October 10, 2019

To:
SEC OIG

Cc:
Joe Dixon (attorney for Phillip Frost)
Ellen Davis (spin doctor for Phillip Frost)

Bcc:
SEC agents
DOJ agents (FBI and US Attorneys)
Journalists and business writers
Others

RE: Phillip Frost’s motivation to participate in Honig-led P&D securities frauds/

Possible short selling of OPK by Frost

All,

In this letter, I present related hypotheses that have crystalized for me over time, but
especially in the last few days. My “central hypothesis” is that Phillip Frost participated in Barry
Honig’s penny stock pump and dump (P&D) securities frauds primarily as a quid pro quo to
access Honig’s methods and network to manipulate the share price of Opko Health (OPK),
where Frost is CEO, largest shareholder, and Chairman of the Board. Such manipulation would
have benefited Frost (OPK) during OPK’s take-over of BRLI, and would have benefited Honig
by providing Frost’s “aura of legitimacy” to Honig’s blatant penny stock frauds. My new “OPK
short sell hypothesis” is that Frost used downward manipulation of the OPK share price after the
BRLI take-over to profit from short selling OPK on the Tel Aviv Stock Exchange (TASE).
These hypotheses are presented for review and testing by the SEC and DOJ, and for evaluation
and comment by others who may have information or opinions about these matters.
Understanding the workings of the Frost gang has required solving many puzzles using
the scientific method.1 For me, it started by experiencing the phenomenon that Phillip Frost,
Elliot Maza and Brian Keller lied to me for a year, culminating with the fraudulent transfer of
propofol rights from BioZone to Opko. This was in late February of 2012. Based upon the facts
available at the time (e.g., BZNE insolvency), my initial hypothesis regarding Frost’s motivation

1
​https://www.oakton.edu/user/4/billtong/eas100/scientificmethod.htm

1
was that Frost intended BZNE to go bankrupt so that he (OPK) could get all BioZone’s patent
rights for next to nothing. My first hypothesis turned out to be incorrect.
Working alone, I began to gather more facts and observations. After additional facts
became available (promotional articles on BZNE, SEC filings, press releases, surge in BZNE
trading volume and price in September of 2013, etc), I rejected my old hypothesis and my new
hypothesis became that Frost and others used BioZone for a P&D securities fraud. I filed a
whistleblower tip with the SEC describing the evidence supporting this hypothesis in December
of 2013. My second hypothesis is now a proven fact, in spite of considerable skepticism,
outright disbelief, and obstruction during the intervening five and a half years until now.
As time went on and I began collaborating with Dan Fisher, additional observations led
to another significant hypothesis, namely that Frost, Honig, Brauser and others were using
systematic methods to conduct P&D operations at multiple companies. This hypothesis is also
now a proven fact..
There are still many remaining puzzles about the illegal activities of the Frost gang. Here
follows my attempt to summarize some of what I know and what I do not know as an example of
my “scientific method” approach.

observation/hypothesis/theory status/evidence

1. Phillip Frost and the Frost gang Proven fact

conducted a P&D at BZNE/COCP.

2. The Frost gang systematically Proven fact

conducts P&D frauds at various
companies

3. The Frost gang did a P&D at Undeniable fact

COOL/PTE.

4. One component of the Frost gang Proven fact

organization/method is an illegal
promotion network.

a. The promotion network includes Proven fact. John Ford consented to

articles written by paid pumpers. judgment in SEC v Honig. Sharesleuth’s
“Pretenders and Ghosts” article documents
many other examples.

b. The promotion network includes Undeniable fact based on overwhelming

message boards. observational evidence. Only the Feds have
access to source evidence to prove this theory.
My suggestion to the Feds is that search
warrants and raids may be needed.

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 c. The promotion network includes Theory supported by Teri Buhl’s stories on
broker/dealer activities. Laidlaw and the Frost/LTS connection.

d. The promotion network includes Hypothesis supported by (1) Observation that

market maker activities. Frost gang stocks often trade in narrow price
windows when under stress; and (2)
Observation that Frost gang stocks often trade
in fractions of pennies when under stress.

5. Another component of the Frost gang Now a proven fact, as per SEC v Honig. My
method is illegal swap trades. original observation was a single post on a
message board in 2013.

6. Frost gang attorney Harvey Kesner used Theory with overwhelming public
illegal means to facilitate Frost gang P&Ds. circumstantial evidence to support it.2 I am
convinced that this is a fact, based on my own
personal experiences with Kesner.

7. Hedge funds play a role in Frost gang Hypothesis with minimal publicly available
market manipulation. supporting information.3

et cetera

The chart above could easily be expanded to cover many more aspects of Frost gang
activities, but this should suffice to provide a general idea of my approach. I will add that my
new hypotheses usually arise from unexplained observations where I lack sufficient information
to reach a clear conclusion. That is partly why my hypotheses have sometimes been wrong.
However, that is also the way the scientific method works.
For me, the biggest remaining mystery of the Frost gang is Phillip Frost’s financial
motivation. The few tens of millions he has made from Honig-led P&Ds are peanuts to a
multi-billionaire.4 It could be that Frost is just doing all his frauds and crimes for “fun,” but I
don’t think so. It could also be that he simply embraces the idea that the best approach is to
break the law when the profits will likely exceed the penalties and there is little or no risk of
criminal consequences.5 However, my current “central hypothesis” is that Frost has been playing

2
See e.g.,
https://www.barrons.com/articles/the-lawyer-at-the-center-of-sec-pump-and-dump-case-153867540

3
​https://www.sec.gov/litigation/litreleases/2019/lr24431.htm

4
Frost’s P&D gains have been somewhat offset by his P&D losses including the need to finance COCP
after the initial P&D, the need to bail out Honig and Brauser from the mess they created at IDI, a $5
million fine to the SEC, etc.
5
E.g., see TEVA’s FCPA settlement. ​https://www.sec.gov/news/pressrelease/2016-277.html

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a bigger game than the Honig-led penny stock P&Ds all along, and that Frost’s bigger game
relates to making billions in cash by manipulating the share price of OPK. There are many
observations and sub-hypotheses related to my central hypothesis, so here is my attempt to
organize this mysterious aspect of the Frost gang situation..

observation/hypothesis/theory status/evidence

1. Frost and Honig are fraudsters. Proven/admitted fact.

2 Frost’s main reason for associating with “Central hypothesis”

Honig/Brauser has been to use their expertise
and network to manipulate the OPK share
price.

3. The Frost gang pumped the OPK share Theory with ample evidentiary support.
price up until 2015.

a. Message boards E.g., see “The Placebo Effect” report6

b. Planted articles Many examples

c. “Buffet of Biotech” meme Many examples

d. Frost buying OPK shares See footnote7

4. Frost profited from the increase in OPK Proven fact.

share price until 2015

a. Opk’s take-over of BRLI was priced See footnote8

at OPKs peak in share price.

b. Frost net worth

6
​http://www.lakewoodlp.com/Opko_Health_The_Placebo_Effect.pdf

http://openinsider.com/screener?s=OPk&o=&pl=&ph=&ll=&lh=&fd=0&fdr=&td=0&tdr=&fdlyl=&fdlyh=&days
ago=&xp=1&xs=1&vl=&vh=&ocl=&och=&sic1=-1&sicl=100&sich=9999&grp=0&nfl=&nfh=&nil=&nih=&nol=
&noh=&v2l=&v2h=&oc2l=&oc2h=&sortcol=0&cnt=1000&page=1

8
​https://www.sec.gov/Archives/edgar/data/792641/000095010315004578/dp56888_ex-9901.htm

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 5. The Frost gang manipulated the OPK share Hypothesis.- see discussion below
price downward from 2015 until 2018.

6. Frost profited from the decrease in OPK “OPK short sell hypothesis” - see discussion
share price by selling OPK short offshore below

I have been wondering about Frost’s motivation for years. The unexplained phenomenon
of Frost committing blatant frauds with Honig has been a major strength of the Frost gang
alliance. For many years, any participant or enabler of Frost gang frauds could use the same
argument to defend Frost and his gang: Why would Frost commit fraud? He’s a billionaire
philanthropist. He doesn’t need to lie, cheat or steal. It doesn’t make sense that he’s a fraudster.
Therefore, there must be an explanation other than fraud. As a person who was specifically
targeted by Frost’s frauds, I have no doubts about them because of my own experiences.
However, it has been hard to convince others until the evidence became overwhelming. Now we
are mostly past that. Still, the question of Frost’s motivation remains.
I could not come up with a good hypothesis on the matter of Frost’s motivation to
participate in penny stock P&Ds for a long time. Then, after the OPK price peak in 2015, a
poster on the OPK Yahoo message board called “Stacey” began posting that Frost was profiting
from OPK’s price decline by OPK shorting associated with hedge funds.9 She also posted that
the center of this activity was a private club on an island near Frost’s Star Island home in Miami.
Stacey presented no evidence, and I had no way to gather evidence about Stacey’s hypothesis,
but Stacey’s idea was the best I had heard up to that point.
Other message board posters speculated that Frost lent his shares to shorts. Still others
speculated about corruption on the Tel Aviv Stock Exchange (TASE), where OPK was listed in
2013. Documents in the Panama Papers naming Honig and Brauser gave a hint that there might
be some offshore money laundering by the Frost gang. The involvement of Alpha Capital
Anstalt (a Liechtenstein hedge fund) as a defendant in SEC v Honig was a further hint that the
frauds of the Frost gang might extend beyond the borders of the U.S.
OPK’s market cap has declined by about $8 billion since 2015 as the share price has
fallen from 19 to 2 since the BRLI take-over. OPK Shorts made a lot of money on the way
down. The market value of Frost’s own OPK holdings went down by about $3 billion. The
situation never did smell right to me. As a result of the available information, my general
working hypothesis became that Frost was somehow profiting from OPK short sales, but I did
not not have any explanation for the mechanism.10

9
Pederson’s previous emails to the Feds.
10
Id.

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 Teri Buhl published a new Frost gang story on October 8, 2019.11 Buhl’s story describes
Barry Honig’s various relationships with an online publication called the StreetSweeper. The
StreetSweeper generally publishes negative articles about public companies and profits from
short selling the same companies. Honig’s association with the StreetSweeper goes back to
2011. The Buhl story shows that Honig’s stock manipulation strategy includes profiting both
from the stock going up (P&D frauds) and from the stock going down (short selling after the
stock peaks). Since P&D share prices inevitably collapse, there is an obvious opportunity for the
manipulators to profit on the downside. Buhl gave several examples, including AWSM,
HOTR/BURG and MGTI, where Honig ran the P&D and the StreetSweeper then wrote a
negative article to push the stock price down.
There is considerable evidence to indicate that a similar stock manipulation model was
used by Frost, Honig and the Frost gang at OPK. While there was no dump of OPK shares, there
is strong evidence that Honig’s methods and network were used to pump up the OPK share price.
After the BRLI take-over, which included taking over BRLI’s billion dollar revenue stream,
OPK’s share price collapsed over a four-year period. Frost had complete control of both the
management and the BOD during this entire time period. Taking the stock price down from 19
to 2 would have been easy, if that was Frost’s intention. Available facts support my OPK short
sell hypothesis by suggesting the methods Frost may have used to sell OPK short while evading
detection up to this point.

1. OPK has been listed on the TASE from April 21, 2013 up to the present.12
2. OPK requested to be delisted from the TASE, and then reversed their decision in early
2018.13
3. Here is OPK’s NYSE/NASDAQ trading chart for the last 10 years.

11
​http://www.teribuhl.com/

12

https://www.opko.com/investors/news-events/press-releases/detail/123/opko-health-announces-new-listin
g-on-tel-aviv-stock-exchange

13

https://www.opko.com/news-media/press-releases/detail/329/opko-health-to-remain-on-the-tel-aviv-stock-
exchange

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 4. OPK was traded on the TASE through most of OPK’s price run-up and all of its decline.
5. Frost could have created or associated with one or more offshore entities to short OPK on
the TASE after the 2015 price peak. Such entities could avoid scrutiny by US regulators
and also ignore US reporting requirements.
6. Frost could have kept the profits from shorting OPK offshore, thereby further avoiding
US regulatory scrutiny.

At this point I am only presenting various hypotheses. Some of my hypotheses have been
wrong before, and these could also be wrong. I give no guarantee about the validity of any of
my hypotheses that I present here. On the other hand, I have often been right about Frost and
his gang, even when my ideas and evidence have been met with skepticism, outright disbelief,
and obstruction. I encourage the SEC and DOJ both to reach out to authorities at the TASE in
Israel to see if there is evidence available to test my OPK short sell hypothesis, as well as
pursuing other possible avenues of investigation that might explain Frost’s motivation.
Several other points are worth commenting on. These comments are all made with the
assumption that my OPK short sell hypothesis is correct.
a. OPK’s listing on the TASE could have been done with the specific purpose of enabling
Frost to short OPK while avoiding detection. OPK did not have absolute need for the

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 listing. The TASE listing was established when Honig was already practicing both P&D
and short selling strategies at other companies. OPK intended to end the TASE listing
after the decline of the OPK share price was complete.
b. Profits from OPK short selling would be entirely in cash, and the transactions would be
completely separate from Frost’s public ownership and trading in OPK.
c. Frost and his gang did not expect to be exposed for their many P&D frauds after the OPK
short sell operation was complete. Frost may have expected to have a pile of offshore
cash from the short selling by now, plus the ability to rebuild the OPK share price again
without the scrutiny he is now getting.
d. While Frost has continued to publicly buy OPK shares as the share price decreased, these
purchases may have been a cover for the short selling operation. As noted above, the
short sell operation involved a completely different set of transactions.
e. Frost may have established one or more new entities to conduct the short selling, or he
may have used existing entities (e.g., hedge funds).

This letter is copied to Frost’s attorney and Frost’s spin doctor at Sard Verbinnen. I
invite Frost and his team to present an explanation for Frost’s participation in the Barry
Honig-led crimes and frauds of the Frost gang. Of course, in order to be believable, Frost’s
explanation would have to include admissions of his wrong-doing.
This letter is also being posted on Scribd, with a link from Twitter. A primary reason for
doing so is to benefit from insights and information from the widest possible group of people.
Experience has shown that more and more people have been coming forward with their own
Frost gang stories as the truth about Phillip Frost, Barry Honig and the rest of the Frost gang
emerges. So, if you have useful information, please reach out to the DOJ, the SEC, the
journalists and writers covering the Frost gang, law firms suing Frost and his gang members,
and/or me.

Lee Pederson