of future financings: “[a]nd the money raise.”

15 84. On June 1, 2014, Brauser and Groussman each committed to make a substantial

16 investment in the public shell, before the merger into MabVax was finalized. As the ringleaders for

17 the investor group in MabVax, Honig and Stetson led the merger negotiations on the group’s behalf.

18 85. On July 18, 2014, MabVax executed the reverse merger of the company into the public

19 shell controlled by Entity H, HSCI, and, by then, Brauser and Groussman’s entity Melechdavid. At

20 or around the time the merger closed, ATG, Brauser and Melechdavid also made investments in

21 MabVax. After the merger, the stake of Entity H, HSCI, Brauser, Melechdavid and ATG (including

22 conversion of all warrants) amounted to almost 48% of the authorized shares of the newly public

23 MabVax. The terms of the merger included granting a “Consent Right” to Entity H and its affiliates,

24 by which Entity H could block or approve many kinds of transactions by MabVax, including the

25 issuance of additional shares, any change of control, and other significant corporate actions.

26 86. In connection with the July 2014 reverse merger, the merger investors obtained

27 warrants that they agreed would not be exercisable until July 8, 2015. However, on September 3,

28 2014, MabVax agreed to allow merger investors to exercise warrants for additional MabVax shares

-24-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 before the previously agreed-upon July 8, 2015 exercise date. This warrant exercise allowed investors

2 to exchange warrants for shares cheaply. In connection with that exercise, Stetson submitted warrants

3 on behalf of several investors, including ATG and Melechdavid. In a September 15, 2014 email,

4 MabVax’s CFO asked Stetson which entities were his or HSCI’s affiliates. Stetson falsely answered

5 that he was “not affiliated with any of those entities,” and that he “just made private sales for my

6 warrants.”

7 DEFENDANTS TIGHTEN THEIR GRIP ON MABVAX THROUGH


FURTHER FRAUD, MANIPULATION, AND DECEIT
8

9 87. In March and April 2015, Honig orchestrated two private placement financings for

10 MabVax that would tighten Honig’s, Brauser’s, Stetson’s, and O’Rourke’s control of the company:

11 the Series D and Series E offerings.

12 88. Following the reverse merger, MabVax looked for additional investors in the Company

13 without success. Although Entity H had held itself out as a respected investor, MabVax later came to

14 learn that Entity H, in fact, had a bad reputation for the manner in which it structured its investments

15 and approached investee companies. In short, Entity H’s large position in MabVax—and the terms of

16 that position—was scaring away other investors.

17 89. In early 2015, MabVax began to negotiate with Entity H to buy out Entity H’s position

18 in MabVax. Entity H, however, would not agree to reasonable terms, asking for a good deal more

19 than it had invested to be bought out. At the time, that made no sense to MabVax. Entity H, however,

20 was continuing to work as an undisclosed collaborator with Defendants.

21 90. Once MabVax came to its bewildering impasse with Entity H, Stetson called MabVax,

22 inquiring about the progress of the Company. MabVax explained to Stetson its predicament: the

23 structure of the Entity H investment made MabVax a difficult and unattractive investment target.

24 Stetson expressed sympathy for MabVax and volunteered that he might be able to arrange a buyout of

25 Entity H, as well as subsequent financing for the Company. These would become the Series D and E

26 rounds of financing. At that time, this call appeared to MabVax to be nothing more than the call of an

27 interested investor. Of course, it was all orchestrated by Honig, out of MabVax’s view. Honig sent a

28 March 5, 2015 email to Stetson, Brauser, and Frost saying that the buyout and follow-on financing

-25-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 were a “real good opportunity” that would allow them to “make $35 million conservatively in 4

2 months and our money out [in] 4 weeks. . . . I will trade out of it for us.”

3 91. Stetson arranged to meet with MabVax on March 9, 2015 at the Marriott Laguna Cliffs

4 in Dana Point, California, to discuss what he was pitching as an arms-length buyout of Entity H’s

5 position in MabVax. MabVax and Stetson reached a rough agreement on proposed terms at that

6 meeting. Stetson continued to express support for MabVax without ever disclosing that, in fact, he

7 and other Defendants were collaborating with Entity H all along.

8 92. Stetson brought Kesner with him, introducing Kesner to MabVax, and recommending

9 that MabVax hire Kesner to advise MabVax on the preparation and filing of its SEC filings, and on

10 related corporate matters. Stetson and Kesner, and later Honig, told MabVax that Kesner had

11 exceptionally significant experience representing companies like MabVax before the SEC and in fact

12 had practiced at the SEC for a period of time. Although Stetson, Honig and Kesner misrepresented

13 Kesner as a leading securities attorney who would bring expertise as counsel for MabVax, it later was

14 revealed that Kesner was, in fact, “The Lawyer at the Center of SEC Pump-and-Dump Case” —i.e.,

15 a co-conspirator. See https://www.barrons.com/articles/the-lawyer-at-the-center-of-sec-pump-and-

16 dump-case-1538675403.9 After the meeting, Stetson sent MabVax a March 9, 2015 email further

17 pitching the deal. Stetson stated that Frost would be investing, saying that “[t]he following of Dr.

18 Frost is worth its weight [in] gold.” Stetson justified the proposed highly dilutive financing terms

19 that were so unfavorable to MabVax, and favorable to the Series D and E investors, as irrelevant

20 because Frost’s involvement would propel MabVax to great success. Stetson argued that “[t]he cost

21 basis of Dr. Frost is irrelevant . . . . I anticipate that with Frost and Barry’s following that the stock

22 will trade up on announcement and with strong shareholders the stock will only increase as MabVax

23 continues to deliver results.” Stetson also sent MabVax a spreadsheet with the terms under which he

24 and other Defendants would exchange the Entity H shares they would buy for Series D preferred shares

25 of MabVax stock, and make a follow-on investment in the Series E round of financing consisting of

26 common stock and Series E preferred shares.

27 9
Honig, Stetson, O’Rourke, Groussman and Kesner are well known for their group activities at the
28 Roth Capital Conference held each year in March at Dana Point. See
https://www.youtube.com/watch?v=CrCpLJ5dZYE.

-26-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 93. Although never disclosed by Honig and Stetson at the time they praised Frost and made

2 him a central component of the group’s investment, other financial firms had started recognizing what

3 Lakewood Capital Management ("Lakewood") in a short thesis referred to as "Opko Health: the

4 Placebo Effect," expressing concern about the extensive relationship between Frost and Honig and

5 Brauser, whom they described “serial stock promoters” and what they also pointed to as the "web of

6 stock promotion."

7 94. Honig, on behalf of Defendants, insisted that these Series D and E preferred shares be

8 convertible into common shares, but with beneficial ownership “blocker” provisions. Pursuant to

9 those provisions, MabVax was prohibited from converting any holder’s preferred shares if doing so

10 would give that holder more than 4.99% voting control of the total outstanding shares. Defendants,

11 and now Kesner, assured MabVax that these blockers would keep everything “kosher,” serving as a

12 sort of “firewall” that would operate to keep any investor from obtaining over 4.99% voting control in

13 MabVax, thereby essentially obviating the need for Section 13(d) reporting. Defendants and Kesner

14 knew, or were reckless in not knowing, that such statements would be viewed by a federal regulator

15 as false. Indeed, Defendants would ultimately require MabVax to retain Kesner and Sichenzia—the

16 law firm where Kesner worked—so as to conceal their illicit and undisclosed group trading under the

17 auspices of lawful (again, “kosher”) transactional structuring—unbeknownst to MabVax.

18 95. On March 13, 2015, MabVax agreed to a term sheet, sent by Stetson on behalf of the

19 still-undisclosed investor group, explicitly requiring MabVax to “engage the firm with which Harvey

20 Kesner, Esq. is associated, as Company counsel (the ‘Firm’) for corporate and [sic] securities for a

21 minimum of 12 months period following closing.” MabVax was assured that Sichenzia and Kesner

22 were so expert in the securities laws and transactional practice that they would better serve the

23 Company than other counsel. Accordingly, MabVax agreed to retain Sichenzia and Kesner. At the

24 time of the retention, MabVax had no reason to believe that Sichenzia and its lawyers would act in the

25 interests of anyone other than MabVax.

26 96. Defendants’ investor group bought out Entity H’s notes and, in late March 2015,

27 pursuant to exchange agreements with MabVax, exchanged those notes for Series D convertible

28 preferred shares on terms that were very favorable to those investors. Southern Biotech was one of

-27-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 the investors participating in the exchange. The exchange agreement between MabVax and Southern

2 Biotech granted a Consent Right to Southern Biotech, pursuant to which MabVax was required to

3 obtain Honig’s permission, as president of Southern Biotech, before the Company could raise

4 additional money (such as any equity or debt financing). 10

5 97. In an email to Stetson and Brauser on March 13, 2015, Honig laid out a more detailed

6 list of investors as well as the proposed investment amount and the method of investment for both the

7 Series D and Series E financings: “Southern biotech will invest 3 million to purchase [Entity H’s]

8 notes—1 million each,” and “[Frost] is going to lead pipe [private investment in public equity] for 1

9 million at .75 cents.”

10 98. Sichenzia also understood the importance of keeping Honig’s and Brauser’s investment

11 through Southern Biotech undisclosed. Right before the closing of the Series D financing, different

12 counsel involved in the transaction sent proposed Form 8-K language to Sichenzia (which was not yet

13 counsel to MabVax and was acting as placement agent’s counsel) in which MabVax’s then-counsel

14 named Southern Biotech as an investor in a footnote. Immediately, on March 25, 2015, Kesner and

15 another Sichenzia lawyer wrote back that “[n]o stockholder [investor] should be named.” Further,

16 at Stetson’s and Honig’s direction, Sichenzia changed the beneficial ownership blocker requirement

17 to 2.49% to create an artificial and deceptive “cap” on the amount of common stock that could be held

18 at one time. Stetson explained in a March 24, 2015 email to MabVax’s CFO that the requirement was

19 “due to Barry being the beneficial owner of both GRQ [] and Southern Bio.” While the 2.49% cap

20 prevented GRQ and Southern Biotech from collectively owning more than 5%, it did nothing to

21 prevent their aggregate group ownership with other associates from exceeding 5%—the reporting

22 threshold—even if their individual common stock ownership was kept to 2.49% or below.

23 99. Next, the Series E financing closed April 6, 2015, and also included terms very

24 favorable to Series E investors. Honig and his associates managed the Frost, FGIT, and OPKO

25
10
Honig and Brauser understood that public investors might not want to follow Frost into a company dominated
26 by Honig and Brauser, and their group. Thus, like Honig’s decision to conceal his initial investment by making
it through HCSI, Honig and Brauser determined to disguise the full extent of their participation in the financings
27 by funneling some of their share acquisitions through a company they owned, Southern Biotech. Honig
informed Stetson and Brauser in early March 2015, “I would like us to do [the investment] through Southern
28 Biotech.” To be clear, “doing” investments through sham, straw and oblique entities to avoid federally-
required disclosure is “fraud.”
-28-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 investments through the Series E financing. For example, OPKO’s investment documentation was

2 transmitted to and from, and negotiated with, Stetson and Brauser, who spoke for Frost, FGIT, OPKO,

3 and other participating Defendants as a group.

4 100. Mere days before finalizing the Series E financing, on or about April 2, 2015, Honig,

5 Stetson, and O’Rourke had a conference call with MabVax’s CEO, demanding that MabVax again

6 sweeten the deal, this time by:

7 a. Providing a number of restricted stock units to Jane Hsaio, the Vice-Chairman

8 of OPKO and a longtime Frost lieutenant; 11

9 b. Reducing its board of directors from seven members to five members selected

10 by Defendants, including two new board members;

11 c. Providing a grant of 200,000 shares of common stock to Rubin for “consulting

12 services” to be rendered based on his industry experience as the general counsel, executive vice

13 president and director of Frost’s companies (OPKO and Ivax Pharmaceuticals, Inc. (“Ivax”)).

14 d. Providing a grant of 500,000 shares of common stock to DMCG—an investor

15 relations firm—pursuant to a consulting agreement. DMCG is run by Prag, who often worked with

16 Defendants in connection with companies they “invested” in.

17 101. MabVax refused to accept Defendants’ request to entirely reconstitute its board of

18 directors. However, following negotiations that involved Defendants Honig, Stetson, and O’Rourke,

19 MabVax agreed to support the appointment of two new board members, one to be appointed

20 immediately, and another who was acceptable to OPKO (and therefore its leader, Frost) to be chosen

21 in the coming weeks. Before Honig agreed to this, in an April 3, 2015 email, Stetson sought

22 reassurance from Kesner—who by that time had been retained as MabVax’s counsel (but who, as

23 noted, was always looking out for the interests of Defendants who installed him in that role)—asking:

24 “Are you comfortable that we will get control of the board with this language?”

25 102. MabVax agreed to Honig’s demand that it provide a grant of 200,000 shares—at the

26 time worth approximately $500,000—to Rubin (again, an officer and on the Board of Directors of

27
11
Although undisclosed to MabVax, Dr. Hsiao also served on the Board of Directors of another company
28 (CoCrystal Pharma, Inc.) that is the subject of the SEC Action, and in which Honig, Frost, Brauser, Stetson,
Groussman, O’Rourke, and Alpha invested.
-29-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 OPKO) pursuant to a 12-month consulting agreement under which Rubin was to provide “advisory

2 services in connection with corporate strategy, licensing, and business development, and introductions

3 to key leaders in the industry.” MabVax agreed to do so based on Rubin’s reputation as a top executive

4 at two publicly traded pharmaceutical companies and alleged ability to introduce potential business

5 partners and talent. Rubin collected his fee but never provided any consulting services to MabVax—

6 the consulting agreement was, in fact, a giveaway to Rubin that Defendants imposed on MabVax.

7 Moreover, despite assuming a fiduciary obligation to MabVax, at no point in time did Rubin, an

8 attorney, advise MabVax that Defendants were acting as an undisclosed 13D group. Rubin’s failure

9 to disclose the true circumstances of Defendants’ conduct—and his own failure to honestly disclose

10 his own beneficial ownership on SEC filings—is particularly striking because he was both well aware

11 of his legal obligations from his service as a general counsel, officer, and director of two Frost-

12 sponsored public companies (Ivax and OPKO), and acutely familiar with the undisclosed group

13 conduct insofar as he also served along with Frost as a director of CoCrystal Pharma, Inc.—yet another

14 small public company pillaged by Defendants Honig, Frost, Brauser, Stetson, Groussman, O’Rourke,

15 and Alpha.

16 103. MabVax also was coerced into providing 500,000 shares—at the time, worth over

17 $1,000,000—to DMCG pursuant to a two-year consulting agreement under which DMCG was to

18 provide investor relations services. Despite becoming a consultant to MabVax, at no point in time did

19 DMCG or Prag advise MabVax that Defendants were acting as an undisclosed 13D group; DMCG

20 and Prag were acutely familiar with the undisclosed group conduct insofar as they worked with

21 Defendants with respect to numerous companies in which Defendants invested, including Marathon

22 Patent Corporation and ChromaDex Corporation—another investment that included Frost.

23 SICHENZIA/KESNER’S RELATIONSHIP WITH DEFENDANTS AND FALSE ADVICE


AS TO THE DEFENDANTS’ BENEFICIAL OWNERSHIP AND CONTROL
24

25 104. As noted above, Defendants required MabVax to hire the Sichenzia law firm, and its

26 partner Kesner. Defendants’ primary purpose in doing so was to have Sichenzia and Kesner provide

27 MabVax with misleading advice as to Defendants’ beneficial ownership status, and how a regulator

28 likely would view MabVax’s reporting obligations with respect to Defendants’ beneficial ownership.

-30-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 105. The federal securities laws typically require that if any person beneficially owns five

2 percent of a class of any registered equity security of an issuer, that person must promptly disclose

3 their beneficial ownership. Those who act together as a group in connection with their investment in

4 a company are treated as a “person” for purposes of this reporting requirement. The calculation and

5 reporting of beneficial ownership calls for an application of legal standards to known facts, an area

6 where Sichenzia and Kesner touted their purported market-leading legal expertise on behalf of issuers

7 like MabVax.

8 106. It recently has become clear to MabVax, however, that the Defendants acted in such a

9 way that they were a “group” under the securities laws (and on information and belief Defendants,

10 Sichenzia, and Kesner all knew), including, but not limited to the following facts and circumstances:

11 a. investing together in dozens of companies;

12 b. coordinating amongst each other the amounts each will invest in those

13 companies;

14 c. consulting with one another, or with other group members, about

15 recommendations they will together give, or demands they together will make, to the management of

16 the companies in which they invest;

17 d. including each other, and/or other group members, on their communications

18 with the companies in which they invest;

19 e. installing certain of the Defendants, or other group members, as directors or

20 officers or counsel in the companies in which they invest; and

21 f. working together to coordinate meetings and introductions between the

22 companies in which they invest and third parties—such as institutional investors, investor relations

23 firms, and potential strategic transaction partners—and often requiring investee companies to retain

24 their selected advisors.

25 107. Instead, Defendants, Sichenzia, and Kesner, actively concealed their group status from

26 MabVax.

27 108. Defendants’ practices and inter-relationships as a group were clear to Sichenzia and

28 Kesner—who had a longstanding attorney-client and business relationship with Honig, Stetson,

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 Brauser, and other Defendants. Indeed, Kesner only recently has admitted to MabVax that Sichenzia

2 and Kesner have worked on numerous transactions with Defendants during their long relationship—

3 at least five transactions per year. In fact, since 2009, Defendants have inserted Kesner as counsel to

4 at least 22 other companies in which Honig, Stetson, Frost and other Defendants have “invested.”

5 This is why the SEC characterized Defendants’ exploitation of MabVax and other vulnerable

6 companies, over many years and for such extraordinary profit, as “brazen.”

7 109. Not only do Defendants use Kesner to facilitate and conceal their undisclosed group

8 activities, Kesner is himself part of Defendants’ investor group. Through a variety of opaque entities

9 he manages (and upon information and belief holds voting and dispositive power over), Kesner has

10 invested in at least 16 companies alongside Honig and various other Defendants. 12

11 110. Despite the fact that Kesner—who has worked in the field of securities law for over 30

12 years—had knowledge of Defendants’ practices and inter-relationships, at Defendants’ behest, he

13 concealed from MabVax the significant risk that the Defendants would be deemed a “group” under

14 the securities laws. To the contrary, Sichenzia and Kesner, as undisclosed collaborators with

15 Defendants, repeatedly advised MabVax that Defendants were not a group for purposes of the

16 securities laws, and they made sure that the Company’s public filings disaggregated Defendants’

17 holdings as if they were not a group. This was not an isolated mistake. Sichenzia, primarily through

18 Kesner, reviewed, edited, and approved literally dozens of SEC filings over three years—many

19 reporting Defendants’ beneficial ownership and outstanding share counts—without even once

20 suggesting there was any risk that Defendants could be considered a group, or that it would be in

21 MabVax’s interest to aggregate Defendants’ individual holdings for purposes of beneficial ownership

22 reporting in these filings. Indeed, in response to an August 18, 2015 inquiry from MabVax about

23
12
24 These include, without limitation: Marathon Patent Group Inc. (f/k/a American Strategic Minerals Corp);
Riot Blockchain Inc. (f/k/a Bioptix, Inc., f/k/a Venaxis, Inc.); Majesco Entertainment Co. (n/k/a PolarityTE
25 Inc.); Orbital Tracking Corp. (in which Sichenzia and Kesner both invested); Viveve Medical, Inc.; Spiral
Energy Tech., Inc. (n/k/a Exactus, Inc.); BTCS Inc. (f/k/a Bitcoin Shop, Inc.) (in which Sichenzia and Kesner
26 both invested); Cell Source, Inc. (in which Sichenzia was an investor but Kesner does not appear to have
invested individually); Pershing Gold Corporation (in which Sichenzia and Kesner both invested); AV
27 Therapeutics, Inc.; Spherix Incorporated (a company for which Kesner served as CEO and a director, while
simultaneously remaining a partner at Sichenzia); Northern Wind Energy Corp. (f/k/a Icarus Wind Energy,
28 Inc.); Document Security Systems, Inc.; Passport Potash Inc.; MusclePharm Corporation; and Bullfrog Gold
Corp (in which Sichenzia was an investor but Kesner does not appear to have invested individually).
-32-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 potential affiliations amongst GRQ, Grander, Brauser, Honig, Stetson, and others, Sichenzia lied,

2 saying that “Barry [Honig] is only affiliated with the GRQ entities,” and that Honig was “separate”

3 from Grander, Brauser, and Stetson.

4 111. On March 7, 2018, the website Seeking Alpha published an article by "Sharesleuth"

5 entitled "Pretenders And Ghosts: Stealth Promotion Network Exploits Financial Sites To Tout

6 Stocks." The article stated that "A small army of writers, both real and imaginary, has produced

7 nearly 600 bullish articles about companies backed by financier Barry C. Honig," that "[m]any of the

8 featured stocks fell sharply after reaching promotion-fueled highs," that "[t]hose names included VBI

9 Vaccines, 22nd Century Group, U.S. Gold Corp., Vuzix, Mabvax Therapeutics and Global

10 Blockchain Technologies," and that "[t]he articles and the methods employed are nearly identical to

11 those that led the SEC to charge 27 individuals and entities last year..." That same day, Gregory

12 Sichenzia forwarded a link to the article to Rose, stating "Just awful did u read." In a subsequent

13 email in the chain, Sichenzia wrote that the article, "mentions every one of Harvey clients he has ever

14 had." "Pretty much," Rose replied.

15 DEFENDANTS’ APRIL 2015 “PUMP AND DUMP”

16 112. One of the goals of the March and April 2015 private placement financings, as

17 Defendants knew, was to generate market interest and boost trading volume in MabVax stock in

18 preparation for a planned stock promotion. On April 3, 2015, O’Rourke, acting at Honig’s direction

19 and with Honig’s and Brauser’s input, circulated a press release touting that Frost, OPKO, and FGIT

20 had invested in MabVax, emphasizing Frost’s reputation among retail investors for successfully

21 backing pharmaceutical companies.

22 113. Honig, with the knowledge of Brauser and Stetson, then directed O’Rourke to write a

23 fraudulent promotional article under the pseudonym “Wall Street Advisors” on the Seeking Alpha

24 website on April 8, 2015 at 11:13 a.m. MabVax was not aware of this, nor was it aware of the true

25 identity of “Wall Street Advisors.” The article, entitled “OPKO Spots Another Overlooked

26 Opportunity in MabVax Therapeutics,” highlighted OPKO’s and Frost’s investment in MabVax, and

27 was designed to inspire Frost’s retail investor devotees to follow his lead and buy MabVax stock.

28 Despite his involvement in facilitating the MabVax financing and his extensive business relationships

-33-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 with Honig, Brauser, Frost, and Stetson, O’Rourke not only concealed his true name in the article but

2 also knowingly and falsely claimed that “[t]he author has no business relationship with MabVax.” He

3 also knowingly and falsely claimed that he was “not receiving compensation for [writing the article].”

4 114. Shortly before publications of O’Rourke’s false Seeking Alpha article, ATG and

5 O’Rourke engaged in early trading of MabVax shares on April 8, 2015 with the intention of creating

6 a false appearance of market interest in the stock. That trading included at least one matched trade,

7 this time involving Groussman’s entity, Melechdavid, submitting the buy order and ATG submitting

8 the sell order for the same price at 9:38 a.m. The share price of MabVax opened that day at $3.14 and

9 reached $3.73 in the minutes before the promotional article was released. Again, MabVax had no

10 knowledge of these fraudulent trading activities.

11 115. The fraudulent “pump” campaign was successful. The trading volume of MabVax

12 shares rose almost 7,500% from 8,833 shares on April 2, 2015 to 667,454 shares on April 6, 2015, and

13 spiked even higher to 858,709 shares on April 9, 2015. MabVax’s share price went from a closing

14 price of $1.91 on April 1, 2015 to a closing price of $4.30 on April 9, 2015.

15 116. After peaking on April 10, 2015, MabVax’s stock began to rapidly decline, falling 50%

16 to around $2.00 per share by June 30, 2015, as Defendants—acting pursuant to their illicit agreement

17 to acquire, hold, vote and/or dispose of their MabVax shares in concert—“dumped” their shares into

18 the market from April 6 to June 30, 2015 for total proceeds of over $5.5 million, as detailed below:

19 Defendants’ Pump and Dump Proceeds: April 1, 2015 – June 30, 2015

20 Defendants Trade Dates (2015) Net Quantity Sold Proceeds


Brauser 4/13 – 6/30 (576,400) $1,600,826.76
21
Stetson and Honig (through HSCI) 4/6 – 6/30 (1,080,379) $3,607,248.91
22 O’Rourke and ATG 4/8 – 6/30 (30,064) $69,774.51

23 Groussman (through Melechdavid) 4/6 – 6/23 (99,616) $342,984.59


Total (1,786,459) $5,620,804.77
24

25 DEFENDANTS’ JULY 2015 “PUMP AND DUMP”

26 117. In June 2015, when the market for MabVax shares had cooled from over $4 per share

27 to closing prices hovering just above $2 per share, O’Rourke recruited Ford to publish another

28 MabVax tout on Ford’s blog. On July 1, 2015, Ford published an article entitled “MabVax: Near-

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 Term Catalysts Could Push Shares from $2 to over $5.” The article contained materially false

2 statements (as Defendants knew or were reckless in not knowing), including that a licensing deal was

3 imminent, when it was not, and that there were near-term therapy development events that could take

4 the share price to $5, when in fact clinical trials were only in early stages. Although O’Rourke

5 requested Ford write the article, and Honig compensated Ford for writing the article, Ford did not

6 disclose that he had been paid in the article, and none of Defendants ever disclosed to MabVax that

7 they were operating in concert to fraudulently promote the Company’s stock.

8 118. Once again, the “pump” worked just as Defendants intended. Defendants’ fraudulent,

9 purchased “research” increased MabVax trading volume from 227,182 shares on June 30, 2015 to

10 798,213 shares on July 2, 2015. Likewise, MabVax’s share price went from a closing price of $2.32

11 on June 30, 2015 to $2.71 on July 2, 2015. Pursuant to their agreement to acquire, hold, vote and/or

12 dispose of their shares in concert, Honig and his affiliates sold shares into the market from July 1 to

13 December 31, 2015 for proceeds of over $2.7 million, as detailed below:

14 Defendants’ Pump and Dump Proceeds: July 1, 2015 – December 31, 2015

15 Defendants Trade Dates (2015) Net Quantity Sold Proceeds


Brauser 7/1 – 10/7 (363,050) $749,025.45
16
Stetson and Honig (through HSCI) 7/1 – 12/7 (682,539) $1,525,588.49
17 O’Rourke and ATG 7/1 – 12/31 (179,690) $235,253.20

18 Groussman (through Melechdavid) 7/15 – 12/18 (212,034) $234,250.96


Total (1,437,313) $2,753,118.10
19

20 DEFENDANTS USE KESNER TO ILLICITLY PRESERVE THEIR “CONSENT RIGHT”—


AND THEIR STRANGLEHOLD ON MABVAX
21

22 119. Defendants’ misconduct and exploitation of MabVax also extended to the so-called

23 “Consent Right” held by one of the Defendants from March 2015 onward, pursuant to which MabVax

24 was required to obtain the Consent Right holder’s permission before it could raise additional money

25 (such as any equity or debt financing).

26 120. The Consent Right gave Defendants the necessary leverage to extract a wide range of

27 demands from MabVax because: (1) MabVax is a clinical-stage biotechnology company that relies on

28 outside financing; and (2) permission under the Consent Right could be withheld at the whim of the

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 Defendants or provided only if MabVax agreed to still other additional “conditions” in exchange for

2 permission.

3 121. Indeed, by leveraging the Consent Right, Defendants forced MabVax to issue to them

4 and to other members of their investor group free “incentive” stock that since 2015 was worth more

5 than $8,300,000 at the time of issuance. Defendants also required MabVax to hire vendors handpicked

6 and controlled by Defendants. Defendants also knew that, by refusing to grant permission under the

7 Consent Right, or by simply threatening to do so, they could block investment from outside sources,

8 including—as outlined below—critically-needed financing through a reputable investment bank in or

9 about July 2017. Through the Consent Right, Defendants could keep MabVax dependent on them and

10 their affiliates for investments—which they required be provided on terms that were extremely

11 favorable to them.

12 122. For the same reasons, advice regarding the Consent Right was fundamental to

13 Sichenzia’s and Kesner’s attorney-client relationship with MabVax. Sichenzia represented MabVax

14 with respect to many transactions for which the Consent Right was negotiated and triggered, and was

15 responsible for documenting and reporting the Consent Right in many public filings and transactional

16 documents. MabVax reasonably expected Sichenzia and Kesner to provide loyal and competent legal

17 advice with respect to the Consent Right, and to safeguard the Company from Defendants abusing the

18 Right. Little did MabVax know that Sichenzia and Kesner were simply another means by which

19 Defendants manipulated and controlled the Company. Sichenzia and Kesner, acting on behalf of

20 Defendants, abused their position of trust, and subordinated MabVax’s interests to Defendants’, just

21 as Defendants had them do with other victimized issuers on whom Defendants foisted Sichenzia and

22 Kesner, such as Riot Blockchain, Inc. and Towerstream Corporation.

23 123. Sichenzia and Kesner never once advised MabVax that counsel’s participation with the

24 other Defendants’ investor group made the lawyers and all Defendants the beneficiaries of the Consent

25 Right. Nor did Sichenzia or Kesner ever disclose to MabVax why the Consent Right was held in the

26 names of various Defendants (passing from Southern Biotech to HSCI), much less that MabVax had

27 the right to negotiate with Defendants for greater transparency in how the Consent Right was held and,

28 ultimately, for greater limitations on its use. In fact, Sichenzia and Kesner never even informed

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 MabVax that, in practice, the facts and circumstances of the ownership and use of the Consent Right

2 could themselves create questions about the calculation and reporting of Defendants’ beneficial

3 ownership.

4 124. For example, for a time Southern Biotech was the designated “investor” that held the

5 Consent Right for the benefit of the Defendants. Although never disclosed to MabVax at the time,

6 Southern Biotech served no substantial business or economic purpose—other than to serve a straw

7 holder for the “Consent Right”—i.e., the “control right”—over MabVax that none of the Defendants

8 wanted to hold in their actual names as to do so would risk exposing the concealed group. Ultimately,

9 MabVax came to learn that Honig served as Southern Biotech’s president, and held voting and

10 dispositive power over it. Very recently, MabVax has learned—from reviewing files maintained by

11 Sichenzia—that still other Defendants had a stake in or were involved in Southern Biotech

12 transactions, including Stetson, Frost, and Brauser in addition to Honig. Yet neither Defendants, nor

13 Sichenzia and Kesner, ever once suggested that the oblique relationships between and among Southern

14 Biotech, Honig, and other Defendants itself raised questions about whether they were conducting

15 themselves in a manner harmful to MabVax and that required public disclosure under Section 13 of

16 the Exchange Act. Simply put, Southern Biotech was a sham designed to camouflage the illicit

17 conduct of those who, like Frost, Stetson, Brauser, and Honig, make a living by avoiding mandatory

18 disclosure under the securities laws.

19 125. Defendants’ use of Southern Biotech, Sichenzia, and Kesner in connection with the

20 Consent Right is further demonstrated by their conduct in November 2015 through January 2016,

21 when MabVax was negotiating a loan that required permission from Southern Biotech (the then-

22 designated official holder of the Consent Right). Sichenzia was responsible for representing

23 MabVax’s interests and, in fact, was preparing the consent documents that it advised MabVax needed

24 to obtain, including from Honig.

25 126. As the financing was being negotiated, during the first week of December 2015,

26 MabVax’s leadership team learned that Southern Biotech had (fortuitously) transferred certain shares

27 that it was required to hold in order to maintain the Consent Right. MabVax urgently emailed

28 Sichenzia, so counsel could confirm that MabVax was finally free of the onerous Consent Right and

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 advise the Company about how to proceed. Although implicit in all confidential communications with

2 its counsel, MabVax explicitly instructed counsel to avoid alerting Southern Biotech: “please hold

3 back sending the consent to Southern Biotech[.]” For obvious reasons, MabVax did not want to

4 prematurely alert the Defendants that Honig had inadvertently terminated their Consent Right—and

5 thus lost their significant leverage over MabVax.

6 127. Kesner did not promptly respond to, or even acknowledge, MabVax’s email. Instead,

7 Sichenzia and Kesner deliberately disregarded the Company’s instructions. The next day, Kesner

8 emailed his junior partner, Tara Guarneri-Ferrara (with the subject line MabVax): “Approval of

9 investments[.] Does Southern Bio have or the transferees from S[outhern ]B[iotech]?” Guarneri-

10 Ferrara replied that she would “need to see the docs by which he [i.e., Honig] sold or assigned his

11 shares[.]” “Ask for,” Kesner replied—in blatant violation of MabVax’s direct instructions. “OK,”

12 Guarneri-Ferrara responded. The next day, Stetson emailed Guarneri-Ferrara a copy of the relevant

13 language.

14 128. Later that day, MabVax heard directly from Honig that the shares that had been

15 transferred out of Southern Biotech would be transferred back to Southern Biotech—thereby creating

16 a potential argument that Southern Biotech had reestablished the Consent Right. In a second email,

17 Honig thanked MabVax’s leadership for “the heads up regarding Southern Biotech,” and stated that

18 the shares upon which the Consent Right relied were “back in[] Southern Biotech.” MabVax was

19 shocked by Honig’s email. The Company had never discussed the issue with Honig, much less given

20 him a “heads up” that the Consent Right had terminated to MabVax’s great benefit and relief.

21 129. MabVax’s CEO replied to Honig saying, “I did not give you the heads up on Southern

22 Biotech. You already realized that you had transferred all shares out of that entity. Someone else

23 must have alerted you.” As the foregoing sequence makes clear, however, it was MabVax’s own

24 counsel at Sichenzia who gave Honig the “heads up” that the Consent Right had terminated. Up to

25 that point, the MabVax leadership team had only discussed the matter internally, with the exception

26 of alerting Kesner and his legal team for the purposes of legal advice—and with strict instructions to

27 not notify Defendants. Only after Honig revealed his knowledge of the Consent Right termination did

28 Kesner address the matter with MabVax—not to help his client, but to declare that a purported

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 undisclosed ethical conflict meant that he and his law firm could not become involved in the dispute

2 over whether the Consent Right had been terminated.

3 130. As a result of this “heads up”—and Sichenzia’s violation of its client’s confidence—

4 Honig was able to re-transfer the shares into the name of Southern Biotech and thus manufacture a

5 legal position that, by having done so, he had restored Defendants’ Consent Right.

6 131. Sichenzia continued to undermine MabVax with respect to this issue in January 2016.

7 In early January, MabVax emailed Sichenzia about a new financing and what consents were needed.

8 In a chain of internal emails, partners at Sichenzia discussed the effect on the Consent Right of

9 Southern Biotech’s transfer of its MabVax securities. For example, Sichenzia partner David Manno

10 expressed concern about “the SRFf [i.e., Sichenzia] conflict” with respect to the issue, indicating it

11 was not “clear as to whether the Holder’s (Southern Bio) consent right in the Exchange Agreement

12 was terminated when Southern Bio transferred its MabVax securities,” and suggesting “an

13 acknowledgment that upon the transfer the consent right terminated.”

14 132. Kesner promptly replied: “Here is my suggestion. Have Southern Bio itself amend the

15 agreement with MabVax to simpl[y] terminate the Southern Bio right and provide a new approval

16 right to Barry personally. Much simpler. Don’t discuss the below specifically with Greg [MabVax’s

17 CFO].” (Emphasis added).13 Another Sichenzia partner, Thomas Rose, later responded that “[i]t’s

18 fine that Barry and the company think the rights didn’t transfer, but our reading of the agreement . . .

19 is that we’re not so sure. In fact, as I read, it looks like the rights transferred with the transfer of the

20 securities.” Nonetheless, pursuant to Kesner’s instruction—“don’t discuss the below specifically with

21 Greg”—Sichenzia never shared their analysis of MabVax’s position with MabVax. Instead of coming

22 to the aid of their client, MabVax, they abetted the adverse position taken by Honig as the leader of

23 Defendants intended them to do.

24 133. Unable to fight a complex and protracted legal battle against the Investors with its own

25 counsel undermining its position, MabVax agreed, on January 12, 2016, to provide Southern Biotech

26 with a new Consent Right. It was not until years later that MabVax was finally able to escape the

27

28 13
As Kesner subsequently explained, “Barry [Honig] has been and continues to be representative to the
transaction with MabVax. In reality.”
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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 Consent Right. In those intervening years, Defendants used the Consent Right to MabVax’s great

2 detriment.

3 DEFENDANTS FORCE MABVAX TO HIRE IRTH COMMUNICATIONS

4 134. On or about January 29, 2016, Honig introduced MabVax to IRTH, an investor

5 relations firm in Santa Monica, California, run by Robert and Andrew Haag. Honig recommended

6 that MabVax engage IRTH for investor relationship services. MabVax, however, was not impressed

7 by the Haag Brothers, who ran IRTH, and declined to engage them.

8 135. Several months later, just as MabVax was about to close a follow-on financing round

9 with Defendants Honig, Stetson, and Brauser, Defendants required, as a condition of financing, that

10 MabVax hire IRTH for $300,000. MabVax remained skeptical of IRTH, and grudgingly acceded to

11 Defendants’ demands to hire the Haag Brothers, provided they comply with strict rules and were

12 accountable to Company management and not Honig, Stetson, et al. As MabVax’s CEO explained in

13 a July 31, 2016 email to IRTH, MabVax wanted “control over . . . what materials are disseminated on

14 our behalf . . . and what is said by those we have hired to represent us.” In particular, MabVax wanted

15 to ensure that IRTH did not leak any non-public information.

16 136. Shortly thereafter, IRTH began to send MabVax invoices and, by November 10, 2016,

17 had paid IRTH $570,979.13.

18 137. By December 2016, MabVax received a regulatory request in a non-public

19 investigation that the Company believed concerned conduct by IRTH. Accordingly, MabVax

20 instructed IRTH to suspend all work for the Company. Almost immediately thereafter, MabVax

21 received loud and vulgar requests by Honig that the Company resume using IRTH (which it refused

22 to do). In January 2017, MabVax issued an early termination letter to IRTH, officially terminating

23 IRTH’s services as of February 2017.

24 138. IRTH provided scant to no valuable services to MabVax, certainly not fair value for

25 the nearly $600,000 it received. But for Defendants requiring that MabVax hire IRTH, MabVax never

26 would have done so. MabVax has since learned that IRTH Communications has purportedly

27 performed investor-relations services for several companies in which Defendants invested, including

28 U.S. Gold Corporation, which raises serious questions about whether the money MabVax was forced

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 to pay IRTH was laundered to subsidize Defendants’ “pump and dump” expenses, such as

2 commissioning fraudulent research from Ford and others.

3 139. IRTH, Robert Haag, and Andrew Haag had worked with the Defendant group before

4 with respect to other companies, under similar arrangements. On information and belief, the

5 Defendant group insisted that MabVax hire IRTH for the purpose of gaining control over MabVax’s

6 public relations and investor relations, to further their scheme to conceal the fact that they were

7 investing as a group and to control their “pump” messages to the public. Although IRTH was acting

8 as MabVax’s agent, IRTH was taking direction from members of the Defendant group, including

9 Honig, Stetson, and Brauser. IRTH knew, or should have known, about the Defendants’ illicit scheme.

10 IRTH provided substantial assistance to the Defendants in furtherance of their scheme, by continuing

11 to take direction from them (including in their work related to public relations statements) and by

12 failing to disclose their group activity to MabVax.

13 DEFENDANTS BLOCK LEGITIMATE FINANCING IN 2017

14 140. In the summer of 2017 MabVax began working with H.C. Wainwright & Co., an

15 investment bank, in an effort to run an additional round of financing with investors other than

16 Defendants and their affiliates.

17 141. A brief review of the onerous terms of the previous financing MabVax had conducted

18 with some of Defendants serves as an example elucidating the Company’s motivation to find investors

19 other than Defendants and their affiliates. On May 18, 2017, MabVax obtained consent from HSCI

20 (which held the Consent Right at that time) for an additional financing of $4.1 million with Defendants

21 and their affiliates, underwritten by Laidlaw & Co. Numerous conditions, however, were attached to

22 this consent. Among other things, MabVax was required to issue 2,610,000 shares of Common Stock

23 to (so called “Inducement Shares”) to investors who had participated in a prior August 2016 financing,

24 to spend $500,000 on “one or more investor relations services”, and to again nominate a new corporate

25 director—now subject to approval by HSCI. (MabVax also was pressured to use Laidlaw, which it

26 since has learned served as the underwriter and banker of choice by Defendants.)

27 142. Desperate to escape such onerous terms, MabVax looked elsewhere, finding H.C.

28 Wainwright. Defendants, however, were determined to keep MabVax dependent upon them, and to

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 keep other investors out. Accordingly, in July 2017, Defendants denied consent to the H.C.

2 Wainwright financing. This led MabVax’s CEO to lament that the financing “crashed before it got

3 out of the starting gate.”

4 143. Indeed, at no point in time since they first became involved with the Company have

5 Defendants allowed MabVax to conduct even one single equity financing with any investors other

6 than one led by one of the Defendants, involving Defendants and their affiliates.

7 FALSE INVESTOR QUESTIONNAIRES SUBMITTED BY THE DEFENDANTS

8 144. Any purchaser of MabVax stock was required to complete and submit Investor

9 Signature Packets which included an Accredited Investor Questionnaire and a Selling Securityholder

10 Notice and Questionnaire. These forms were completed and sent to the MabVax office in San Diego,

11 California, at various times prior to MabVax issuing several rounds of funding to the Defendants (over

12 the course of the years 2015-2018), the Defendants subsequently converting their shares to common

13 shares, and MabVax preparing SEC filings and registration statements based on the information

14 provided by the Defendants. The false submissions by Defendants include (but are not exclusive to)

15 those identified below.

16 145. On April 3, 2015, OPKO submitted a signature packet to MabVax. Diana Rosada

17 emailed the packet on behalf of OPKO, to John Stetson, who forwarded the email to David Hansen

18 and Gregory Hanson at MabVax. The packet contained the Selling Securityholder Notice and

19 Questionnaire, which at Question 4, required OPKO to list the “Type and Amount of other securities

20 beneficially owned by the [undersigned].” OPKO wrote “n/a,” misrepresenting that OPKO owned no

21 beneficial interest.

22 146. On October 12, 2017, OPKO sent another Selling Securityholder Notice and

23 Questionnaire to MabVax’s office in San Diego, California. Diana Rosado emailed the questionnaire

24 on behalf of OPKO, to Anne Long and Gregory Hanson at MabVax. Question 4 of the Selling

25 Securityholder Notice and Questionnaire required the investors to list the “Type and Amount of other

26 securities beneficially owned by the [undersigned].” OPKO only listed its own shares,

27 misrepresenting that it owned no other beneficial interest.

28

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 147. On March 17, 2015, Frost Gamma Investment Trust submitted the Investor Signature

2 Packet, which included the Investor Questionnaire and the Selling Securityholder Notice and

3 Questionnaire, to MabVax’s office in San Diego, California. Question 4 of the Selling Securityholder

4 Notice and Questionnaire required the investors to list the “Type and Amount of other securities

5 beneficially owned by the [undersigned].” FGIT left its answer blank, misrepresenting that it owned

6 no beneficial interest.

7 148. On October 2, 2017, Brauser, on behalf of himself, Grander, and Grander 401K,

8 submitted a questionnaire packet, which included the Selling Securityholder Notice and Questionnaire,

9 to MabVax’s office in San Diego, California. Christian Paez, on behalf of Brauser, Grander, and

10 Grander 401k, emailed the packet to Greg Hanson at MabVax, copying Brauser and his family

11 member, Ben Brauser. Question 4 of the Selling Securityholder Notice and Questionnaire required

12 the investors to list the “Type and Amount of other securities beneficially owned by the

13 [undersigned].” Brauser only listed the shares owned by himself, Grander, and Grander 401K,

14 respectively, misrepresenting that those parties owned no other beneficial interest.

15 149. On May 3, 2017, Barry Honig, on behalf of GRQ Consultants, Inc. Roth 410K FBO

16 Barry Honig, submitted the Registration Rights Agreement including a Plan of Distribution and the

17 Selling Stockholder Notice and Questionnaire to MabVax’s office in San Diego, California. The

18 number of Registrable Securities for resale totaled 285,714. The Selling Stockholder Notice and

19 Questionnaire required the signatory to acknowledge their obligation to comply with Securities

20 Exchange Act of 1934 particularly Regulation M. Mr. Honig signed this document even though Mr.

21 Honig was not complying with Regulation M as he had an arrangement to manipulate the price of the

22 stock in direct contradiction of Regulation M. Mr. Honig knowingly submitted false documentation.

23 Question 4 of the Selling Securityholder Notice and Questionnaire also required the investors to list

24 the “Type and Amount of other securities beneficially owned by the [undersigned].” Honig only listed

25 the shares owned by GRQ Consultants, Inc. Roth 401K FBO Barry Honig, misrepresenting that there

26 was no other beneficial interest.

27 150. On October 17, 2017, Renee Honig submitted the same packet on behalf of GRQ

28 Consultants, Inc. ROTH 401K FBO Renee Honig, to MabVax’s office in San Diego, California. In

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 the Selling Stockholder Notice and Questionnaire, Ms. Honig included the same misrepresentations

2 regarding Regulation M and misrepresenting that there was no beneficial ownership beyond the

3 entity’s own shares.

4 151. On February 1. 2018, John O’Rourke, on behalf of ATG Capital LLC, submitted the

5 Investor Signature Packet, which included the Securities Purchase Agreement, the Accredited Investor

6 Questionnaire, and the Selling Securityholder Notice and Questionnaire, to MabVax’s office in San

7 Diego, California. O’Rourke emailed the packet to Gregory Hanson at MabVax. The Subscription

8 Amount specified in the Securities Purchase Agreement was $100,000 US Dollars consisting of

9 133,333 shares of common stock at $0.75 per unit plus 93,331 warrants. The attached Accredited

10 Investor Questionnaire included Question 17 which asked whether there were any “[e]xceptions to the

11 representations and warranties made in Section 3.2 of the Securities Purchase Agreement.” Mr.

12 O’Rourke left that section blank which indicated “none.” In fact, Mr. O’Rourke did have an

13 arrangement or understanding with other persons regarding the distributions of his MabVax shares

14 which is in direct contradiction of section 3.2(b). Mr. O’Rourke knowingly submitted false

15 documentation. The attached Selling Securityholder Notice and Questionnaire included Question 4

16 which required Groussman to list the “Type and Amount of other securities beneficially owned by the

17 [undersigned].” O’Rourke, on behalf of ATG, did not list any beneficial ownership other than the

18 amount of ATG’s own shares (“20,000”).

19 152. On July 3, 2014, John Stetson, on behalf of HS Contrarian Investments, LLC,

20 submitted the Common Stock Purchase Agreement, the Stockholders Agreement Joinder, and the

21 Investor Suitability Questionnaire, to MabVax’s office in San Diego, California. The Common Stock

22 Purchase Agreement specified that HS Contrarian Investments, LLC was investing $115,001.18 for a

23 total of 44,402 shares in MabVax. The attached Investor Suitability Questionnaire included a

24 Certification that “[b]y signing this Questionnaire, the undersigned certifies the following: (a) that the

25 entity’s purchase of the Securities will be solely for the entity’s own account and not for the account

26 of any other person.” This Certification was false as Mr. Stetson had agreements to buy and sell

27 MabVax stock to benefit not only his company but others. Mr. Stetson knowingly submitted false

28 documentation.

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 153. On July 1, 2014 and February 1. 2018, Mark Groussman, on behalf of himself and

2 Melechdavid Inc, submitted the Investor Signature Packet, which included the Accredited Investor

3 Questionnaire, and the Selling Securityholder Notice and Questionnaire, to MabVax’s office in San

4 Diego, California. The attached Accredited Investor Questionnaire included Question 17 which asked

5 whether there were any “[e]xceptions to the representations and warranties made in Section 3.2 of the

6 Securities Purchase Agreement.” Mr. Groussman left that section blank which indicated “none.” In

7 fact, Mr. Groussman did have an arrangement or understanding with other persons regarding the

8 distributions of his MabVax shares which is in direct contradiction of section 3.2(b). The attached

9 Selling Securityholder Notice and Questionnaire included Question 4 which required Groussman to

10 list the “Type and Amount of other securities beneficially owned by the [undersigned].” Groussman,

11 on behalf of Melechdavid Inc., did not list any beneficial ownership. Mr. Groussman knowingly

12 submitted false documentation.

13 154. On October 4, 2017, John O’Rourke, Jr., Esq. submitted Selling Securityholder Notice

14 and Questionnaires on to MabVax on behalf of Airy Properties and 11 East Airy Partnership. Mr.

15 O’Rourke emailed the questionnaires to Anne Long and Gregory Hanson at MabVax. The

16 questionnaires included Question 4 which required Airy Properties and 11 East Airy Partnership to

17 list the “Type and Amount of other securities beneficially owned by the [undersigned].” Mr. O’Rourke

18 answered “N/A,” misrepresenting that those entities had no beneficial ownership.

19 155. On March 31, 2015, Prag submitted a signature packet to MabVax. Prag emailed that

20 packet to an attorney at Sichenzia, which forwarded it to Gregory Hanson at MabVax. The packet

21 contained the Selling Securityholder Notice and Questionnaire, which at Question 4, required Prag to

22 list the “Type and Amount of other securities beneficially owned by the [undersigned].” Prag wrote

23 “NONE,” misrepresenting that he owned no beneficial interest.

24 156. On October 2, 2017, Prag submitted another Selling Securityholder Notice and

25 Questionnaire to MabVax. Prag emailed the questionnaire to Gregory Hanson at MabVax. Question

26 4 of the Selling Securityholder Notice and Questionnaire required the investors to list the “Type and

27 Amount of other securities beneficially owned by the [undersigned].” Prag only listed its own shares,

28 misrepresenting that it owned no other beneficial interest.

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 FALSE BENEFICIAL OWNERSHIP REPORTING

2 157. All of the members in the Defendant group who held shares in MabVax were required

3 to make Schedule 13D filings given their agreement to acquire, hold, vote and/or dispose of their

4 MabVax shares in concert, the group’s direction of MabVax management and policies, and their

5 combined share ownership. They did not make such filings, allowing them to conceal their control

6 over MabVax and obscuring that they were positioning themselves for a pump-and-dump scheme.

7 158. For example, by the end of April 2015, after the closing of the private placement

8 financings, Stetson, HSCI, Brauser (through Grander) and O’Rourke (through ATG) all had

9 substantial deposits of MabVax shares in their brokerage accounts. Therefore, they were all

10 individually obligated to make a Schedule 13D filing, disclosing their own holdings and that they were

11 members of the group because they were acting together for the purpose of acquiring, holding, voting

12 and/or disposing of MabVax shares, and collectively owned greater than 5% of MabVax’s outstanding

13 shares. The other Defendants were similarly obligated to make Schedule 13D filings as they obtained

14 MabVax shares.

15 159. Other Defendants who invested in MabVax also improperly made Schedule 13G

16 filings, by which they falsely represented themselves as passive investors, and also failed to disclose

17 their membership in the group, in violation of disclosure requirements. For example:

18  Honig filed a Schedule 13G on February 17, 2017 disclosing only his 6.22% ownership
through GRQ.
19
 Stetson filed a Schedule 13G on September 19, 2017 disclosing only his 5.64% (nominal)
20 ownership through HSCI.

21  Brauser filed a Schedule 13G on February 2, 2017 disclosing only his 5.44% ownership
through Grander.
22
160. Each of the Defendants should have made Schedule 13D filings because they were not
23
passive investors, and each should have disclosed the existence of, and membership in, a group. Nor
24
were the eventual Schedule 13D filings made by Stetson on February 12, 2018, Honig on February
25
13, 2018, and a Schedule 13D/A filing by Honig on February 16, 2018 (all filed after they became
26
aware of a pending regulatory investigation), compliant with the federal securities laws since none of
27
them disclosed the existence of a group or their membership in it.
28

-46-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 DEFENDANTS FRAUDULENTLY OBTAIN MILLIONS IN ILLICIT STOCK
CONVERSIONS—CASTING DOUBT OVER MABVAX’S CAPITALIZATION TABLE
2

3 161. From the spring of 2015 until the spring of 2018, all Defendants held convertible

4 preferred stock from MabVax, with the exception of Ford, Rubin, Andrew and Robert Haag, and IRTH

5 (who, as noted above, benefited from their participation in the illicit group through either fully tradable

6 common stock or cash). Each share of convertible preferred stock, upon the request of the investor

7 holding that share, was to be converted by MabVax into shares of common stock that could be

8 immediately sold on the open market. Critically, however, the convertible preferred stock was also

9 subject to “beneficial ownership blockers” that forbade the conversion of preferred shares into

10 common stock if, as a result, the converting shareholder would beneficially own more than a certain

11 percentage of MabVax (most often, 4.99%).

12 162. Kesner, acting at Defendants’ behest, consistently advised MabVax that the “blockers”

13 operated as a legal barrier against any need to aggregate or report the beneficial ownership of the

14 investors holding those shares as reaching 5%. He also advised that the blockers allowed for one

15 investor to convert shares without regard to the ownership of MabVax stock by other investors. In

16 effect, Kesner explained and assured, and MabVax believed and relied on Kesner, that these blockers

17 kept the Company “safe” under the securities laws. As the Company later realized and disclosed,

18 however, this advice was false. The blockers do not legally foreclose a determination that Defendants

19 and their affiliates (or some of them) may be deemed as having acted as a previously undisclosed

20 group. As discussed above, the test to determine whether investors are part of a 13D Group is a multi-

21 factor test, and a group can exist notwithstanding the existence of beneficial ownership blockers.

22 163. Contemporaneous emails—as well as Kesner’s lengthy history with Defendants—

23 demonstrate that Sichenzia not only was aware of the interchangeability of Defendants’ interests, but

24 that Defendants interposed Sichenzia and Kesner on MabVax to conceal that fact from regulators. For

25 example, in September 2017, an examiner for Nasdaq emailed an associate at Sichenzia (“Associate

26 One”) asking for the name of “an investor” whom Associate One had stated was being issued 100,000

27 shares “for diligence” with respect to a particular round of financing. Associate One emailed Kesner

28 and another Sichenzia partner, Avital Perlman, stating “The nasdaq examiner is asking for . . . Barry’s

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 name. The attached list indicates he is not an investor [in that particular financing round] though. Do

2 you have any issue with me releasing his name?” Perlman replied, to Kesner only, “Maybe the

3 100,000 diligence shares should be issued to HSC[I], which did invest.”

4 164. Had MabVax understood that the beneficial ownership blockers did not foreclose a

5 determination that Defendants were a 13D group, it would not have processed requests for conversions

6 it received from Defendants and their affiliates. Indeed, MabVax could not have processed the

7 conversion requests and issued common stock if Defendants were a properly disclosed 13D group,

8 and therefore already possessed over 4.99% ownership of the Company.

9 165. Defendants either made no filings under sections 13(d) and/or 13(g) of the Exchange

10 Act, or where they did make such filings, did not aggregate their ownership or indicate they were part

11 of a 13D group. Defendants misrepresented their beneficial ownership in connection with every

12 purchase of stock from the Company, and misrepresented their beneficial ownership again thereafter

13 every time they sought to convert their preferred stock into common stock. MabVax also only received

14 the fraudulent and deceitful legal advice that Defendants put Sichenzia and Kesner in place to give.

15 Accordingly, MabVax processed conversion requests from many Defendants who purchased

16 convertible preferred stock issued to MabVax, as well as from other members of Defendants’ investor

17 group. In total, MabVax issued 2,628,766 shares of common stock via preferred share conversions.

18 These shares were worth over $22 million based on the price of the stock on the days they were issued.

19 Neither Defendants nor their affiliates were entitled to these shares of common stock—they obtained

20 them by fraudulently deceiving MabVax as to their status as a potential 13D group. Had MabVax

21 been aware of Defendants’ status, it would not have issued Defendants and their affiliates $22 million

22 in stock to which they were not entitled under the terms of the beneficial ownership blockers.

23 Party Converting (including affiliated Value of Common Stock Issued


entities and family members)
24
Honig* $12,604,534
25 Brauser $6,918,360

26 Stetson* $565,320
Groussman $528,957
27
O’Rourke $1,002,493
28 Prag $268,873

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 Kesner $53,181

2 Others $256,514
Total $22,198,232
3 *HSCI’s conversions are allocated 94% to Honig and 6% to Stetson, representing, upon information and belief,
their respective ownership of HSCI, which to this day has never been fairly disclosed
4
166. In processing these conversions, on each occasion, MabVax was relying on (1) the
5
shareholder’s representation that they were entitled to convert the stock as their beneficial ownership
6
was below the blocker amount, and (2) the honesty of the shareholder’s Exchange Act section 13
7
filings (or absence of the same). MabVax had continued to rely upon the Defendants’
8
misrepresentations into 2018, continuing to issue Defendants stock and grant their conversion
9
requests. However, by October 15, 2018, MabVax learned that Defendants’ estimated beneficial
10
ownership was “at least 9,447,685” shares, or “at least 53.95%” of the entire ownership of MabVax.
11
167. It was not until mid-2018, that the legal frailty of the “blocker” firewall was revealed.
12
Because of this, MabVax became concerned about the validity of the 2,628,766 shares of common
13
stock issued to its investors via preferred share conversions. The Company also could not be certain
14
that its previous reports regarding the number of common shares outstanding were accurate.
15
Accordingly, MabVax had to publicly disclaim reliance on four years of previously filed SEC reports
16
and financial statements and was for some time unable to file reports for 2018 as it is required to do
17
under SEC and Nasdaq rules. Under these circumstances, MabVax has been delisted from the Nasdaq,
18
and has been named in putative class actions filed by certain of its shareholders.
19
168. Additionally, in order to clear the cloud over its capitalization table, MabVax was
20
forced to file a petition in the Delaware Chancery Court seeking the extraordinary relief of judicial
21
validation of the unknown number of shares of arguably invalid common stock, and other corporate
22
acts that also may not be valid. While MabVax was successful in obtaining the requested relief from
23
the Delaware Chancery Court, the action cost the Company hundreds of thousands of dollars in legal
24
fees and expenses, all of which would have been unnecessary but for the misconduct of Defendants.
25

26

27

28

-49-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 THE SEC INVESTIGATION AND FEDERAL COURT FRAUD ACTION

2 “THE NOOSE GETS TIGHTER”

3 169. In late January 2018, MabVax disclosed that it had received notice that the SEC was

4 conducting an investigation relating to certain of the Company’s registration statements (and

5 amendments thereto). The SEC issued a subpoena to MabVax on February 2, 2018.

6 170. Through February and March of 2018, Defendants saw the walls closing in on them.

7 Reporters began to contact Sichenzia and Kesner, leading one Sichenzia partner to lament “This is

8 going to be real bad.” Sichenzia’s managing partner, Gregory Sichenzia, exclaimed that one article

9 regarding Defendants’ illicit activity “mentions every one of Harvey [Kesner’s] clients he has ever

10 had.” Another Sichenzia partner predicted that Gregory Sichenzia would want the firm to break ties

11 with Honig “as the noose gets tighter.” Despite this, Kesner continued to represent MabVax in

12 connection with the SEC investigation—covering up his and the Defendants scheme as long as he

13 could, even though his own law partner partner asked “how in G-d’s name can Harvey be advising

14 [MabVax].” Despite acknowledging, in vivid terms, the egregious conflicts, Sichenzia did not

15 withdraw from representation until late May 2018.

16 171. Even in withdrawing, Sichenzia continued to collaborate with Defendants and violate

17 its duties to MabVax. A Sichenzia associate who worked on the MabVax engagement confided to a

18 law firm colleague that he was in a professionally untenable position when asked transition questions

19 by successor counsel. During one instant message conversation, the associate stated, “its [sic] tough

20 for me because like wtf do I say?” He then acknowledged that “i can sell the investors down the river.”

21 Neither the Sichenzia associate, nor anyone else at that law firm, ever disclosed those true facts to

22 MabVax (i.e., their client).

23 172. Kesner violated MabVax’s client confidences at least one more time during the

24 transition to successor counsel. On information and belief, he alerted Honig and Brauser of a sensitive

25 and confidential MabVax meeting within ninety (90) minutes after it concluded.

26 173. On September 7, 2018, the SEC filed suit against many of the Defendants, including:

27 Honig, Brauser, Stetson, O’Rourke, Groussman, Frost, Ford, Alpha, ATG, FGIT, GRQ, HSCI,

28 Grander, Melechdavid, OPKO, and Southern Biotech. See Securities and Exchange Commission v.

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 Honig, et al., 1:18-cv-08175 (S.D.N.Y.).14 The SEC complaint alleges that Defendants engaged in

2 “three highly profitable ‘pump-and-dump’ schemes,” that “Honig was the primary strategist, calling

3 upon other Defendants to buy or sell stock, arrange for the issuance of shares, negotiate transactions,

4 or engage in promotional activity” and that “once Honig and his associates had secured substantial

5 ownership of the issuer, they acted as an undisclosed control group[.]”

6 FIRST CAUSE OF ACTION


(Market Manipulation in violation of Cal. Corp. Code § 25400 against Honig, GRQ, HSCI)
7

8 174. MabVax realleges and incorporates by reference the allegations contained above as if

9 fully set forth herein.

10 175. By virtue of the allegations set forth above, Defendants violated California

11 Corporations Code Sections 25400(a) and (b) et seq. Defendants’ violations were committed either

12 directly or indirectly within California.

13 176. Defendants knew that they were effecting the purchase or sale of MabVax stock,

14 arranging for the issuance of shares, negotiating transactions, or engaging in promotional activity.

15 Defendants acted with the intent and thereby did create a false or misleading appearance with respect

16 to the market for MabVax securities, among other things, in violation of Section 25400(a).

17 177. Defendants effected repeated transactions in MabVax securities to create actual or

18 apparent active trading in MabVax, with the knowledge that their actions would affect the stock,

19 including its price and transactions by others, among other things, in violation of Section 25400(b).

20 178. As a proximate result of Defendants’ conduct occurring in California with regard to

21 MabVax, the Company’s stock was manipulated and MabVax was injured.

22 179. Pursuant to the provisions of California Corporations Code 25500, MabVax is entitled

23 to, and should be awarded, damages against Defendants for unlawful manipulation of MabVax stock.

24 180. Defendants violated Section 25400 and/or willfully, directly, and materially

25 participated in violating Section 25400 by, for example: (a) effecting transactions in MabVax

26 securities with the intention of creating a false and misleading appearance with respect to the market

27
14
In an Amended Complaint filed March 8, 2019, the SEC dropped as defendants Groussman, Melechdavid,
28 Alpha, Frost, FGIT, and OPKO, after the Court entered judgment against them, and Southern Biotech, the sham
entity that has been dissolved.
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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 for MabVax securities; (b) effecting transactions in MabVax securities to create the actuality or

2 appearance of active trading in MabVax securities or to affect the price of MabVax securities; and/or

3 (c) knowingly manipulating transactions in MabVax securities.

4 181. Honig (acting individually and/or through the entities he controlled, including GRQ

5 and HCSI, and pursuant to tacit or explicit agreements with Brauser, Stetson, O’Rourke and other

6 affiliates to acquire, hold, vote and/or dispose of shares they acquired in MabVax in coordination with

7 one another) violated Section 25400 by, among other things, directly or indirectly, and willfully:

8 obtaining and exercising undisclosed control of the management and policies of MabVax; paying

9 undisclosed compensation to writers and bloggers to write enthusiastic and deceptive articles on

10 MabVax to artificially boost trading volume and stock price; and selling shares of MabVax into the

11 market at artificially high prices.

12 182. Honig further violated Section 25400 by willfully making both a materially false and

13 misleading Schedule 13G filing (by which he concealed his control over MabVax’s management and

14 policies as well as his membership in a group with Brauser, Stetson, O’Rourke and other affiliates,

15 pursuant to their agreement to acquire, hold, vote and/or dispose of their shares in coordination with

16 one another), and a materially false and misleading Schedule 13D filing (by which he concealed his

17 membership in a group with Brauser, Stetson, O’Rourke and other affiliates, pursuant to their

18 agreement to acquire, hold, vote and/or dispose of their shares in coordination with one another).

19 183. Honig’s intentional or reckless failure to make timely and appropriate filings under the

20 securities laws with respect to his and his group’s holdings of MabVax shares violated Section 25400

21 and facilitated his scheme to create a false or misleading appearance with respect to the market of

22 MabVax securities. By means of Honig’s false and misleading securities filings with respect to his

23 stock ownership of MabVax, Honig was able to acquire additional shares of MabVax, and was able to

24 sell his shares in the dump into artificially inflated trading volume and stock price.

25 184. Given the collective effort of all Defendants functioning as a conspiracy whereby each

26 meaningfully contributed to the shared and illicit objective of the others, MabVax is informed and

27 believes that in doing the wrongful and illegal acts herein alleged, Defendants, and each of them, acted

28

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 as the agents and co-conspirators of the other Defendants, acted within the course and scope of said

2 agency, and acted with the knowledge, consent, and approval of the other Defendants.

3 SECOND CAUSE OF ACTION


(Market Manipulation in violation of Cal. Corp. Code § 25400 against Brauser, Stetson,
4 O’Rourke, Grander, and ATG)
5
185. MabVax realleges and incorporates by reference the allegations contained above as if
6
fully set forth herein.
7
186. By virtue of the allegations set forth above, Defendants violated California
8
Corporations Code Sections 25400(a) and (b) et seq. Defendants’ violations were committed either
9
directly or indirectly within California.
10
187. Defendants knew that they were effecting the purchase or sale of MabVax stock,
11
arranging for the issuance of shares, negotiating transactions, or engaging in promotional activity.
12
Defendants acted with the intent and thereby did create a false or misleading appearance with respect
13
to the market for MabVax securities, among other things, in violation of Section 25400(a).
14
188. Defendants effected repeated transactions in MabVax securities to create actual or
15
apparent active trading in MabVax, with the knowledge that their actions would affect the stock,
16
including its price and transactions by others, among other things, in violation of Section 25400(b).
17
189. As a proximate result of Defendants’ conduct occurring in California with regard to
18
MabVax, the Company’s stock was manipulated and MabVax was injured.
19
190. Pursuant to the provisions of California Corporations Code 25500, MabVax is entitled
20
to, and should be awarded, damages against Defendants for unlawful manipulation of MabVax stock.
21
191. Defendants violated Section 25400 and/or willfully, directly, and materially
22
participated in violating Section 25400 by, for example: (a) effecting transactions in MabVax
23
securities with the intention of creating a false and misleading appearance with respect to the market
24
for MabVax securities; (b) effecting transactions in MabVax securities to create the actuality or
25
appearance of active trading in MabVax securities or to affect the price of MabVax securities; and/or
26
(c) knowingly manipulating transactions in MabVax securities.
27
192. Brauser (acting individually and/or through the entities he controlled, including
28
Grander, and pursuant to tacit or explicit agreements with Honig, Stetson, O’Rourke and other
-53-
FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 affiliates to acquire, hold, vote and/or dispose of shares they acquired in MabVax in coordination with

2 one another) violated Section 25400 by, among other things, directly or indirectly, and willfully:

3 obtaining and exercising undisclosed control of the management and policies of MabVax; and selling

4 shares of MabVax into the market into trading volume and at prices he knew or was reckless in not

5 knowing were artificially inflated by promotional articles that Honig had directly or indirectly secretly

6 paid for and orchestrated. Brauser’s intentional or reckless failure to make timely and appropriate

7 filings under the securities laws with respect to his and his group’s holdings of MabVax shares also

8 violated Section 25400 and facilitated his scheme to create a false or misleading appearance with

9 respect to the market of MabVax securities.

10 193. Stetson (acting individually and/or through the entities he ostensibly and actually

11 controlled, including HSCI, and pursuant to tacit or explicit agreements with Honig, Brauser,

12 O’Rourke and other affiliates to acquire, hold, vote and/or dispose of shares they acquired in MabVax

13 in coordination with one another) violated Section 25400 by, among other things, directly or indirectly,

14 and willfully: obtaining and exercising undisclosed control of the management and policies of

15 MabVax; paying undisclosed compensation to writers and bloggers to write enthusiastic and deceptive

16 articles on MabVax to artificially boost trading volume and stock price; and selling shares of MabVax

17 into the market at artificially high prices. Stetson’s intentional or reckless failure to make timely and

18 appropriate filings under the securities laws with respect to his and his group’s holdings of MabVax

19 shares also violated Section 25400 and facilitated his scheme to create a false or misleading appearance

20 with respect to the market of MabVax securities.

21 194. O’Rourke (acting individually and/or through the entities he controlled, including

22 ATG, and pursuant to tacit or explicit agreements with Honig, Brauser, Stetson and other affiliates to

23 acquire, hold, vote and/or dispose of shares they acquired in MabVax in coordination with one another)

24 violated Section 25400 by, among other things, directly or indirectly, and willfully: obtaining and

25 exercising undisclosed control of the management and policies of MabVax; paying undisclosed

26 compensation to writers and bloggers to write enthusiastic and deceptive articles on MabVax to

27 artificially boost trading volume and stock price, and, on at least one occasion, writing and publishing

28 his own materially false and misleading article about MabVax; and selling shares of MabVax into the

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 market at artificially high prices. O’Rourke’s intentional or reckless failure to make timely and

2 appropriate filings under the securities laws with respect to his and his group’s holdings of MabVax

3 shares also violated Section 25400 and facilitated his scheme to create a false or misleading appearance

4 with respect to the market of MabVax securities.

5 195. Given the collective effort of all Defendants functioning as a conspiracy whereby each

6 meaningfully contributed to the shared and illicit objective of the others, MabVax is informed and

7 believes that in doing the wrongful and illegal acts herein alleged, Defendants, and each of them, acted

8 as the agents and co-conspirators of the other Defendants, acted within the course and scope of said

9 agency, and acted with the knowledge, consent, and approval of the other Defendants.

10 THIRD CAUSE OF ACTION


(Unlawful Business Practices in violation of Cal. Bus. & Prof. Code § 17200 against all
11 Defendants)
12 196. MabVax realleges and incorporates by reference the allegations contained above as if

13 fully set forth herein.

14 197. Defendants engaged in unlawful business practices in violation of the Unfair

15 Competition Law by violating the Corporate Securities Law of 1968, Cal. Corp. Code § 25400, as

16 alleged above. Defendants also engaged in unlawful business practices in violation of the Unfair

17 Competition Law by committing fraud and deceit, fraudulent concealment, constructive fraud, and

18 negligent misrepresentation, as alleged below.

19 198. Given the collective effort of all Defendants functioning as a conspiracy whereby each

20 meaningfully contributed to the shared and illicit objective of the others, MabVax is informed and

21 believes that in doing the wrongful and illegal acts herein alleged, Defendants, and each of them, acted

22 as the agents and co-conspirators of the other Defendants, acted within the course and scope of said

23 agency, and acted with the knowledge, consent, and approval of the other Defendants.

24 FOURTH CAUSE OF ACTION


(Fraud and Deceit in violation of Cal. Civ. Code §§ 1709 and 1710 and Common Law against
25 all Defendants)
26 199. MabVax realleges and incorporates by reference the allegations contained above as if

27 fully set forth herein.

28

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 200. Defendants made false and misleading statements of material fact and omitted to state

2 material facts necessary in order to make the statements made, in light of the circumstances under

3 which they were made, not misleading.

4 201. Defendants’ misrepresentations to MabVax included the specific misrepresentations in

5 their investor submissions and questionnaires, as described in Paragraphs 144-156.

6 202. The Defendants made further misrepresentations throughout the course of their scheme

7 to induce MabVax into issuing them stock, allowing them to convert their shares to common shares,

8 and allowing them to exert control over the company and “pump and dump” their shares. For example,

9 in around April 2014, as the first tranche of financing was closing, Stetson identified HSCI as his own

10 company on an investor list submitted to MabVax, even though Honig owned the great majority of

11 HSCI. That misrepresentation, done at Honig’s direction, was part of the Defendants’ larger scheme

12 of concealing their ownership of shares. In a September 15, 2014 email, MabVax’s CFO asked Stetson

13 which entities were his or HSCI’s affiliates. Stetson falsely answered that he was “not affiliated with

14 any of those entities,” and that he “just made private sales for my warrants.”

15 203. As alleged in Paragraphs 94-109 and 162, Defendants also made specific

16 misrepresentations that the 4.99% “blocker provision” would prevent any investor from gaining over

17 4.99% of control in MabVax. Defendants repeatedly made that misrepresentations through Honig,

18 Stetson, and Kesner (who was acting on their behalf), during the course of arranging the terms of

19 MabVax’s financing.

20 204. Defendants knew their representations were untrue or made such representations with

21 reckless indifference to the truth or in a manner not warranted by the information known to

22 Defendants.

23 205. Defendants purposefully made these misrepresentations to induce reliance by MabVax,

24 e.g., inducing MabVax to issue more than 2.6 million shares of common stock (worth roughly $22

25 million at the time) in connection with preferred stock conversions that MabVax would have been

26 prohibited from issuing had the true facts been disclosed, and inducing MabVax to issue shares of

27 preferred stock (worth roughly $8.3 million at the time) as “inducement shares” in connection with

28 new financings.

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 206. MabVax also relied on Defendants’ misrepresentations in preparing its capitalization

2 tables and beneficial ownership charts, and then in preparing its SEC filings and registration statements

3 filed throughout 2015-2018. MabVax was forced to disclaim its SEC filings when it discovered

4 Defendants’ fraud.

5 207. Defendants’ intent and knowledge of the falsity of their representations is demonstrated

6 by the internal communications within their group. Those communications show that they intended

7 to deploy the same scheme as they had in the numerous of other companies that they targeted (see

8 Paragraphs 50-66). For example:

9 a. In March 2015, Honig emailed Frost, Brauser, and Stetson stating that MabVax was a

10 “really good opportunity,” and that the group would “make $35 million conservatively

11 in 4 months and our money out [in] 4 weeks . . . .”

12 b. In November 2016, Honig emailed O’Rourke and others, stating “[t]he goal is to stop

13 people from knowing what Barry [Honig] invests in.”

14 c. In April 2015, Stetson stated in an email that the group was acting to gain “control of

15 the board” of MabVax.

16 d. In February 2014, O’Rourke stated in an email that “Barry Honig is the principal

17 investor of our small group.”

18 208. MabVax was unaware of, and reasonably and justifiably relied upon, Defendants’

19 material misrepresentations in issuing securities, remaining invested in MabVax securities, and

20 foregoing other potential investment opportunities due to Defendants’ actions. MabVax would not

21 have issued the securities to Defendants, allowed them to take control over MabVax’s board,

22 converted the shares into common shares, nor based on SEC filings and registration statements on

23 Defendants’ representations, if it had known that Defendants were investing as a group.

24 209. MabVax was damaged as a direct, proximate, and foreseeable result of the willful and

25 intentional misconduct of Defendants.

26 210. Defendants’ willful and intentional misconduct, in disregard of MabVax’s rights and

27 business, justifies the awarding of punitive damages to MabVax.

28 211. Defendants’ intentional conduct has caused and continues to cause damage to MabVax.

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 212. Given the collective effort of all Defendants functioning as a conspiracy whereby each

2 meaningfully contributed to the shared and illicit objective of the others, MabVax is informed and

3 believes that in doing the wrongful and illegal acts herein alleged, Defendants, and each of them, acted

4 as the agents and co-conspirators of the other Defendants, acted within the course and scope of said

5 agency, and acted with the knowledge, consent, and approval of the other Defendants.

6 FIFTH CAUSE OF ACTION


(Fraudulent Concealment/Omission in Violation of Cal. Civ. Code § 1710 and Common
7 Law against all Defendants)
8 213. MabVax realleges and incorporates by reference the allegations contained above as if

9 fully set forth herein.

10 214. Defendants actively concealed material information. They engaged in a years-long

11 scheme to obtain control over MabVax by hiding, in numerous ways, that they were investing as a

12 group.

13 215. For example, as described in Paragraphs 94-109 and 162, Honig and Stetson (on behalf

14 of the Defendant group) required that MabVax hire Kesner as its attorney. Kesner was an important

15 part of the concealment strategy, because Kesner falsely assured and advised MabVax that there was

16 a blocker provision in place that would prevent any investor from gaining more than 4.99% of control.

17 Kesner falsely advised MabVax that the investors were not a group for purposes of securities laws.

18 Kesner’s firm also specifically lied that Honig was “separate” from Grander, Brauser, and Stetson,

19 and “only affiliated with the GRQ entities.” Honig repeated that blocker provision strategy to falsely

20 reassure MabVax.

21 216. As described in Paragraphs 76-86, Defendants concealed their true status from the

22 beginning, inducing MabVax into dealing with them under the guise of a charity and then failing to

23 be transparent about the actual parties who would be investing in MabVax in the proposed financing.

24 217. As described in Paragraphs 144-160, Defendants submitted false investor information

25 and failed to make required Schedule 13D disclosures, all concealing and omitting their group

26 beneficial ownership. Section 13 of the Securities Exchange Act and SEC Rule 13d-1 thereunder

27 required each Defendant to publicly and honestly disclose that they beneficially owned, in the

28 aggregate, more than 5% of MabVax securities, and to do so by making a public filing with the SEC

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 (and generally within 10 days of exceeding 5%). None of the Defendants satisfied that duty, even

2 though each of them beneficially owned over 5% from their very first investment. By October 15,

3 2018, their estimated beneficial ownership was “at least 9,447,685” shares, or “at least 53.95%” of the

4 entire ownership of MabVax.

5 218. Defendants made partial representations while failing to disclose their scheme to invest

6 as a group and their true beneficial ownership, which rendered the partial disclosures misleading.

7 219. For example, in a March 24, 2015 email to MabVax’s CFO, Stetson disclosed that

8 Honig was “the beneficial owner of both GRQ [] and Southern Bio.” However, he omitted Honig’s

9 and the other Defendants’ beneficial ownership in all of the other members in their group.

10 220. They also submitted investor lists associated with the rounds of financing, which

11 identified some of the entities affiliated with certain of the Individual Defendants, but omitted the

12 group’s beneficial ownership and relationship as a whole. This misled MabVax to think that they did

13 not have any interests in any other entity or investor.

14 221. As described in Paragraphs 161-168, the Defendants also made specific requests to

15 convert their MabVax stock into common shares, which, under the “blocker” scheme they created,

16 they knew they could only do if they held less than 4.99% in beneficial ownership of MabVax. The

17 requests misled MabVax into believing that the conversions were permissible—which was not the

18 case, because of the Defendants’ group beneficial ownership.

19 222. Defendants had exclusive knowledge of the concealed material facts and MabVax did

20 not know, and could not reasonably be expected to know, of these facts. Defendants have engaged in

21 a scheme dating back years. MabVax had no reason to know that Defendants were acting as a group

22 with the intent to defraud it and “pump and dump” its stock.

23 223. Finally, certain of the Defendants were acting as MabVax’s agents and owed a

24 fiduciary duty to MabVax: Rubin, Prag, DMCG, DMCG Retirement, IRTH, Andrew Haag, and Robert

25 Haag. Those Defendants knew or should have known of Defendants’ scheme. They had each worked

26 with Honig, Stetson, and others in the Defendant group for years and had engaged in similar plays in

27 other companies. They were also taking instruction from rotating members of the Defendant group,

28 even though they were MabVax’s agent. This included taking instruction from the Defendant group

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 as to “pump” articles. Even if they somehow did not know of Defendants’ scheme and beneficial

2 ownership group (despite years of working together), they should have known that Defendants were

3 improperly acting together to control MabVax. Despite those Defendants’ fiduciary duties, they did

4 not inform MabVax of Defendants’ beneficial ownership and “pump and dump” scheme.

5 224. Defendants knew or had reason to know that the information they concealed was

6 material, but they continued to purposefully and actively conceal material information to induce

7 MabVax’s reliance.

8 225. MabVax reasonably and justifiably relied upon Defendants’ material misstatements

9 and omissions, issued securities (including conversion stock and inducement shares), forewent other

10 potential investment opportunities, and hired and retained the services of Defendants Rubin, Prag,

11 Robert Haag, Andrew Haag, DMCG, and IRTH, due to Defendants’ actions. Defendants’

12 concealment was a substantial factor in causing harm to MabVax.

13 226. Given the collective effort of all Defendants functioning as a conspiracy whereby each

14 meaningfully contributed to the shared and illicit objective of the others, MabVax is informed and

15 believes that in doing the wrongful and illegal acts herein alleged, Defendants, and each of them, acted

16 as the agents and co-conspirators of the other Defendants, acted within the course and scope of said

17 agency, and acted with the knowledge, consent, and approval of the other Defendants.

18 SIXTH CAUSE OF ACTION


(Constructive Fraud in Violation of Cal. Civ. Code § 1573 and Common Law against Rubin,
19 Prag, DMCG, DMCG Retirement, IRTH, Andrew Haag, and Robert Haag)
20 227. MabVax realleges and incorporates by reference the allegations contained above as if

21 fully set forth herein.

22 228. Defendants made statements to MabVax that were materially false and failed to

23 disclose information that made other statements materially misleading, as alleged above. Defendants

24 had a duty to disclose such information in order to prevent the statements they actually made from

25 being misleading.

26 229. Defendants Rubin, Prag, Robert Haag, Andrew Haag, DMCG, DMCG Retirement, and

27 IRTH, as agents of MabVax, owed a duty to MabVax, and had a duty to refrain from any act that

28 breached the trust reposed in them.

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 230. Defendants misled MabVax to its prejudice by inducing MabVax to issue MabVax

2 securities, providing Defendants financial gain to their advantage.

3 231. MabVax was reasonably and justifiably misled by relying on Defendants’ material

4 misrepresentations and omissions.

5 232. As a direct and proximate result of Defendants’ misleading statements, MabVax was

6 damaged.

7 233. Given the collective effort of all Defendants functioning as a conspiracy whereby each

8 meaningfully contributed to the shared and illicit objective of the others, MabVax is informed and

9 believes that in doing the wrongful and illegal acts herein alleged, Defendants, and each of them, acted

10 as the agents and co-conspirators of the other Defendants, acted within the course and scope of said

11 agency, and acted with the knowledge, consent, and approval of the other Defendants.

12 SEVENTH CAUSE OF ACTION


(Negligent Misrepresentation in Violation of Cal. Civ. Code § 1710 and Common Law against
13 all Defendants)
14 234. MabVax realleges and incorporates by reference the allegations contained above as if

15 fully set forth herein.

16 235. By virtue of their role as agents of MabVax, Defendants Rubin, Prag, Robert Haag,

17 Andrew Haag, DMCG, and IRTH had a particular duty to provide accurate information about MabVax

18 and its securities, based on MabVax’s pecuniary interest in that information.

19 236. Defendants supplied to MabVax false material information and made material

20 omissions, as alleged above.

21 237. Defendants had no reasonable ground for believing their representations were true

22 when made, yet intended that MabVax rely on their representations in order to further Defendants’

23 fraudulent schemes to profit from MabVax through illicit transactions.

24 238. MabVax reasonably and justifiably relied on the false information communicated by

25 Defendants and sustained pecuniary loss as a direct and proximate result of such reliance.

26 239. Given the collective effort of all Defendants functioning as a conspiracy whereby each

27 meaningfully contributed to the shared and illicit objective of the others, MabVax is informed and

28 believes that in doing the wrongful and illegal acts herein alleged, Defendants, and each of them, acted

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 as the agents and co-conspirators of the other Defendants, acted within the course and scope of said

2 agency, and acted with the knowledge, consent, and approval of the other Defendants.

3 EIGHTH CAUSE OF ACTION


(Breach of Fiduciary Duty against Rubin, Prag, DMCG, DMCG Retirement, Andrew Haag,
4 Robert Haag, and IRTH)
5
240. MabVax realleges and incorporates by reference the allegations contained above as if
6
fully set forth herein.
7
241. Between April 2015 and April 2016, MabVax had an agency relationship with Rubin
8
pursuant to a consulting agreement.
9
242. Between April 2015 and January 2016, MabVax had an agency relationship with
10
DMCG. Prag is the principle of DMCG. As such, he acted as an agent of MabVax.
11
243. Between August 2016 and February 2017, MabVax had an agency relationship with
12
IRTH pursuant to the Services Agreement between MabVax and IRTH. As principals of IRTH, Robert
13
Haag and Andrew Haag, acting on behalf of IRTH, were agents of MabVax.
14
244. As agents of MabVax, Defendants Rubin, Prag, DMCG, DMCG Retirement, Andrew
15
Haag, Robert Haag, and IRTH owed fiduciary duties to MabVax, including a duty of reasonable care,
16
a duty of loyalty, and a duty of confidentiality.
17
245. These Defendants repeatedly violated these fiduciary duties to MabVax in multiple
18
ways, including:
19
a. Despite being familiar with Defendants’ inter-relationships and practices, Defendants
20
Rubin, Prag, DMCG, Robert Haag, Andrew Haag, and IRTH failed to inform MabVax
21
of the risk that Defendants were a 13D group.
22
b. Defendants Rubin, Robert Haag, Andrew Haag, and IRTH failed to provide value for
23
the payments they received from MabVax, instead relying on the fact that Honig
24
mandated that MabVax hire and pay them exorbitant amounts.
25
246. MabVax was damaged as a direct, proximate, and foreseeable result of the willful and
26
intentional misconduct of Defendants. Such willful and intentional misconduct, in disregard of
27
MabVax’s rights and business, justifies the awarding of punitive damages to MabVax.
28
247. Defendants’ intentional conduct has caused and continues to cause damage to MabVax.
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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 NINTH CAUSE OF ACTION
(Restitution for Unjust Enrichment against All Defendants)
2

3 248. MabVax realleges and incorporates by reference the allegations contained above as if

4 fully set forth herein.

5 249. Defendants received benefits from MabVax, including shares of common stock and

6 payment for services.

7 250. These benefits are unjustly retained by Defendants where they were procured by

8 Defendants through fraud, among other things, as alleged above.

9 251. Given the collective effort of all Defendants functioning as a conspiracy whereby each

10 meaningfully contributed to the shared and illicit objective of the others, MabVax is informed and

11 believes that in doing the wrongful and illegal acts herein alleged, Defendants, and each of them, acted

12 as the agents and co-conspirators of the other Defendants, acted within the course and scope of said

13 agency, and acted with the knowledge, consent, and approval of the other Defendants.

14 PRAYER FOR RELIEF

15 WHEREFORE, MabVax prays:

16 A. That judgment be entered in favor of MabVax and against Defendants;

17 B. That MabVax be awarded actual and punitive damages;

18 C. That MabVax be awarded pre- and post-judgment interest and that the interest be

19 awarded at the highest available rate;

20 D. That Defendants be required to make full disclosure and accounting of their interests

21 and transactions in MabVax’s securities, directly or indirectly, whether transacting in their own names

22 or with respect to transactions undertaken through entities, nominees or other investors;

23 E. That MabVax recover its costs of suit and reasonable attorney’s fees; and

24 F. That the Court grant such other legal and equitable relief as it may deem proper under

25 the circumstances.

26

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FIRST AMENDED COMPLAINT CASE NO.: 37-2019-00018398-CU-SL-CTL
1 JURY TRIAL DEMANDED

2 MabVax hereby demands a trial by jury on all issues triable by a jury in the above-entitled

3 action.

4 Respectfully submitted,
5 Dated: August 28, 2020 BAKER BOTTS L.L.P.
6

7 By:
Jonathan A. Shapiro
8 Brian C. Kerr
Tania Rice
9 Kathryn Christopherson
BAKER BOTTS L.L.P.
10
Attorneys for Plaintiff
11 MABVAX THERAPEUTICS HOLDINGS, INC.
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