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1

2 Jason M. Leviton, (pro hac vice forthcoming)


Joel A. Fleming (CA Bar No. 281264)
3 Jacob A. Walker (CA Bar No. 271217)
BLOCK & LEVITON LLP
4 155 Federal Street, Suite 400
Boston, MA 02110
5 (t) (617) 398-5600
6 (f) (617) 507-6020
jason@blockesq.com
7 joel@blockesq.com
jake@blockesq.com
8
Attorneys For Plaintiff
9
10 SUPERIOR COURT FOR THE STATE OF CALIFORNIA
11
COUNTY OF SAN DIEGO
12
13 MABVAX THERAPEUTICS HOLDINGS, INC., a Case No.
Delaware Corporation,
14 COMPLAINT FOR DAMAGES
Plaintiff,
15 1. NEGLIGENT PROFESSIONAL
v. PRACTICE
16 2. BREACH OF FIDUCIARY DUTY
SICHENZIA ROSS FERENCE LLP (f/k/a 3. BREACH OF CONTRACT
17 SICHENZIA ROSS FERENCE KESNER LLP; 4. RESTITUTION FOR UNJUST
f/k/a SICHENZIA ROSS FRIEDMAN FERENCE ENRICHMENT
18 LLP), HARVEY KESNER, GREGORY 5. DECEIT
SICHENZIA, MICHAEL FERENCE, TARA 6. FRAUD
19 GUARNERI-FERRARA, MARC ROSS, THOMAS
ROSE, RICHARD J. BABNICK, JR., DAVID B. JURY TRIAL DEMANDED
20 MANNO, and AVITAL EVEN-SHOSHAN
PERLMAN, and DOES 1 through 10, inclusive,
21
Defendants.
22
23
24
25
26
27
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COMPLAINT FOR DAMAGES CASE NO.


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

2 complaint (the “Complaint”) against Defendants Sichenzia Ross Ference LLP (“Sichenzia”)
3 (f/k/a Sichenzia Ross Ference Kesner LLP; f/k/a Sichenzia Ross Friedman Ference LLP) and
4 certain partners of Sichenzia (collectively, the “Individual Defendants”): Harvey Kesner
1
5 (“Kesner”), Gregory Sichenzia (“Gregory Sichenzia”), Michael Ference (“Ference”), Tara
6 Guarneri-Ferrara (“Guarneri-Ferrara”), Marc Ross (“Ross”), Thomas Rose (“Rose”), Richard J.
7 Babnick, Jr. (“Babnick”), David B. Manno (“Manno”), and Avital Even-Shoshan Perlman
8 (“Perlman”) and alleges as follows:
9 INTRODUCTION

10 There are lots of players looming in the shadows to hurt small public companies.
11 * * *

12 Watch out for … nominee accounts among those who own stocks in shells.
* * *
13
A lot of lawyers [i]n the microcap space play on the fringes.
14
- Gregory Sichenzia, April 9, 20182
15
16
1. MabVax is a clinical-stage biotechnology company that is developing treatments
17
for certain insidious cancers, including pancreatic cancer, soft tissue cancer, and ovarian cancer.
18
MabVax was founded in San Diego more than a decade ago by leading pharmaceutical
19
researchers, clinicians, and entrepreneurs, including the head of the Laboratory of Tumor
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Vaccinology at the renowned Memorial Sloan Kettering Cancer Center in New York. Since then,
21
the MabVax team has brought its promising therapies into clinical trials in conjunction with
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traditional chemotherapy and collaborated with others here and abroad in the fight to find
23
effective treatments for these diseases. Along the way, MabVax matured from a local start-up
24
25
1
Hereafter, references to “Sichenzia” are to the law firm defendant and references to “Gregory Sichenzia”
26 are to the Individual Defendant.
2
27 Gregory Sichenzia’s Advice to Microcap Investors, RedChip Companies (Apr. 9, 2018),
https://www.redchip.com/articles/1019/greg-sichenzias-advice-to-microcap-investors
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COMPLAINT FOR DAMAGES CASE NO.
1 financed by a few generous patrons into a public company with its stock traded on the Nasdaq
2 Stock Market.
3 2. The Company’s clinical research has been exhausting and expensive. Like other

4 clinical-stage biotechnology companies, MabVax cannot earn product revenue until it (or its
5 collaborative partners) complete clinical trials, obtain regulatory approval and successfully
6 commercialize one or more of its products. As a result, the Company has incurred, and will likely
7 continue to incur, substantial operating losses. In order to continue its vitally important work,
8 MabVax has raised, and will likely continue to have to raise, money through debt and equity
9 financing. Unfettered access to the public capital markets is, therefore, of critical importance to
10 the Company.
11 3. Sadly, of all the obstacles that MabVax has faced in its pursuit of a treatment for

12 certain types of cancer, one of the greatest threats has come from the very attorneys who MabVax
13 trusted to protect the Company. MabVax engaged Sichenzia and its team, led by Kesner, as its
14 counsel for securities reporting matters, with confidence that they were “experts that help serve
3
15 the unique needs of small and mid-cap issuers.” As the Company’s lawyers, Defendants owed
16 fiduciary duties, as well as ethical and professional obligations, to use their best efforts to protect
17 MabVax and its interests by offering their best advice with respect to compliance with the United
18 States securities laws. Defendants did exactly the opposite. Rather than looking out for MabVax,
19 the lawyers exploited their positions of trust by looking out for themselves, and for other more-
20 valued clients whose interests were directly adverse to MabVax. As a consequence of
21 Defendants’ egregious misconduct, MabVax has been confronted with an expensive and
22 distracting investigation by the U.S. Securities and Exchange Commission (“SEC”) and forced
23 to publicly disclaim reliance on past financial statements and other publicly filed reports. In
24 addition, the Company has been delisted from trading on the Nasdaq, thereby strangling its access
25 to the capital markets.
26
3
27 Securities Law, SICHENZIA ROSS FERENCE LLP, available at http://srfkllp.com/practice-areas/securities-
law/ (last visited September 5, 2018).
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2
COMPLAINT FOR DAMAGES CASE NO.
1 4. Specifically, Defendants failed, throughout the course of over three years of

2 representing MabVax, to advise and disclose that certain of the Company’s largest investors (the
4
3 “Investors”) —who were also clients of Sichenzia—were acting in a manner such that federal
4 regulators would consider the Investors to be a so-called “13D Group,” subjecting both them and
5 MabVax to heightened disclosure requirements under the federal securities laws. Sichenzia
6 advised MabVax that—based on its knowledge and experience as “experts”—the Investors were
7 not a “group” under settled law and that neither the Investors’ public disclosures nor MabVax’s
8 public disclosures were required to treat the Investors as a group or otherwise aggregate their
9 interests. Sichenzia also assured MabVax that it had structured and documented the Investors’
10 complex securities transactions with legal firewalls against the formation of any 13D Group
5
11 through the use of formalistic “beneficial ownership blockers” in corporate documents and other
12 mechanistic devices.
13 5. As Sichenzia knew well, that advice was false. The legal test for whether a 13D

14 Group exists is “whether there is sufficient direct or circumstantial evidence to [show] … a formal
15 or informal understanding between [the group members] for the purpose of acquiring, holding,
6
16 or disposing of securities,” including an analysis of “prior relationships and trading patterns.”
17 Sichenzia was intimately familiar with the relevant law, with the Investors, and with the facts and
18 circumstances that raise very serious questions about whether the Investors should be deemed a
19 “group” with respect to their collective investments in MabVax and other issuers based on the
20 totality of the circumstances. Sichenzia obtained such knowledge through extensive relationships
21
4
The Investors include, but are not necessarily limited to, Barry Honig, Renee Honig, Jonathan Honig,
22 John Stetson, Phillip Frost, Mark Groussman, and Michael Brauser, as well as Defendants Sichenzia,
Kesner, and Ference and many entities affiliated or controlled by those individuals.
23 5
As described below, the Investors repeatedly purchased convertible preferred stock from MabVax
24 pursuant to contracts and public filings advised by Sichenzia. Each share of convertible preferred stock
could, upon the request of the Investor holding that share, be converted by MabVax into shares of common
25 stock that could be immediately sold on the open market. At the insistence of the Investors, their
convertible preferred stock was also subject to purported “beneficial ownership blockers” that forbade the
26 conversion of preferred shares into common stock if, as a result, the converting shareholder would
beneficially own more than a certain percentage of MabVax (most often, 4.99%).
27 6
Hallwood Realty Partners, L.P. v. Gotham Partners, L.P., 286 F.3d 613, 617–18 (2d Cir. 2002).
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COMPLAINT FOR DAMAGES CASE NO.
1 with several of the Investors, not only as their lawyers but—shockingly—as their business
2 partners such that Sichenzia and multiple Sichenzia partners (including, at least, Defendants
3 Kesner and Ference) are themselves are part of the Investors.
4 6. Sichenzia’s illegality and exploitation of MabVax went well beyond false advice

5 about the Investors’ alleged “group” status and related public disclosures. In December 2016,
6 Kesner personally revised a submission to a regulator to avoid scrutiny of the Investors’ activity,
7 falsely criticizing Company management for proposing to provide what he described as excessive
8 details that were not necessary under the circumstances.
9 7. On another occasion—in direct defiance of instructions from MabVax—Kesner

10 and Guarneri-Ferrara breached their fiduciary duties and ethical obligations to MabVax by
11 divulging client confidences. They did so by tipping at least one of the Investors that the Investors
12 had inadvertently terminated a critical consent right—that provided the Investors with significant
13 leverage over MabVax—when the designated Investor and consent holder, Southern Biotech,
14 Inc., transferred all of the MabVax shares held in its name to other Investors. After being tipped
15 off, the designated Investor re-transferred the shares back into Southern Biotech, creating an
16 argument that the Consent Right had been re-established. Approximately a month later, MabVax
17 contacted Sichenzia, in the course of finalizing a new agreement with Honig. In internal emails,
18 including Defendants Manno, Kesner, Guarneri-Ferrara, and Rose, Manno pointed out to the
19 other Defendants “the SRFf [i.e., Sichenzia] conflict” with respect to the issue of how Southern
20 Biotech’s transfer of its MabVax securities affected the Consent Right. Both Rose and Manno
21 suggested that the Consent Right may, in fact, have been irrevocably terminated by the transfer.
22 Although irrevocable termination of the Consent Right so clearly served MabVax’s interest,
23 Kesner instead doubled down on Defendants’ breach of fiduciary duty by instructing his partners
24 (in writing) to conceal their analysis from MabVax: “Don’t discuss the below specifically
25 [referring to Manno’s analysis] with [MabVax’s CFO].”
26 8. Defendants continued their pattern of deception even after the SEC began

27 investigating. Sichenzia and Kesner repeatedly advised MabVax that Sichenzia was best situated
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COMPLAINT FOR DAMAGES CASE NO.
1 to represent the Company in connection with the SEC investigation without disclosing that
2 Defendants were hopelessly conflicted given: (1) their undisclosed involvement in the matters
3 under investigation, (2) their representation of and business relationships with multiple other
4 Investors also known to be under government scrutiny, and (3) their status as an Investor and a
5 member of the same group of Investors under investigation.
6 9. As the SEC investigation continued, Sichenzia partners sent internal emails

7 describing Sichenzia’s continued representation of MabVax as “nutz” and wondering “how in G-


8 d’s name,” the firm could continue its representation given these blatant conflicts. One named
9 partner concluded that Kesner “had lost his mind” by proposing that Sichenzia take on still more
10 work for MabVax (i.e., suggesting that MabVax prepare an administrative challenge against the
11 SEC for an estimated $40,000 to $50,000 legal fee). Despite the partners’ candor with each other
12 in private internal communications, Sichenzia inexplicably failed to stop the continuing breaches
13 of duty. As weeks stretched into months, Sichenzia continued to mislead MabVax and represent
14 the Company in the SEC investigation. Not until May 2018, did the firm’s overwhelming
15 conflicts finally compel its withdrawal.
16 10. Although Sichenzia, through Kesner, pledged assistance during the transition to

17 successor counsel, Kesner and a Sichenzia associate instead lied and deliberately omitted material
18 information when asked about the representation. Kesner, shockingly, again violated MabVax’s
19 client confidentiality by alerting the Investors to a sensitive confidential meeting with successor
20 counsel within ninety minutes of successor counsel leaving Kesner’s office. Another named
21 partner criticized Kesner for even agreeing to meet with successor counsel, saying that doing so
22 was in neither Kesner’s nor Sichenzia’s interest. Since then, Sichenzia and Kesner have flatly
23 refused to answer basic questions, at one point even demanding payment of a large legal fee
24 before they would provide information and, ultimately, saying that they had done enough and
25 would do no more.
26 11. Since MabVax retained new counsel, the breadth of Defendants’ malfeasance has

27 been increasingly exposed. It is now clear that Sichenzia—led by Kesner and his partners—
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COMPLAINT FOR DAMAGES CASE NO.
1 provided MabVax with misleading legal advice in order to protect the interests of themselves and
2 their other clients (i.e., the other Investors), thus allowing the Investors to operate in a manner
3 that financial regulators could view as an undisclosed control group with respect to both MabVax
4 and their other public-company victims.
5 12. The impact on the Company has been staggering. In late May 2018, MabVax

6 determined that, as a result of the emerging and still unresolved “control group” questions, it
7 could no longer confidently determine the validity of a strikingly large number of shares issued
8 to Investors, casting a cloud over as many as 2,628,766 shares (roughly 28% of its common stock)
9 that were issued on Sichenzia’s watch. To remove that cloud, the Company has been forced to
10 expend significant resources in seeking extraordinary relief from Delaware’s Court of Chancery
11 to validate the unknown number of shares of arguably invalid common stock, and to validate
12 other corporate acts that may also otherwise be deemed invalid as a result of Sichenzia’s
13 misconduct.
14 13. In the interim, MabVax determined that it could not responsibly file its report on

15 SEC Form 10-Q for the quarter ended March 31, 2018, and had no choice but to publicly disclaim
16 reliance on financial statements and other reports that it had filed publicly since 2014, noting that
17 the number of shares of its outstanding common stock previously reported—as well as figures
18 reported in reliance on the number of outstanding shares of common stock—may be inaccurate.
19 As a result of its present inability to file those required reports, MabVax has been delisted from
20 trading on the Nasdaq Stock Market, thus depriving the Company of access to the Wall Street
7
21 and Main Street investors it needs to finance its research. In short, instead of safeguarding
22 MabVax’s critical access to the capital markets, Defendants and their other clients—the
23 Investors—have choked off that access to the point that the Company’s viability is in question.
24 At the same time that its ability to raise money has been severely handicapped, MabVax has been
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26 Many institutional investors are forbidden from holding delisted stock. See, e.g., Jonathan Macey et. al.,
Down and Out in the Stock Market: The Law and Economics of the Delisting Process, 51 J.L. & ECON.
27 683, 709 (2008) (“volumes increase when stocks move to the Pink Sheets, possibly because of portfolio
rebalancing of institutional investors unable to retain unlisted securities in their portfolios.”).
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COMPLAINT FOR DAMAGES CASE NO.
1 required to spend more than one million dollars cooperating with an investigation by SEC into
2 the very “group” conduct by the Investors that Sichenzia had falsely advised was safe and
8
3 consistent with the disclosure requirements of the federal securities laws.
4 14. Defendants’ misconduct was as lucrative for them as it has been devastating to the

5 client they exploited. Sichenzia charged MabVax more than $1,600,000 for legal services,
6 including approximately $250,000 for representing the Company in an SEC investigation where
7 counsel must have known that its own conduct was at issue. In his role as an Investor, Kesner
8 received thousands of MabVax shares, valued at more than $90,000. Ference also invested at
9 least $25,000 in the Company. To this day, MabVax does not know—because Kesner has refused
10 to disclose—the circumstances under which Kesner obtained and thereafter liquidated MabVax
11 stock, making it impossible to know the full extent of his trading profits. At this point MabVax
12 cannot even determine whether its now-former counsel traded in possession of the material non-
13 public information entrusted to them by their own public company client.
14 15. Simply put, MabVax engaged Defendants as counsel to keep the Company safe,

15 to ensure its compliance with the securities laws and its access to the public capital markets, and
16 to serve faithfully the Company’s interest in dozens of transactions with the Investors. Instead,
17 Defendants inexcusably put MabVax in harm’s way by providing conflicted, self-interested,
18 misleading and improper advice and exploiting their positions of trust, all to promote and protect
19 their own interests and those of their other more-valued clients and collaborators, the other
20 Investors.
21 THE PARTIES

22 16. Plaintiff MabVax Therapeutics Holdings, Inc. is, and at all times mentioned in the

23 Complaint was, a Delaware corporation, with its principal place of business in San Diego County,
24 California.
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26 Even in the face of the SEC investigation, Sichenzia continued to assure MabVax that the Company was
in full compliance with the securities laws and even claimed that the law firm could, and should, represent
27 the Company in the investigation because its lawyers possessed intimate knowledge of the facts and the
law, while other counsel would charge far more money to catch up.
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COMPLAINT FOR DAMAGES CASE NO.
1 17. Defendant Sichenzia Ross Ference LLP is a limited liability partnership with its

2 principal place of business in New York County, New York. From December 20, 2016 through
3 August 31, 2018, Sichenzia was known as Sichenzia Ross Ference Kesner LLP. From October
4 17, 2011 through December 20, 2016, Sichenzia was known as Sichenzia Ross Friedman Ference
5 LLP.
6 18. Defendant Harvey Kesner is an attorney. Kesner was a partner of Sichenzia from

7 June 2009 through (on information and belief) August 31, 2018. From December 20, 2016
8 through (on information and belief) August 31, 2018, Kesner was a so-called “name partner” of
9 Sichenzia. On September 5, 2018, a journalist reported that “Harvey Kesner’s law firm has
10 removed his name from the [firm’s] logo today. According to a member of the law firm, this [is]
11 a clear signal that his fellow partners don’t want to be associated with him or his ties to [one of
12 the Investors,] Barry Honig.” Throughout his time with Sichenzia, Kesner was the partner at
13 Sichenzia with primary responsibility for MabVax’s matters and traveled to San Diego to solicit
14 and perpetuate Sichenzia’s engagement by MabVax.
15 19. Defendant Gregory Sichenzia is an attorney. Gregory Sichenzia founded

16 Sichenzia in May 1998 and has been a partner of the firm ever since. Gregory Sichenzia’s profile
17 on the firm’s website states that he “counsels public and private companies in all securities laws
18 matters, from complex financing transactions and listings on various stock exchanges through
19 everyday regulatory requirements.”
20 20. Defendant Michael Ference is an attorney. Ference joined Sichenzia in 1999 and

21 is a partner of the firm. According to Ference’s profile on Sichenzia’s website, he has experience
22 “represent[ing] clients in actions and investigations brought before governmental agencies and
23 self-regulatory bodies such as the Securities and Exchange Commission (SEC), various state
24 agencies and the Financial Industry Regulatory Authority (FINRA).” The profile goes on to state
25 that, “[i]n his Corporate Finance practice, Mr. Ference represents public and private companies,
26 underwriters and investment funds in a broad range of federal and state securities laws and
27
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COMPLAINT FOR DAMAGES CASE NO.
1 investment and capital-raising transactions, including public offerings, PIPEs, private equity, debt
2 and venture capital transactions.”
3 21. Defendant Tara Guarneri-Ferrara is an attorney. Guarneri-Ferrara joined the

4 Corporate and Securities Department of Sichenzia in February 2008 and became a partner of the
5 firm in 2015. Guarneri-Ferrara focuses her practice in the areas of securities, corporate finance
6 and mergers and acquisitions.
7 22. Defendant Marc Ross is an attorney. Ross is a founding partner of Sichenzia.

8 According to his profile on the law firm’s website, Ross “advises companies, mainly small to
9 mid-cap public companies, with their 1934 Act reporting requirements as well as their NASDAQ,
10 AMEX and NYSE and other exchange listing and compliance matters.” He also “counsels clients
11 through the arduous and often frustrating process of civil regulatory and possibly criminal
12 investigations, whether the client is the subject of an investigation by a self-regulatory
13 organization, a state agency, or a federal agency. In particular, he regularly appears before the
14 SEC, FINRA, and state securities agencies in connections with investigations, including
15 responding to FINRA 8210 requests, appearing for On-The-Record examinations, preparing
16 ‘Wells’ submissions, negotiating Acceptance, Waiver & Consent agreements, and defending
17 clients in enforcement proceedings.”
18 23. Defendant Thomas Rose is an attorney. Rose joined Sichenzia in 2000 and is a

19 partner of the firm. According to the law firm’s website, Rose “concentrates his practice in the
20 areas of Securities Law, Corporate Finance, Mergers and Acquisitions and General Corporate
21 Law. Mr. Rose represents public and private companies, underwriters and investment funds in a
22 broad range of federal and state securities laws and investment and capital-raising transactions,
23 including public offerings, PIPEs, private equity, debt and venture capital transactions.” Rose is
24 a former staff attorney with the SEC, “where he specialized in Corporate Finance.”
25 24. Defendant David B. Manno is an attorney. Manno joined Sichenzia in 2006 and is

26 a partner of the firm. According to his profile on the firm’s website, “Manno’s practice focuses
27 on corporate and securities law. Mr. Manno regularly represents public and private companies in
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COMPLAINT FOR DAMAGES CASE NO.
1 capital raising transactions, including private placements, bridge financings and mergers and
2 acquisitions. Mr. Manno also counsels public companies on securities law compliance and assists
3 them with the preparation of Securities and Exchange Commission filings, including registration
4 statements, proxy statements, 10-Ks, 10-Qs and 8-Ks.”
5 25. Defendant Richard J. Babnick, Jr. is an attorney. Babnick joined Sichenzia in 1999

6 and became a partner of the firm in 2005. According to his profile on the firm’s website, Babnick
7 “represents Business Entities, Officers and Directors, Shareholders, and Individuals in State and
8 Federal court proceedings, as well as Broker-Dealers and Registered Representatives in
9 investigations and administrative proceedings before the U.S. Securities and Exchange
10 Commission, the Financial Industry Regulatory Authority (‘FINRA’), and State Securities
11 Regulators.”
12 26. Defendant Avital Even-Shoshan Perlman is an attorney. Perlman joined Sichenzia

13 in 2014 and became a partner of the firm in 2017. According to her profile on the firm’s website,
14 Perlman “concentrates her practice on securities offerings and compliance, mergers and
15 acquisitions and corporate governance. She represents public and private clients in a variety of
16 corporate and securities matters, including public and private capital raising transactions, public
17 company reporting, investor relations activities, board and committee matters and general
18 corporate matters.”
19 27. The true names and capacities of the Defendants named herein as Does 1 through

20 10, inclusive, are unknown to MabVax, who therefore sues such Defendants by fictitious names
21 pursuant to Code of Civil Procedure § 474. MabVax will amend this Complaint to show such true
22 names and capacities when they have been determined. On information and belief, Defendant
23 Does 1 through 10 are responsible in some manner for the actions complained of herein.
24 28. MabVax is informed and believes that in doing the wrongful, illegal, tortious,

25 intentional acts hereinafter alleged, Defendants, and each of them, acted as the agents and co-
26 conspirators of the other Defendants, acted within the course and scope of said agency, and acted
27 with the knowledge, consent, and approval of the other Defendants.
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COMPLAINT FOR DAMAGES CASE NO.
1 JURISDICTION

2 29. Jurisdiction and venue are proper because Defendants’ wrongful conduct was

3 directed to and caused MabVax injury in the County of San Diego and Defendants’ false and
4 misleading communications were directed to, received in, and had a significant economic impact
5 in the County of San Diego. Throughout the period relevant to this Complaint, Defendants
6 called, emailed, and met with MabVax, knowing that the Company was headquartered in the
7 County of San Diego and knowing that the effects of their misconduct would be, and were, felt
8 in San Diego.
9 MABVAX IS FRAUDULENTLY INDUCED INTO AN
ATTORNEY-CLIENT RELATIONSHIP WITH SICHENZIA
10
30. In or about March 2015, Barry Honig and John Stetson, two of the Investors,
11
introduced Kesner to MabVax. Honig and Stetson recommended (and later required) MabVax to
12
hire Kesner to advise MabVax on the preparation and filing of its SEC filings, and on related
13
corporate matters. Honig, Stetson, and Kesner told MabVax that Kesner had exceptionally
14
significant experience representing companies like MabVax before the SEC and in fact had
15
himself practiced at the SEC for a period of time.
16
31. At the time Honig and Stetson introduced Kesner to MabVax, the Investors were
17
negotiating the terms under which they would make certain investments into MabVax. On March
18
12, 2015, shortly after MabVax senior leadership first met Kesner, Stetson sent the term sheet for
19
the investments that explicitly required, as a condition of the financing, that MabVax “engage the
20
firm with which Harvey Kesner, Esq. is associated, as Company counsel (the ‘Firm’) for
21
corporate and [sic] securities for a minimum of 12 months period [paid in advance] following
22
closing.” MabVax’s leadership team had never previously been compelled to hire counsel
23
designated by outside investors (instead of selecting counsel of its own choice), nor had they even
24
heard of such an unusual request. But MabVax was assured that Sichenzia and Kesner were so
25
expert in the securities laws and transactional practice that they would better serve the Company
26
than other counsel. At the time of the retention, MabVax had no reason to believe that Sichenzia
27
and its lawyers would act in the interests of anyone other than MabVax.
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COMPLAINT FOR DAMAGES CASE NO.
1 32. On April 2, 2015, MabVax executed—as it was required, by the terms of the

2 financing—an engagement letter with Sichenzia, on terms dictated by Sichenzia, for


3 representation in connection with MabVax’s general corporate securities matters, including
4 matters related to ongoing SEC reporting. In this letter, Sichenzia noted that Sichenzia had
5 represented Honig, Stetson, and another Investor, Groussman, as well as certain associated
6 companies or investment entities, without any elaboration as to the true extent of those conflicting
7 relationships. MabVax was required to agree that Sichenzia would not be disqualified from
8 representing those clients on matters that in the future might become adverse to MabVax so long
9 as those other matters were not substantially related to the MabVax representation. Indeed,
10 Sichenzia made clear that the waiver was limited, and “is not intended to and does not permit
11 [Sichenzia] to represent any interests that may be directly adverse to you or the Company that
12 involve matters substantially related to the services for which you or the Company retained
13 [Sichenzia].”
14 33. MabVax entered into additional engagement letters with Sichenzia during the

15 years that followed, including with respect to matters where it is now apparent that Defendants’
16 representation of Investors, and economic participation as part of the Investors, were adverse to
17 the Company’s interests. As set forth herein, the engagement letters, and indeed, Defendants’
18 attorney-client relationship with MabVax, were procured by and the product of fraud and the
19 other misconduct alleged herein.
20 34. At no time prior to their engagement, did Defendants ever inform MabVax that

21 the Investors had previously inserted Sichenzia and Kesner as company counsel for other
22 companies in which the Investors had invested (“Other Investor Companies”). Nor did Kesner
23 disclose the circumstances under which he had invested in MabVax and Other Investor
24 Companies in coordination with other Investors. Defendants also did not disclose the full extent
25 of their relationships with other Investors, nor any basis upon which MabVax could assess
26 whether a waiver was in the Company’s interest or, even, whether Sichenzia’s representation of
27 and relationship with the Investors was in fact “substantially related to” or “adverse to” the
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COMPLAINT FOR DAMAGES CASE NO.
1 Company’s interests. Had such matters been honestly disclosed, MabVax never would have
2 retained Sichenzia and it certainly would not have signed an engagement letter procured under
3 improper circumstances.
4 35. At no time during the engagement, did Defendants ever disclose the matters set

5 forth in the prior paragraph. Had such matters been honestly disclosed, MabVax would not have
6 continued to rely on Defendants as counsel, and it certainly would not have signed other
7 engagement letters that, like the initial one, were procured through materially misleading
8 omissions.
9 36. On information and belief, Sichenzia and the Individual Defendants were

10 economically dependent on and beholden to the Investors during the course of their representation
11 of MabVax. As set forth below, Defendants profited handsomely from abusing their position of
12 client trust.
13 37. Defendants continued to represent MabVax until withdrawing from representation

14 on May 23, 2018, finally acknowledging the conflicts of interest that had prejudiced MabVax for
15 years.
16 DEFENDANTS’ LONGSTANDING RELATIONSHIP AND PARTICIPATION WITH THE INVESTORS
17 38. At the time they were first engaged by MabVax, Defendants had—and continue

18 to have—a longstanding attorney-client and business relationship with Honig, Stetson, and other
19 Investors. Kesner only recently has admitted to MabVax that Sichenzia and Kesner have worked
20 on numerous transactions with the other Investors during their long relationship—at least five
21 transactions per year. Plaintiff’s new counsel has determined that since Kesner first joined
22 Sichenzia in 2009, Sichenzia and Kesner have been inserted as counsel to at least 22 other
23 companies (i.e., other than MabVax), in which Honig and/or Stetson has invested.
24 39. Moreover, Kesner has, at least twice, been involved in litigation alleging that some

25 of the Investors engaged in misconduct substantially similar to that which Kesner facilitated and
9
26 concealed with respect to the Investors’ relationship as it related to MabVax.
27
9
See, e.g., Fisher v. Biozone, 3:12-cv-03716 (N.D. Cal.) (Kesner acted as litigation counsel); Greenberg
28
13
COMPLAINT FOR DAMAGES CASE NO.
1 40. Not only has Kesner worked as counsel for both the Investors and the Other

2 Investor Companies in which they invest, Kesner is himself one of the Investors. Kesner is the
3 manager of opaque entities named Paradox Capital Partners, LLC (“Paradox”); Darwin
4 Investments, LLC (“Darwin”); Darwin Retirement Investments, LLC (“Darwin Retirement”),
5 Darwin Ret LLC (“Darwin Ret”), Denville and Dover Fund LLC (“Denville”) and, upon
6 information and belief, holds voting and dispositive power over the securities held by these LLCs.
7 Through these entities, Kesner (and, in some instances, Sichenzia) invested in at least 16
10
8 companies alongside Honig and various other Investors.
9 41. Kesner also invested in MabVax through Paradox and Darwin Retirement. These

10 two Kesner-controlled entities obtained shares in MabVax by directly investing in the Company
11 through financings; by receiving 185,000 free shares as a condition to financing required by
12 another one of the Investors; and by receiving, on at least one other occasion from at least one
13 other Investor, a distribution of 50,000 shares—for reasons that are unclear to MabVax, and
14 certainly have never been disclosed. Kesner also solicited the investment of yet another named
15 partner at Sichenzia: Ference.
16 42. Sichenzia and Kesner have never disclosed the circumstances under which Kesner

17 initially and subsequently invested in MabVax. To the contrary, even when explicitly and
18 repeatedly asked, Sichenzia and Kesner flatly refused to tell MabVax the details of his
19 investment, including open-market trading in their own client’s securities. As set forth herein,
20
v. Hudson Bay Master Fund Ltd., 1:14-cv-05226-DLC-HBP (S.D.N.Y.) (Kesner and Sichenzia were
21 securities counsel to the nominal defendant when complaint was filed; Kesner was also an investor in the
nominal defendant and had served as a director of the nominal defendant).
22 10
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
23 PolarityTE Inc.); Orbital Tracking Corp. (in which Sichenzia and Kesner were both investors); Viveve
Medical, Inc.; Spiral Energy Tech., Inc. (n/k/a Exactus, Inc.); BTCS Inc. (f/k/a Bitcoin Shop, Inc.) (in
24 which Sichenzia and Kesner were both investors); Cell Source, Inc. (in which Sichenzia was an investor
but Kesner does not appear to have invested individually); Pershing Gold Corporation (in which Sichenzia
25
and Kesner were both investors); AV Therapeutics, Inc.; Spherix Incorporated (a company for which
26 Kesner served as CEO and a director, while simultaneously remaining a partner at Sichenzia); Northern
Wind Energy Corp. (f/k/a Icarus Wind Energy, Inc.); Document Security Systems, Inc.; Passport Potash
27 Inc.; MusclePharm Corporation; and Bullfrog Gold Corp (in which Sichenzia was an investor but Kesner
does not appear to have invested individually).
28
14
COMPLAINT FOR DAMAGES CASE NO.
1 Sichenzia profited handsomely from its relationship with MabVax (in excess of $1,600,000),
2 although even to this day MabVax cannot determine how much more Sichenzia, Kesner, and
3 Ference profited—such as from open market trading or straw man private transactions in their
4 client’s securities—because those lawyers refuse to come clean.
5 SICHENZIA/KESNER’S FALSE ADVICE AS TO THE
INVESTORS’ BENEFICIAL OWNERSHIP AND CONTROL
6
43. The United States securities laws typically require that if any person beneficially
7
owns five percent of a class of any registered equity security of an issuer, that person must
8
promptly disclose their beneficial ownership. Those who act together as a group in connection
9
with their investment in a company are treated as a “person” for purposes of this reporting
10
requirement. The calculation and reporting of beneficial ownership calls for an application of
11
legal standards to known facts, an area where Defendants touted their market-leading legal
12
expertise on behalf of issuers like MabVax.
13
44. It recently has become clear that the Investors (including Kesner and Ference)
14
have acted in such a way that, on information and belief, Defendants knew, and regardless should
15
have known and advised MabVax, that the Company faced significant legal exposure because the
16
Investors should be treated as a “group” under the securities laws, including, but not limited to
17
the following facts and circumstances:
18
a. investing together in dozens of companies, including (but not limited to)
19
those listed above;
20
b. coordinating amongst each other the amounts each Investor will invest in
21
those companies;
22
c. consulting with one another about recommendations they will together
23
give, or demands they together will make, to the management of the companies in which they
24
invest;
25
d. including other Investors on their communications with the companies in
26
which they invest;
27
28
15
COMPLAINT FOR DAMAGES CASE NO.
1 e. installing certain of the Investors as directors or officers or counsel in the

2 companies in which they invest; and


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

4 companies in which they invest and third parties—such as institutional investors, investor
5 relations firms, and potential strategic transaction partners—and often requiring investee
6 companies to retain Investor-selected advisors.
7 45. Despite the fact that Kesner—who has worked in the field of securities law for

8 over thirty years—had knowledge of his and the other Investors’ practices and inter-relationships,
9 at no point in time did he (or any other Defendant) advise MabVax of the significant risk that the
10 Investors would be deemed a “group” under the securities laws. Nor did Defendants ever advise
11 MabVax of the consequences to the Company of having to respond to even unproven allegations
11
12 of an undisclosed group (true or otherwise), including, but not limited to: expense and
13 reputational harm of defending public and financial reporting; the inability to satisfy going-
14 forward reporting obligations; the loss, in turn, of its listing on the Nasdaq; and the related
15 inability to raise money from other, public investors.
16 46. To the contrary, Sichenzia and Kesner repeatedly advised MabVax that the

17 Investors were not a group for purposes of the securities laws, and they made sure that the
18 Company’s public filings disaggregated the Investors’ holdings as if they were not a group. This
19 was not an isolated mistake. Sichenzia, primarily through Kesner, reviewed, edited and approved
20 literally dozens of SEC filings over three years—many reporting the Investors’ beneficial
21 ownership and outstanding share counts—without even once suggesting there was any risk that
22 the Investors could be considered a group, or that it would be in MabVax’s interest to aggregate
23 the Investors’ individual holdings for purposes of beneficial ownership reporting in these filings.
24 Even when asked, Sichenzia and Kesner assured MabVax that the “ownership blockers” inserted
25
11
26 MabVax does not assume that any regulator or court will ultimately conclude that such a group existed,
or that all Investors were participants. It is the mere fact that, as a result of Defendants’ malfeasance,
27 MabVax is exposed to such questions, investigation, and related aftermath, that has given rise to such
substantial harm to the Company.
28
16
COMPLAINT FOR DAMAGES CASE NO.
1 in various investment and corporate documents were a legal firewall against the formation of any
2 group such that other factors known to Sichenzia and Kesner did not matter (including, for
3 example, that a single Lead Investor coordinated investments for the others).
4 47. As recently as May 2018, Sichenzia, through Kesner, continued to urge that

5 MabVax hold the line and disputed any claimed need to aggregate their and the other Investors’
6 ownership. Kesner represented to successor counsel defending the Company in the SEC

7 investigation that the “ownership blockers” were time-tested and effective, and the SEC would
8 not be able to establish otherwise. Sichenzia, through Kesner, also threatened MabVax by
9 suggesting that the Company had a contractual obligation to publicly disaggregate the Investors’
10 ownership. Kesner suggested that the Company may have already violated its obligations to the
11 Investors by even publicly suggesting that a question may exist as to whether the Investors, or
12 some of them, had in fact operated as a group with respect to MabVax.
13 DEFENDANTS BREACH THEIR DUTIES TO—AND HARM—MABVAX
WITH RESPECT TO THE INVESTORS’ “CONSENT RIGHT” AND
14 VIOLATE CLIENT CONFIDENCES TO PRESERVE THE INVESTORS’ CONTROL
15 48. Defendants’ misconduct and exploitation of MabVax also extended to the so-

16 called “Consent Right” held by the Investors throughout the representation, pursuant to which
17 MabVax was required to obtain the Consent Right holder’s permission before it could raise
18 additional money (such as any equity or debt financing).
19 49. As Sichenzia, Kesner, and the other Defendants knew, the Consent Right gave the

20 Investors the necessary leverage to extract a wide range of demands from MabVax because: (1)
21 MabVax is a clinical-stage biotechnology company heavily dependent on outside financing
22 because its clinical research expenses greatly exceed its revenues, and (2) permission under the
23 Consent Right could be withheld at the whim of the Investors or provided only if MabVax agreed
24 to still other additional “conditions” in exchange for permission. For example, by leveraging the
25 Consent Right, the Investors forced MabVax to issue to them free “incentive” stock that since
26 2015 was worth more than $9,600,000 at the time of issuance (including thousands of shares to
27 Kesner) and required MabVax to hire lawyers and other vendors handpicked and controlled by
28
17
COMPLAINT FOR DAMAGES CASE NO.
1 Investors (including, of course, Kesner and his law firm). Defendants also knew that, by refusing
2 to grant permission under the Consent Right, or by simply threatening to do so, the Investors
3 could block investment from outside sources, including critically-needed financing through a
4 reputable investment bank in or about July 2017. Simply put, the Consent Right presented a clear
5 and present risk to MabVax throughout the Sichenzia representation.
6 50. For the same reasons, advice regarding the Consent Right was fundamental to

7 Defendants’ attorney-client relationship with MabVax. Sichenzia represented MabVax with


8 respect to many transactions for which the Consent Right was negotiated and triggered, and was
9 responsible for documenting and reporting the Consent Right in many public filings and
10 transactional documents. MabVax reasonably expected Defendants to provide loyal and
11 competent legal advice with respect to the Consent Right, and to safeguard the Company in the
12 face of constant risk that the Investors would abuse the Right. Instead, Defendants abused their
13 position of trust, and subordinated MabVax’s interests to their and their fellow Investors’
14 interests.
15 51. As an initial matter, Defendants never once advised MabVax that counsel’s

16 participation with the other Investors made the lawyers the beneficiaries of the Consent Right.
17 Nor did Defendants ever disclose to MabVax why the Consent Right was held in the names of
18 various Investors (passing from a Honig-affiliated-entity to an ostensibly Stetson-affiliated-
19 entity), much less that MabVax had the right to negotiate for greater transparency in how the
20 Consent Right was held and, ultimately, for greater limitations on its use. In fact, Defendants
21 never even informed MabVax that, in practice, the facts and circumstances of the ownership and
22 use of the Consent Right could themselves create questions about the calculation and reporting of
23 the beneficial ownership of the Investors.
24 52. For example, Southern Biotech was one of the Investors that held the Consent

25 Right during the representation. Although Defendants did not disclose it to MabVax, MabVax
26 later learned that Honig served as Southern Biotech’s President and held voting and dispositive
27 power over it. Very recently, MabVax has learned—from reviewing files maintained by
28
18
COMPLAINT FOR DAMAGES CASE NO.
1 Sichenzia—that still other Investors had a stake in or were involved in Southern Biotech
12
2 transactions, including Stetson, Frost, Brauser, and OPKO Health, Inc. Defendants never once
3 suggested that the oblique relationships between and among Southern Biotech, Honig and other
4 Investors itself raised questions about whether they were conducting themselves in a manner
5 harmful to MabVax. Indeed, despite their plainly superior knowledge (of both the law and the
6 facts) and their ethical, fiduciary, and other duties owed to their client, Defendants never advised
7 MabVax that there was anything about Southern Biotech, its ownership, or its Consent Right,
8 even worth looking into.
9 53. Defendants’ disregard of their duties to MabVax in connection with the Consent

10 Right is brought into sharp focus by their conduct in November 2015 through January 2016, when
11 MabVax was negotiating an urgently-needed loan that required permission from Southern
12 Biotech (the Investors’ then-designated official holder of the Consent Right). Sichenzia was
13 responsible for representing MabVax’s interests and, in fact, was preparing the consent
14 documents that it advised MabVax needed to obtain, including from Honig.
15 54. As the financing was being negotiated, during the first week of December 2015,

16 MabVax’s leadership team made a startling, joyous discovery: Southern Biotech had transferred
17 certain shares that it was required to hold in order to maintain the Consent Right. MabVax
18 urgently emailed Defendants Kesner and Guarneri-Ferrara, so counsel could confirm that
19 MabVax was finally free of the onerous Consent Right and advise the Company about how to
20 proceed. Although implicit in all confidential communications with its counsel, MabVax
21 explicitly instructed Kesner and Guarneri-Ferrara to avoid alerting Southern Biotech: “please
22 hold back sending the consent to Southern Biotech[.]” For obvious reasons, MabVax did not
23 want to prematurely alert the Investors that they had inadvertently terminated the Consent
24 Right—and thus lost their significant leverage over MabVax.
25 55. Kesner did not promptly respond to, or even acknowledge, MabVax’s email.

26 Guarneri-Ferrara responded, but she did not address the client’s direct request for confidentiality.
27 12
Frost is the CEO and Chairman of OPKO Health.
28
19
COMPLAINT FOR DAMAGES CASE NO.
1 Instead, Kesner and Guarneri-Ferrara deliberately disregarded the Company’s instructions. The
2 next day, Kesner emailed Guarneri-Ferrara (with the subject line MabVax): “Approval of
3 investments Does Southern Bio have or the transferees from SB?” Guarneri-Ferrara replied that
4 she would “need to see the docs by which he [i.e., Honig] sold or assigned his shares[.]” “Ask
5 for,” Kesner replied—in blatant violation of MabVax’s direct instructions. “OK,” Guarneri-
6 Ferrara responded. The next day, Stetson emailed Guarneri-Ferrara a copy of the relevant
7 language.
8 56. Later that day, MabVax heard directly from Honig that the shares that had been

9 transferred out of Southern Biotech would be transferred back to Southern Biotech—thereby


10 creating a potential argument that Southern Biotech had reestablished the Consent Right. In a
11 second email, Honig thanked MabVax’s leadership for “the heads up regarding Southern
12 Biotech,” and stated that the shares upon which the Consent Right relied were “back in[] Southern
13 Biotech.” MabVax was shocked by Honig’s email. The Company had never discussed the issue
14 with Honig, much less given him a “heads up” that the Consent Right had terminated to
15 MabVax’s great benefit and relief.
16 57. MabVax’s CEO replied to Honig saying, “I did not give you the heads up on

17 Southern Biotech. You already realized that you had transferred all shares out of that entity.
18 Someone else must have alerted you.” As the foregoing sequence makes clear, it was, in fact,
19 MabVax’s own counsel at Sichenzia—Kesner and Guarneri-Ferrara—who gave Honig the
20 “heads up” that the Consent Right had terminated. Up to that point, the MabVax leadership team
21 had only discussed the matter internally, with the exception of alerting Kesner and his legal team
22 for the purposes of legal advice—and with strict instructions to not notify Investors. Indeed, only
23 after Honig revealed his knowledge of the Consent Right termination did Kesner address the
24 matter with MabVax—not to help his client, but to declare that a never-explained ethical conflict
25 meant that he and his law firm could not become involved in the dispute over whether the Consent
26 Right had been terminated.
27
28
20
COMPLAINT FOR DAMAGES CASE NO.
1 58. As a result of this “heads up”—and Kesner’s and Guarneri-Ferrara’s violation of

2 their client’s confidence—Honig was able to re-transfer the shares into the name of Southern
3 Biotech and thus manufacture a legal position that, by having done so, he had restored Southern
4 Biotech’s Consent Right.
5 59. Defendants continued to undermine MabVax with respect to this issue in January

6 2016. In early January, MabVax emailed Defendants Kesner, Guarneri-Ferrara, and Manno about
7 a new financing and what consents were needed. In a chain of internal emails, Defendants Manno,
8 Kesner, Guarneri-Ferrara, and Rose discussed the effect on the Consent Right of Southern
9 Biotech’s transfer of its MabVax securities. Manno expressed concern about “the SRFf [i.e.,
10 Sichenzia Ross Friedman Ference] conflict” with respect to the issue, indicated it was not “clear
11 as to whether the Holder’s (Southern Bio) consent right in the Exchange Agreement was
12 terminated when Southern Bio transferred its MabVax securities,” and suggested “an
13 acknowledgment that upon the transfer the consent right terminated.” (Manno later drafted a
14 letter to that effect).
15 60. Kesner promptly replied “Here is my suggestion. Have Southern Bio itself amend

16 the agreement with MabVax to simpl[y] terminate the Southern Bio right and provide a new
17 approval right to Barry personally. Much simpler. Don’t discuss the below specifically with Greg
13
18 [MabVax’s CFO].” (emphasis added). Rose later responded that “[i]t’s fine that Barry and the
19 company think the rights didn’t transfer, but our reading of the agreement … is that we’re not so
20 sure. In fact, as I read, it looks like the rights transferred with the transfer of the securities.”
21 Nonetheless, pursuant to Kesner’s instruction—“don’t discuss the below specifically with
22 Greg”—Defendants never shared their analysis of MabVax’s rightful position with MabVax.
23 Instead, of coming to the aid of their client, MabVax, they abetted the adverse position taken by
24 the Investors.
25
26
13
27 As Kesner subsequently explained, “Barry [Honig] has been and continues to be representative to the
transaction with MabVax. In reality.”
28
21
COMPLAINT FOR DAMAGES CASE NO.
1 61. Unable to fight a complex and protracted legal battle against the Investors with its

2 own counsel undermining its position, MabVax agreed, on January 12, 2016, to provide Southern
3 Biotech with a new Consent Right. It was not until years later that MabVax was finally able to
4 escape the Consent Right.
5 KESNER MINIMIZES THE INVESTORS’ INVOLVEMENT TO A REGULATOR
6 62. In December 2016, MabVax received a request for information from a regulator

7 in connection with a non-public investigation into trading activity in MabVax stock. MabVax
8 promptly sent the inquiry to Sichenzia in confidence and for purposes of obtaining legal advice.
9 63. Kesner advised MabVax that the regulator’s request was a routine inquiry and

10 nothing to be concerned about. Kesner also reviewed a draft response prepared by non-lawyers
11 at MabVax, which he criticized as “far too inclusive” and admonished the non-lawyers for over-
12 reading and over-answering questions. Kesner personally edited the response in a manner he
13 advised was appropriate under the circumstances. For example, in response to a question about
14 the nature and frequency of MabVax’s contact with two of the Investors, Kesner characterized
15 the contact as “occasional.” Although surprised by Kesner’s minimization of those Investors’
16 contact, the Company’s management, as non-lawyers, deferred to counsel’s deep expertise in
17 responding to what they were told was a routine inquiry. In light of facts that have come to light,
18 it now is apparent that Kesner knew or should have known that his approach would expose the
19 Company to claims that its response was misleading or, at least, difficult to defend. In so doing,
20 Sichenzia, through Kesner, once again endangered MabVax in order to protect themselves and
21 fellow Investors from regulatory scrutiny as being part of an undisclosed control group.
22 64. In May 2018, when asked about his involvement in the above-described regulatory

23 inquiry by successor counsel, Kesner falsely denied any role. He also falsely denied any
24 involvement in other regulatory matters. He also withheld many facts and circumstances about
25 his and the other Investors’ conduct and relationships that plainly bear on the defense of the SEC
26 investigation and related matters. Only upon subsequent investigation and email review did
27 MabVax determine that Sichenzia and Kesner not only were involved, but in a manner that seems
28
22
COMPLAINT FOR DAMAGES CASE NO.
1 only calculated to protect the lawyers and other Investors under the pretense of legal advice to
2 the Company.
3 SICHENZIA/KESNER’S MISCONDUCT CASTS
DOUBT OVER MABVAX’S CAPITALIZATION TABLE
4
65. During the course of the representation, the Investors repeatedly purchased
5
convertible preferred stock from MabVax pursuant to contracts and public filings advised by
6
Sichenzia and Kesner. Each share of convertible preferred stock could, upon the request of the
7
Investor holding that share, be converted by MabVax into shares of common stock that could be
8
immediately sold on the open market. At the insistence of the Investors, their convertible
9
preferred stock was also subject to “beneficial ownership blockers” that forbade the conversion
10
of preferred shares into common stock if, as a result, the converting shareholder would
11
beneficially own more than a certain percentage of MabVax (most often, 4.99%).
12
66. Kesner advised MabVax throughout the engagement that the “blockers” operated
13
as a legal barrier against any need to aggregate or report the beneficial ownership of the Investors
14
as reaching 5%. He also advised that the blockers allowed for one Investor to convert shares
15
without regard to the ownership of MabVax stock by other Investors. In effect, Kesner explained
16
and assured, and MabVax believed and relied on Kesner, that these blockers kept the Company
17
“safe” under the securities laws. As the Company later realized and disclosed, however, this
18
advice was false. The blockers do not legally foreclose a determination that the Investors (or some
19
of them) may be deemed as having acted as a previously undisclosed group. As discussed above,
20
the test to determine whether investors are part of a 13D Group is a multi-factor test and courts
21
can and do find a group to exist notwithstanding the existence of beneficial ownership blockers.
22
67. Contemporaneous emails—as well as Kesner’s lengthy history with the
23
Investors—demonstrate that Sichenzia not only was aware of the interchangeability of the
24
Investors’ interests, but also sought to conceal it from regulators. For example, in September
25
2017, an examiner for Nasdaq emailed an associate at Sichenzia (“Associate One”) asking for the
26
name of “an investor” whom Associate One had stated was being issued 100,000 shares “for
27
diligence.” Associate One emailed Defendants Kesner and Perlman, stating “The nasdaq
28
23
COMPLAINT FOR DAMAGES CASE NO.
1 examiner is asking for … Barry’s name [i.e., Honig]. The attached list indicates he is not an
2 investor though. Do you have any issue with me releasing his name?” Perlman replied, to Kesner
3 only, “Maybe the 100,000 diligence shares should be issued to HSC, which did invest.” HSC
4 refers to HS Contrarian Investments, LLC, an entity purportedly controlled by Stetson.
5 68. Once the legal frailty of the “blocker” firewall was revealed, MabVax became

6 concerned about the validity of the 2,628,766 shares of common stock issued to the Investors via
7 preferred share conversions. The Company also could not be certain that its previous reports
8 regarding the number of common shares outstanding were accurate. Accordingly, MabVax has
9 had to publicly disclaim reliance on four years of previously filed SEC reports and financial
10 statements and is unable to file reports for 2018 as it is required to do under SEC and Nasdaq
11 rules. Under these circumstances, it is sadly not surprising that MabVax has been delisted from
12 the Nasdaq, and has been named in putative class actions filed by certain of its shareholders.
13 69. Additionally, in order to clear the cloud over its capitalization table, MabVax has

14 been forced to file a petition in the Delaware Chancery Court seeking the extraordinary relief of
15 judicial validation of the unknown number of shares of arguably invalid common stock, and other
16 corporate acts that also may not be valid as a result of Defendants’ false legal advice and
17 dereliction of duty. That action currently is pending, its outcome is uncertain, and it already has
18 cost the Company hundreds of thousands of dollars in legal fees and expenses, all of which would
19 have been unnecessary but for the misconduct of Defendants.
20 AS THE “NOOSE TIGHT[ENS],” SICHENZIA ASSUMES REPRESENTATION OF MABVAX IN
AN SEC INVESTIGATION DESPITE BEING HOPELESSLY CONFLICTED, THEN
21 MISREPRESENTS AND CONCEALS FACTS NECESSARY FOR THE
COMPANY’S ONGOING REPRESENTATION BY SUCCESSOR COUNSEL
22
70. In late January 2018, MabVax disclosed that it had received notice that the SEC
23
was conducting an investigation relating to certain of the Company’s registration statements (and
24
amendments thereto). As also previously disclosed, the SEC issued a subpoena to MabVax on
25
February 2, 2018. As publicly disclosed, MabVax believes that investigation pertains to
26
MabVax’s relationship with certain of its investors, including whether or not they have acted as
27
28
24
COMPLAINT FOR DAMAGES CASE NO.
1 an undisclosed control group in connection with MabVax, and the manner in which they may
2 have sought to control or influence MabVax.
3 71. By mid-February, Sichenzia saw the walls closing in on it and its Investor clients.

4 On February 16, 2018, CNBC published a highly critical article about Riot Blockchain, which
5 listed a number of “red flags” and stated that “Riot’s filings reveal that Barry Honig may be the
6 man behind the Riot Blockchain curtain.” The CNBC story went on to state that “SEC filings
7 suggest that when Honig began his charge to take over the board, he was represented by lawyer
8 Harvey Kesner of Sichenzia Ross Ference Kesner LLP. A few months later, Kesner’s law firm
9 appears on Riot Blockchain’s SEC filings. Kesner’s company, Paradox Capital Partners LLC,
10 owns Riot stock, according to SEC filings. When reached by phone, Kesner said he didn’t know
11 anything about Riot Blockchain and Barry Honig and hung up.”
12 72. After her call, the CNBC reporter sent Kesner an email noting that Kesner’s

13 “company, Paradox Capital owns shares in Riot. Your partner Michael Ference also owns
14 shares.” That email was ultimately forwarded to, among others, Defendants Gregory Sichenzia,
15 Ross and Ference.
16 73. Ference asked Gregory Sichenzia, “Does he have any other subpoenas?” Gregory

17 Sichenzia replied “Yes mabvax 2 weeks ago. [A class action law firm] just filed for plaintiffs in
18 a class action against riot. This is going to be real bad.” (emphasis added). In a separate thread
19 of the same email chain, Ross wrote to Ference that Kesner was planning to threaten a lawsuit
20 against CNBC. He added, “[a]nd did you know the SEC issued a formal order of investigation
21 against Mabvax in January 28th?” “Figures,” Ference replied, “Bad idea.”
22 74. In a separate email, Ference replied to Ross “We need a protocol of subpoena to

23 form comes in it has to be given to exec comm. no one should get a subpoena and handle
24 themselves without talking to us.” Ross responded to Ference: “Ha. Harvey and Greg [Sichenzia]
25 are on the executive [] committee, you know, unless Greg gets his way, as he doesn’t want us to
26 continue to represent Barry [Honig], as the noose gets tighter.” (emphasis added).
27
28
25
COMPLAINT FOR DAMAGES CASE NO.
1 75. In yet another email exchange on February 16, 2018, Ross forwarded an email

2 from Kesner to Gregory Sichenzia, writing “I spoke with Harvey. He got this below email from
3 the [CNBC] reporter before today. I am looking at the Mabvax subpoena that [a Sichenzia junior
4 associate (hereafter, “Associate Two”)] is working on for Harvey.” Gregory Sichenzia responded
5 to Ross “He should have let us know instead of being blindsided.”
6 76. Despite recognizing that the “noose [was] get[ting] tighter” around the Investors

7 and the law firm itself, and that it was “going to be real[ly] bad,” Sichenzia continued to represent
8 MabVax in connection with the SEC investigation.
9 77. Dominoes continued to fall. On March 7, 2018, the website Seeking Alpha

10 published an article by “Sharesleuth” entitled “Pretenders And Ghosts: Stealth Promotion


11 Network Exploits Financial Sites To Tout Stocks.” The article stated that “A small army of
12 writers, both real and imaginary, has produced nearly 600 bullish articles about companies backed
13 by financier Barry C. Honig,” that “[m]any of the featured stocks fell sharply after reaching
14 promotion-fueled highs,” that “[t]hose names included VBI Vaccines, 22nd Century Group, U.S.
15 Gold Corp., Vuzix, Mabvax Therapeutics and Global Blockchain Technologies,” and that “[t]he
16 articles and the methods employed are nearly identical to those that led the SEC to charge 27
17 individuals and entities last year…” That same day, Gregory Sichenzia forwarded a link to the
18 article to Rose, stating “Just awful did u read.” In a subsequent email in the chain, Gregory
19 Sichenzia wrote that the article, “mentions every one of Harvey clients he has ever had.” “Pretty
20 much,” Rose replied.
21 78. Stunningly, Sichenzia pressed ahead with its representation of MabVax in

22 connection with the SEC investigation and corporate and securities matters.
23 79. On April 14, 2018, Kesner sent MabVax an email proposing an additional project

24 in response to the SEC investigation—that MabVax should file an administrative challenge


25 against the SEC to allow it to register even more shares for the benefit of the Investors. Associate
26 Two was copied on the email and forwarded it to Ross. Ross replied to Associate Two, “He’s lost
27 his mind.” Ross then forwarded the chain to Rose with the commentary, “This is nutz.” In a
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COMPLAINT FOR DAMAGES CASE NO.
1 subsequent email in the chain, Ross wrote to Rose that “Honig [is] the subject of the enforcement
2 inquiry. The only thing for the company to do is to throw Barry under the bus, how in G-d’s name
3 can Harvey be advising this company. And I found out on Friday that is Babnick didn’t want to
4 be involved, and [Associate Two] was left to flounder and have to deal with Harvey on his own.”
5 80. Still, Defendants continued to represent MabVax in the SEC investigation. On

6 April 17, 2018, Associate Two—the same junior associate who had been “left to flounder and
7 deal with Harvey on his own”—emailed Ross about an SEC request for on-the-record testimony
8 from a top MabVax executive. Associate Two stated that “Harvey threw out the idea of me going
9 alone … I don’t mind going with someone else, but I have never defended a witness at an
10 OTR/deposition by myself.” Ross forwarded the email to Babnick with the comment: “Might be
11 a conflict now, no?” “No. Let’s discuss tomorrow,” Babnick replied.
12 81. In short, Sichenzia took on representation of MabVax in the SEC investigation,

13 advising both management and the Board of Directors that they were best positioned to do so. In
14 internal emails, the Sichenzia partners acknowledged, in vivid terms, the egregious conflicts that
14
15 the firm faced. Defendants failed, however, to disclose to MabVax that they could not continue
16 the representation because of those conflicts. Indeed, Defendants failed to disclose even the need
17 for a limited conflict waiver in light of their representation of Investors named in the subpoena
18 issued to MabVax.
19 82. Sichenzia did not acknowledge its intractable conflicts and withdraw from

20 representation until late May 2018—after wasting MabVax’s money and six months during
21 which competent counsel would have assisted the Company in responding to the SEC
22 investigation. Moreover, as late as May 3, 2018, Kesner himself was still providing corporate
23 advice to (and billing) the Company in connection with a financing, as always, with the Investors.
24 83. As Sichenzia and Kesner were leaving the representation, they compounded their

25 misconduct and undermined the transition to successor counsel. On May 21, 2018, Ross wrote to
26 14
As detailed herein, Defendants plainly knew or should have known of their conflicted status because they are
among the Investors under scrutiny; they had also served as counsel for the Investors in substantially similar matters;
27 and, in fact, they had provided the false and misleading advice to MabVax regarding the calculation and reporting
of beneficial ownership and potential “control group” issues under investigation.
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1 Kesner, “I wouldn’t think it would be a good idea for you to meet and speak with [successor
2 counsel], both from a firm perspective and from your individual perspective.” Kesner did not
3 remain silent. Instead, he met with successor counsel the next day and repeatedly made false and
4 misleading statements to successor counsel, for example, lying about Sichenzia and Kesner’s role
5 in the underlying conduct (e.g., denying that he was involved in MabVax’s response to the
6 December 2016 request for information from a regulator); mischaracterizing the circumstances
7 of his engagement by MabVax (including denying that the Company was required to hire
8 Sichenzia and Kesner as condition of the Investors’ investment); inaccurately characterizing
9 MabVax’s legal defenses, including the very “blocker” firewall theories that created the exposure
10 in the first instance; and refusing to disclose his outside trading activity in MabVax stock.
11 84. Kesner was not alone in the misleading transition to successor counsel. Associate

12 One and Associate Two engaged in an instant message conversation shortly after Associate Two
13 met with successor counsel, at Kesner’s request. In the instant message conversation, Associate
14 Two recounted how he under-disclosed facts to successor counsel in an attempt to steer successor
15 counsel away from the Investors and Sichenzia. Associate Two recounted his sense that: “the guy
16 [i.e., successor counsel] was wavering between ‘this is a real clusterfuck’ to ‘they are prob looking
17 at the investors …” and stated that “its [sic] tough for me because like wtf do I say?” Associate
18 Two then acknowledged that “i can sell the investors down the river” but did not disclose those
19 true facts. Instead, Associate Two explained, in speaking with successor counsel, he limited his
20 assessment of the investigation to what the SEC had put in writing, i.e. “i was like 100 percent
21 looking at the investors, that’s obvious based on the subpoena.” “[R]ight,” Associate One
22 responded, “you have to juggle what to say without this guy thinking holy shit this idiot firm[.]”
23 85. Finally, Kesner violated MabVax’s client confidences at least one more time

24 during the transition. He alerted the Investors of a sensitive meeting with successor counsel within
25 ninety (90) minutes of successor counsel leaving his office.
26 86. On another occasion, Sichenzia and Kesner went so far as to demand that MabVax

27 pay a large legal fee as a condition of responding to successor counsel’s questions. Sichenzia and
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1 Kesner later withdrew that payment precondition, instead simply refusing to provide any
2 additional information (including responses to pending questions) because purportedly Kesner
3 believe[d] that he and his law firm [had] already done enough to help its client.
4 DEFENDANTS PROFITED FROM THEIR MISCONDUCT
5 87. During the period of its representation, Sichenzia charged MabVax roughly

6 $1,600,000 for purported legal services that were disloyal, dishonest, and incompetent. That
7 income inured to the benefit of all Defendants, each of whom is (or, in Kesner’s case, was) a
8 partner of the firm.
9 88. As also noted above, as an investor in MabVax, Kesner, through Paradox and

10 Darwin Retirement, received shares of convertible preferred stock. And as an experienced


11 attorney in the field of securities law, Kesner knew that, if his beneficial ownership were
12 calculated to include that of the other Investors, his beneficial ownership would well exceed the
13 4.99% “blocker” and thus he would be legally foreclosed from requesting conversion of any of
14 those preferred shares into common shares that would be freely tradeable. Despite that knowledge
15 (of the law and the facts), Sichenzia and Kesner allowed Investors to convert 2,628,766 shares
16 (for a market value at issuance of an estimated $22,200,000 based on the closing price of common
17 stock on the date of conversion). Kesner himself received, through conversions requested by
18 Paradox and Darwin Retirement, at least 22,980 shares of MabVax common stock (valued at
19 $92,969) for his own personal benefit.
20 89. To this day, MabVax does not know the full extent of Sichenzia, Kesner, and

21 Ference’s trading in MabVax stock, despite having asked repeatedly. Absent that information,
22 MabVax cannot determine the full extent of their ill-gotten gains, nor whether their violation of
23 client confidences also involved unlawful trading in their own names or by others to whom they
24 divulged the material, non-public information to which as counsel they were consistently privy
25 since 2015.
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COMPLAINT FOR DAMAGES CASE NO.
1 THE SEC ACTION

2 90. On September 7, 2018, the SEC filed suit against, among others, Honig, Stetson,

3 Groussman, Frost, and entities affiliated with those Investors, including Southern Biotech. See
4 Securities and Exchange Commission v. Honig, et al., 1:18-cv-08175 (S.D.N.Y.). The SEC
5 complaint alleges that Defendants engaged in “three highly profitable ‘pump-and-dump’
6 schemes,” that “Honig was the primary strategist, calling upon other Defendants to buy or sell
7 stock, arrange for the issuance of shares, negotiate transactions, or engage in promotional
8 activity” and that “once Honig and his associates had secured substantial ownership of the issuer,
9 they acted as an undisclosed control group[.]”
10 FIRST CAUSE OF ACTION

11 (Negligent Professional Practice against all Defendants)

12 91. Plaintiff realleges and incorporates by reference the foregoing allegations.

13 92. Between April 2, 2015 and May 23, 2018, MabVax had an attorney-client

14 relationship with Defendants.


15 93. During the course of that attorney-client relationship, Defendants provided

16 MabVax with legal advice that Defendants knew or should have known was improper. Among
17 other things, Defendants:
18 a. advised MabVax that the Investors could not be considered to be a group

19 for purposes of the securities laws;


20 b. advised MabVax that the common stock MabVax issued to the Investors—

21 including Defendant Kesner—as a result of the Investors’ conversions of preferred stock were
22 indisputably valid under MabVax’s beneficial ownership blockers;
23 c. instructed MabVax to provide potentially misleading information in

24 response to a request for information from a regulator.


25 94. In addition, Defendants violated MabVax’s confidences by warning Southern

26 Biotech—to MabVax’s detriment—that Southern Biotech had transferred away all of the shares
27 Southern Biotech was required to hold to maintain its Consent Right. Defendants also violated
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COMPLAINT FOR DAMAGES CASE NO.
1 MabVax’s confidences by reporting to Investors Defendant Kesner’s confidential discussion with
2 MabVax’s successor counsel.
3 95. Further, Defendant Kesner and Associate Two provided false and misleading

4 information to successor counsel and/or made material omissions of fact knowing that those
5 omissions would tend to mislead successor counsel. Meanwhile, Ross advocated that Sichenzia
6 refuse to even meet once with successor counsel.
7 96. Defendants failed to disclose to MabVax that they had deep conflicts of interest in

8 representing MabVax as well as the Investors, and indeed that they were part of the Investors,
9 and as such, had interests directly adverse to MabVax.
10 97. Defendants also assumed representation of MabVax in connection with the

11 subpoena it received from the SEC despite the fact that they knew or ought to have known that
12 they had multiple conflicts of interest that ethically precluded their representation of MabVax.
13 98. Defendants’ negligent conduct has caused and continues to cause MabVax

14 damage.
15 SECOND CAUSE OF ACTION

16 (Breach of Fiduciary Duty against all Defendants)

17 99. Plaintiff realleges and incorporates by reference the foregoing allegations.

18 100. Between April 2, 2015 and May 23, 2018, MabVax had an attorney-client

19 relationship with Defendants. As such, Defendants owed fiduciary duties to MabVax, including
20 a duty of reasonable care, a duty of loyalty, and a duty of confidentiality.
21 101. Defendants repeatedly violated these fiduciary duties to MabVax in multiple

22 ways:
23 a. Defendants provided MabVax with legal advice that Defendants knew or

24 should have known was improper, in breach of their fiduciary duties, including, without
25 limitation: (1) advising MabVax that the Investors could not be considered to be a group for
26 purposes of the United States securities laws; (2) advising MabVax that the common stock
27 MabVax issued to the Investors—including Defendant Kesner—as a result of the Investors’
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COMPLAINT FOR DAMAGES CASE NO.
1 conversions of preferred stock were indisputably valid under MabVax’s beneficial ownership
2 blockers; (3) instructing MabVax to provide potentially misleading information in response to a
3 request for information from a regulator.
4 b. Defendant Kesner failed to disclose to MabVax that he was a member of

5 the Investor group that had interests directly adverse to MabVax, including his transacting in
6 MabVax securities.
7 c. Defendants assumed representation of MabVax in connection with both

8 corporate securities matters and an SEC investigation despite the fact that they knew or ought to
9 have known that they had un-waivable conflicts of interest, and failed to inform MabVax of those
10 conflicts.
11 d. Defendants provided false and misleading information to MabVax’s

12 successor counsel. Defendants then violated MabVax’s confidences by sharing that discussion
13 with other Investors. Defendants additionally failed to answer questions posed to them by
14 successor counsel about their prior representation of MabVax, and even attempted to use those
15 questions to leverage payments of amounts purportedly owed to Defendants by MabVax.
16 e. Defendants violated MabVax’s confidences by warning Southern

17 Biotech—to MabVax’s detriment—that Southern Biotech had transferred out all of the shares
18 Southern Biotech was required to hold to maintain its Consent Right.
19 102. MabVax was damaged as a direct, proximate, and foreseeable result of the willful

20 and intentional misconduct of Defendants. Such willful and intentional misconduct, in disregard
21 of MabVax’s rights and business, justifies the awarding of punitive damages to MabVax.
22 103. Defendants’ intentional conduct has caused and continues to cause Plaintiff

23 damage.
24 THIRD CAUSE OF ACTION

25 (Breach of Contract against all Defendants)

26 104. Plaintiff realleges and incorporates by reference the foregoing allegations.

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COMPLAINT FOR DAMAGES CASE NO.
1 105. By the acts and failures to act described above, Defendants entered into several

2 agreements to act as counsel to MabVax between the period of April 2, 2015 until May 23, 2018,
3 in exchange for payment in cash and stock by MabVax. As alleged, those agreements were
4 procured by fraud and other misconduct, and set forth terms dictated by Sichenzia.
5 106. MabVax performed all, or substantially all, of what was required under the terms

6 of its agreements with Defendants.


7 107. Defendants, all of whom were Sichenzia partners, materially breached the

8 agreements, including, without limitation, by failing to disclose conflicts of interest in their


9 representation of MabVax; disclosing MabVax’s confidences; providing false and misleading
10 advice to MabVax in connection with, among other things, the Investors’ potential group status,
11 the propriety of preferred stock conversions under the terms of beneficial ownership blockers,
12 and MabVax’s response to a regulator’s December 2016 request for information; and providing
13 false and misleading information to successor counsel.
14 108. Defendants’ breaches have caused and continue to cause MabVax damage.

15 FOURTH CAUSE OF ACTION

16 (Restitution for Unjust Enrichment against all Defendants)

17 109. Plaintiff realleges and incorporates by reference the foregoing allegations

18 110. Defendants received a benefit from MabVax, specifically, charging MabVax more

19 than $1,600,000 for legal services.


20 111. This benefit is unjustly retained by Defendants where it was procured by

21 Defendants through fraud, as alleged above. This benefit also is unjustly retained by Defendants
22 where Defendants have materially breached the contracts between them and MabVax, rendering
23 those contracts unenforceable against MabVax.
24 112. Additionally, Defendant Kesner received a benefit from MabVax through

25 conversions requested by Paradox and Darwin Retirement of at least 22,980 shares of MabVax
26 common stock (valued at over $90,000) for his own personal benefit.
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COMPLAINT FOR DAMAGES CASE NO.
1 113. Defendant Ference also received a benefit from MabVax through the shares he

2 procured, which he would not have been able to obtain had all material facts been fully and fairly
3 disclosed to the Company.
4 114. These benefits are unjustly retained by Defendants where they were procured by

5 fraud, as alleged above.


6 FIFTH CAUSE OF ACTION

7 (Deceit against all Defendants)


8 115. Plaintiff realleges and incorporates by reference the foregoing allegations.

9 116. Defendants made the following representations, set forth above, among others, to

10 MabVax:
11 a. that Defendants would not represent interests directly adverse to MabVax,

12 and that Defendants did not have any conflicts of interest in representing MabVax both as
13 corporate securities counsel and in connection with the SEC investigation;
14 b. that the Investors could not be considered to be a group for purposes of the

15 securities laws;
16 c. that MabVax ought to describe as “occasional” its contacts with certain

17 Investors to a regulator;
18 d. that the common stock MabVax issued to the Investor—including

19 Defendant Kesner—were indisputably valid under the terms of MabVax’s beneficial ownership
20 blockers; and
21 e. that Defendants were acting on MabVax’s behalf, and not on behalf of

22 Defendants’ other clients, in the advice that Defendants provided to MabVax.


23 117. These and other misrepresentations were not true. Even if Defendants may have

24 initially believed or intended that these and other representations were true (which MabVax does
25 not believe), they had no reasonable grounds for believing they were true when they were made.
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COMPLAINT FOR DAMAGES CASE NO.
1 118. Defendants also suppressed facts that they were bound by their professional,

2 ethical, and fiduciary duties to disclose, which omissions were likely to mislead for want of
3 communication, including, as set forth above, among others:
4 a. the true nature of Defendants’ relationship with the Investors;

5 b. the true nature of the Investors’ relationship with each other;

6 c. the serious conflicts between the interests of the Investors and the Company;

7 d. the serious conflicts between the interests of Defendants and the Company;

8 e. Defendants’ honest beliefs regarding the propriety of Sichenzia’s continued

9 representation of the Company notwithstanding its conflicts; and

10 f. Defendants’ honest beliefs regarding the legal implications of the beneficial

11 ownership blockers;

12 119. Defendants intended that MabVax rely on its representations and materially

13 misleading omissions.
14 120. MabVax reasonably relied on these and other representations and omissions by,

15 among other things, engaging and relying on Defendants for legal advice as their counsel in
16 connection with corporate securities matters and a pending SEC investigation, by communicating
17 with Defendants and Investors regarding the termination of the Investors’ Consent Right, by filing
18 reports with the SEC that did not aggregate the Investors’ beneficial ownership, by processing
19 the Investors’ conversions of preferred stock and issuing common stock as a result of those
20 conversions, and by modifying its responses to a request for information from a regulator, all in
21 reliance on Defendants’ representations, all of which have been a substantial factor in causing the
22 harm described herein.
23 121. Defendants’ conduct has caused and continues to cause MabVax damage.

24 SIXTH CAUSE OF ACTION

25 (Fraud against Sichenzia and Kesner)

26 122. Plaintiff realleges and incorporates by reference the foregoing allegations.

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COMPLAINT FOR DAMAGES CASE NO.
1 123. Defendants Sichenzia and Kesner made numerous misrepresentations to, and

2 concealed numerous material facts from, MabVax, including, without limitation:


3 a. misrepresenting the Investors’ potential status as a group for purposes the

4 securities laws;
5 b. concealing Defendants’ status as among the Investors;

6 c. misrepresenting the possibility that the shares of common stock issued to

7 the Investors—including to Defendant Kesner—as a result of the Investors’ conversion of


8 preferred stock may be invalid as forbidden under the beneficial ownership blockers;
9 d. concealing Defendants’ conflicts of interest in representing MabVax as

10 corporate securities counsel and in connection with the SEC investigation, and affirmatively
11 misrepresenting that Defendants were not aware of any such conflicts;
12 e. misrepresenting to MabVax the proper way to disclose, in response to a

13 regulatory inquiry, the nature and frequency of its contact with certain Investors;
14 f. concealing from MabVax their disclosure of MabVax’s confidences to the

15 Investors, in violation of their contractual, professional, and fiduciary duties to MabVax.


16 124. Defendants made these and other statements or omissions with knowledge of their

17 falsity.
18 125. Defendants made these and other statements or omissions with the intent to induce

19 MabVax’s reliance on such statements and omissions.


20 126. MabVax justifiably relied on the statements and omissions of Defendants, where

21 MabVax understood Defendants to be acting as its counsel, thereby having fiduciary, ethical, and
22 professional duties to MabVax, which MabVax reasonably believed Defendants would honor.
23 127. These statements and omissions have damaged MabVax. MabVax has been

24 exposed to an SEC investigation, made potentially inaccurate statements on its public filings and
25 provided potentially misleading responses to a request for information from a regulator, and
26 issued an unknown number of potentially invalid shares to investors, necessitating public
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COMPLAINT FOR DAMAGES CASE NO.
1 disclosure of non-reliance on financial statements and other reports that the Company had filed
2 publicly since 2014.
3 128. MabVax was damaged as a direct, proximate, and foreseeable result of the willful

4 and intentional misconduct of Defendants. Such willful and intentional misconduct, in disregard
5 of MabVax’s rights and business, justifies the awarding of punitive damages to MabVax.
6 129. Defendants’ intentional conduct has caused and continues to cause Plaintiff

7 damage.
8 PRAYER FOR RELIEF

9 WHEREFORE, Plaintiff prays:

10 A. That judgment be entered in favor of Plaintiff and against Defendants;

11 B. That Plaintiff be awarded actual and punitive damages, according to proof;

12 C. That Plaintiff be awarded restitution including disgorgement of profits or other

13 monies obtained by the Defendants through unjust enrichment;


14 D. That Plaintiff be awarded pre- and post-judgment interest and that the interest be

15 awarded at the highest legal rate from and after the date of service of the initial Complaint in
16 this action;
17 E. That Defendants be required to make full disclosure and accounting of their

18 interests and transactions in Plaintiff’s securities, whether transacting in their own names or
19 with respect to transactions undertaken through entities, nominees or other Investors;
20 F. That Plaintiff recover its costs of suit and reasonable attorney’s fees; and

21 G. That the Court grant such other legal and equitable relief as it may deem proper

22 under the circumstances.


23
JURY TRIAL DEMANDED
24
Plaintiff hereby demands a trial by jury on all issues triable by a jury in the above-
25
entitled action.
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COMPLAINT FOR DAMAGES CASE NO.
Dated September 10, 2018 BLOCK & LEVITON LLP
1
2 /s/ Joel A. Fleming
Jason M. Leviton, (pro hac vice forthcoming)
3 Joel A. Fleming (CA Bar No. 281264)
Jacob A. Walker (CA Bar No. 271217)
4 155 Federal Street, Suite 400
Boston, MA 02110
5 (t) (617) 398-5600
6 (f) (617) 507-6020
jason@blockesq.com
7 joel@blockesq.com
jake@blockesq.com
8
Attorneys For Plaintiff
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COMPLAINT FOR DAMAGES CASE NO.