heb lawsuit vs asenio page 2
COUNT I
VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT AGAINST DEFENDANTS ASENSIO, ACI, FORT HILL AND JOHN DOES 1-20
30. HBI incorporates by reference herein the allegations contained in paragraphs 1 through 29 as though fully set forth herein.
31. Defendants Asensio, ACI and Fort Hill and defendants John Does 1 through 20 are "persons" within the meaning of 18 U.S.C. ßß 1961(3) and 1962.
32. ACI and the association in fact of Asensio, ACI, Fort Hill and John Does 1 through 20 are "enterprises" within the meaning of 18 U.S.C. ßß 1961(4) and 1962, which engaged in, or the activities of which affected, interstate commerce within the meaning of 18 U.S.C. ß 1962.
33. At all times material to this action, Defendants Asensio, ACI, Fort Hill and John Does 1 through 20 were employed by or associated with one or more of the aforementioned enterprises.
34. Beginning in or about September, 1998 and extending through the present, defendants used or invested income derived, directly or indirectly, from a pattern of racketeering activity to acquire an interest in HBI in violation of ß 1962(a), acquired or maintained an interest in or control of HBI through a pattern of racketeering activity in violation of ß 1962(b), conducted or participated directly or indirectly in the affairs of ACI and the association in fact of Asensio, ACI, Fort Hill and John Does 1 through 20 through a pattern of racketeering activity in violation of 18 U.S.C. ß 1962(c), and conspired to violate ß 1962 (a), (b), and (c), in violation of ß 1962 (d), through at least the following:
(a) knowingly and willfully transmitting or causing to be transmitted, through the interstate mails, communications in furtherance of the aforementioned fraudulent scheme of manipulation and illegal short selling in violation of 18 U.S.C. ß 1341; and
(b) knowingly and willfully transmitting sounds and other information by wire communication in interstate commerce in furtherance of the aforementioned fraudulent scheme of manipulation and illegal short selling in violation of 18 U.S.C. ß 1343.
35. The conduct of defendants in (a) disseminating false and misleading information regarding HBI by comments and reports sent by mail, fax and Internet, (b) participating in illegal short sales placed and confirmed by telephone and mailed confirmations, and (c) manipulating the price of HBI common stock to their substantial financial advantage by all of the aforementioned mail and wire facilities, constitute violations of the aforementioned mail and wire fraud statutes. Specifically, each of the defendants, through or with Defendants Asensio and ACI, made untrue statements of material fact or omitted to state material facts necessary to make the statements made, in light of the circumstances in which they were made, not misleading, and engaged in acts, practices, and courses of business that operated as a fraud or deceit upon HBI as more fully set forth in paragraphs 1 through 28 above, and they did so by fax, U.S. mail, telephone and wire.
36. HBI believes and therefore alleges that defendants pattern of racketeering activity has included similar schemes to defraud, destroy and profit from the demise of at least the following companies in which one or more defendants issued similarly false and misleading research reports and engaged in illegal short selling:
Zonagen
Shared Medical Systems
Computer Learning Centers
Action Performance Company
Biovail
Chromatics Colors
Turbodyne
Sol-vex.
37. HBI has been injured as a result of defendants violations of 18 U.S.C. ß 1962 in at least the following respects:
(a) HBIs market capitalization has been reduced by over Three Hundred Million Dollars ($300,000,000), thereby impairing its business dealings with the FDA, its lenders, its investors, and its shareholders;
(b) HBIs business and professional reputation has been severely damaged, imperiling the ongoing Phase III tests and its "Fast Track" status application with the FDA, and discouraging patient participation in its new drug testing;
(c) HBI has sustained a substantial reduction in the value of its treasury stock; and
(d) HBIs ability to obtain financing for ongoing business initiatives has been imperiled.
38. As a direct and proximate result, HBI has sustained substantial harm, which harm is ongoing.
WHEREFORE, plaintiff Hemispherx Biopharma, Inc. requests judgment in its favor and against Defendants Asensio, ACI, Fort Hill and John Does 1 through 20 in an amount sufficient to compensate HBI for its losses, trebled pursuant to 18 U.S.C. ß 1964, together with interest, costs and attorneys fees incurred in connection with this action, and such other relief as this Court deems appropriate.
COUNT II
VIOLATIONS OF SECTION 10(a) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10a-1 PROMULGATED THEREUNDER AGAINST ALL DEFENDANTS
39. HBI incorporates by reference herein the allegations contained in paragraphs 1 through 38 above as though fully set forth herein.
40. HBI believes, and therefore alleges, that the illegal short selling by defendants, and the material misstatements and omissions of fact made in connection therewith, were designed intentionally or recklessly from inception as a scheme, artifice or device to defraud HBI of its market capitalization, to destroy the business of HBI, and to cause HBI to file for bankruptcy, all to the great financial benefit of the defendant short sellers and the great financial detriment of HBI.
41. The intentional or reckless conduct of defendants in (a) disseminating false and misleading information regarding HBI, (b) participating in illegal short sales, and (c) manipulating the price of HBI common stock to their substantial financial advantage constitute violations of Section 10(a) of the Exchange Act, 15 U.S.C. ß 78j (a), and Rule 10a-1 promulgated thereunder, 17 C.F.R. ß 240.10a-1.
42. Specifically, each of the defendants, through or with Asensio and ACI, made untrue statements of material fact or omitted to state material facts necessary to make the statements made, in light of the circumstances in which they were made, not misleading, and engaged in acts, practices, and courses of business which operated as a fraud or deceit upon HBI as more fully set forth in paragraphs 1 through 28 above.
43. The aforementioned intentional or reckless acts of manipulation, fraud and deceit constituted a fraud on the market for HBI securities, as a direct and proximate result of which HBIs market capitalization has been fraudulently reduced by in excess of Three Hundred Million Dollars.
44. As a further result of defendants fraudulent conduct, HBIs business operations have been substantially impaired, to the great financial harm of HBI and its shareholders.
WHEREFORE, plaintiff Hemispherx Biopharma, Inc. requests judgment in its favor and against all defendants in an amount sufficient to compensate HBI for its losses, together with interest, costs and attorneys fees incurred in connection with this action, and such other relief as this Court deems appropriate.
COUNT III
COMMON LAW FRAUD AGAINST DEFENDANTS
ASENSIO, ACI, FORT HILL AND JOHN DOES 1-20
45. HBI incorporates by reference herein the allegations contained in paragraphs 1 through 44 above as though fully set forth herein.
46. At the time each of the defendants, with or through Defendants Asensio and ACI, engaged in the aforementioned illegal short selling and the material representations and omissions of fact in furtherance thereof specifically alleged in paragraphs 24 through 28 above, they knew, or by the exercise of reasonable diligence should have known, that the scheme and the statements made in furtherance thereof constituted, and were intended to constitute, a fraud on the market for HBI common stock.
47. The aforementioned acts of manipulation, fraud and deceit constituted a fraud on the market for HBI securities as a direct and proximate result of which HBIs market capitalization has been fraudulently reduced by in excess of Three Hundred Million Dollars.
48. The aforementioned fraudulent scheme of defendants was willful, wanton, outrageous, and undertaken with the intent of causing great harm to HBI or with a reckless indifference to the rights and interests of HBI.
49. As more fully set forth above, all of the foregoing has caused HBI considerable financial harm, which harm is continuing.
WHEREFORE, plaintiff Hemispherx Biopharma, Inc. requests judgment in its favor and against Defendants Asensio, ACI, Fort Hill and John Does 1 through 20 in an amount sufficient to compensate HBI for its losses, punitive damages in an amount sufficient to punish defendants for their reckless, willful, wanton and outrageous conduct, together with interest, costs and attorneys fees incurred in connection with this action, and such other relief as this Court deems appropriate.
COUNT IV
COMMON LAW FRAUD AGAINST DEFENDANTS
MESIROW, FLAGSHIP, FSC, SHARPE AND "LXE"
50. HBI incorporates by reference herein the allegations contained in >paragraphs 1 through 49 above as though fully set forth herein.
51. At the time each of defendants Mesirow, Flagship, FSC, Sharpe and "LXE" engaged in the aforementioned illegal short selling, they knew, or by the exercise of reasonable diligence should have known, that the scheme and the statements made in furtherance thereof constituted, and were intended to constitute, a fraud on the market for HBI stock, and that in trading HBI common stock, shareholders of HBI would rely thereon.
52. As more fully and specifically alleged above, and in furtherance of their illegal short selling, defendants material misrepresentations and omissions of fact included, but were not limited to:
(a) communicating to floor brokers and specialists of the AMEX that their sales were lawful short sales, when in fact the short sales were "naked" shorts for which defendants knew they would not receive delivery of securities on their own behalf or for their customers, or for which they could not borrow securities on behalf of themselves or their customers for delivery, by settlement date;
(b) that such orders were "long" sales, when in fact they were unlawful short sales;
(c) that such sales as were placed on the "down tick" were lawful sales on the "down tick"; and
(d) that such sales were not being made in collusion with other illegal short sellers or for the purpose of unlawfully manipulating the price of HBI common stock, when, in fact, they were.
53. The aforementioned material misrepresentations and omissions of fact were made at a time when defendants knew, or by the exericse of reasonble diligence should have known, that they were untrue, and they were made with the intention of fraudulently inducing reliance and fraudulently manipulating the market for HBI common stock.
54. The aforementioned acts of manipulation, fraud and deceit constituted a fraud on the market for HBI securities as a direct and proximate result of which HBIs market capitalization has been fraudulently reduced by in excess of Three Hundred Million Dollars.
55. The aforementioned fraudulent scheme of defendants was willful, wanton, outrageous, and undertaken with the intent of causing great harm to HBI or with reckless indifference to the rights and interests of HBI.
56. As more fully set forth above, all of the foregoing has caused HBI considerable financial harm, which harm is continuing.
WHEREFORE, plaintiff Hemispherx Biopharma, Inc. requests judgment in its favor and against Defendants Mesirow, Flagship, FSC, Sharpe and "LXE" in an amount sufficient to compensate HBI for its losses, punitive damages in an amount sufficient to punish defendants for their reckless, willful, wanton and outrageous conduct, together with interest, costs and attorneys fees incurred in connection with this action, and such other relief as this Court deems appropriate.
COUNT V
INTENTIONAL INTERFERENCE WITH EXISTING AND
PROSPECTIVE BUSINESS RELATIONS AGAINST DEFENDANTS ASENSIO AND ACI
57. HBI incorporates by reference herein the allegations contained in paragraphs 1 through 56 above as though fully set forth herein.
58. As more fully set forth above, at the time that defendants initiated their fraudulent scheme, Defendants Asensio and ACI knew that (a) HBI was about to engage in FDA-approved Phase III testing of AMPLIGEN treatment of CFS; (b) HBI had or was about to apply to the FDA for "Fast Track" designation and approval under applicable rules and regulations; and (c) HBI would be in need of additional capital, investment and financing to complete the FDA approval process for AMPLIGEN.
59. Defendants Asensio and ACI further knew that patient participation in the continued testing of AMPLIGEN is critical, and that patient participation in such testing would depend on patients view of the safety and efficacy of AMPLIGEN.
60. Notwithstanding this knowledge, defendants engaged in a pattern and practice of deceptive, manipulative and fraudulent conduct designed to destroy HBI by interfering with its existing and prospective business relations with its investors, shareholders, business partners, financiers and test patients.
61. As a direct and proximate result of the foregoing, HBI has already experienced difficulty in obtaining financing for equipment needed for its Phase III trials, and its relationships with its business partners and patients have been impaired. The harm to HBI from the foregoing is ongoing and in an amount yet to be fully determined.
62. The aforementioned actions of defendants have been willful, wanton, outrageous, and undertaken with the intent of causing great harm to HBI or with a reckless indifference to the rights and interests of HBI.
63. As more fully set forth above, all of the foregoing has caused HBI considerable financial harm, which harm is continuing.
WHEREFORE, plaintiff Hemispherx Biopharma, Inc. requests judgment in its favor and against all defendants in an amount sufficient to compensate HBI for its losses, punitive damages in an amount sufficient to punish defendants for their reckless, willful, wanton and outrageous conduct, together with interests, costs and attorneys fees incurred in connection with this action, and such other relief as this Court deems appropriate.
COUNT VI
DEFAMATION AGAINST ASENSIO AND ACI
64. HBI incorporates by reference herein the allegations contained in paragraphs 1 through 65 above as though fully set forth herein.
65. The material misstatements and omissions of fact set forth above, including, but not limited to, the statements of Asensio and ACI with regard to the safety and efficacy of AMPLIGEN in the treatment of CFS, and defendants unsubstantiated innuendo of scientific fraud, securities fraud, and extortion against HBI and its principals, has directly impugned the business and reputation of HBI and its principals.
66. The aforementioned statements have been published in wide circulation through nationwide publications print and news media and on the Internet.
67. The aforementioned statements were further designed to, and did, engender in the listener and reader views of HBI and its business reputation that were unsubstantiated, unjustified, and untrue. The foregoing statements were also designed to defame and cast HBI in a false light.
68. The aforementioned actions of defendants were willful, wanton, outrageous, and undertaken with the intent of causing great harm to HBI or with a reckless indifference to the rights and interests of HBI.
69. As a direct and proximate result of the foregoing, HBI has suffered considerable financial harm, which harm is continuing.
WHEREFORE, plaintiff Hemispherx Biopharma, Inc. requests judgment in its favor and against Defendants Asensio and ACI in an amount sufficient to compensate HBI for its losses, punitive damages in an amount sufficient to punish defendants for their willful, wanton, outrageous and fraudulent conduct, together with interest, costs and attorneys fees incurred in connection with this action, and such other relief as this Court deems appropriate.
COUNT VII
DISPARAGEMENT AGAINST ASENSIO AND ACI
70. HBI incorporates by reference herein the allegations contained in paragraphs 1 through 69 above as though fully set forth herein.
71. The material misstatements and omissions of fact set forth above, including, but not limited to, the statements of Asensio and ACI with regard to the safety and efficacy of AMPLIGEN in the treatment of CFS, and defendants unsubstantiated innuendo of scientific fraud, securities fraud, and extortion against HBI and its principals were made by Defendants Asensio and ACI knowing that the statements were false or acting in reckless disregard of their truth or falsity.
72. The aforementioned statements have been published in wide circulation through nationwide publications print and news media and on the Internet.
73. The aforementioned statements were further designed to, and did, cause HBI to suffer considerable financial harm, which harm is continuing.
74. The aforementioned actions of defendants were willful, wanton, outrageous, and undertaken with the intent of causing great harm to HBI or with a reckless indifference to the rights and interests of HBI.
75. As a direct and proximate result of the foregoing, HBI has suffered considerable financial loss including, but not limited to, a reduction of HBIs market capitalization by over Three Hundred Million Dollars ($300,000,000), a substantial decrease in the value of its treasury stock, difficulty in obtaining financing for equipment needed for its Phase III trials of AMPLIGEN, and impairment of its relationships with its business partners, financiers and investors.
WHEREFORE, plaintiff Hemispherx Biopharma, Inc. requests judgment in its favor and against Defendants Asensio and ACI in an amount sufficient to compensate HBI for its losses, punitive damages in an amount sufficient to punish defendants for their willful, wanton, outrageous and fraudulent conduct, together with interest, costs and attorneys fees incurred in connection with this action, and such other relief as this Court deems appropriate.
COUNT VIII
NEGLIGENCE AGAINST DEFENDANTS ASENSIO AND ACI
76. HBI incorporates by reference herein the allegations contained in paragraphs 1 through 75 above as though fully set forth herein.
77. In making the material misstatements and omissions of fact set forth in paragraphs 1 through 28 above, Defendants Asensio and ACI recklessly failed to conduct any appropriate investigation or due diligence into their truthfulness.
78. Defendants negligence and/or recklessness included, but was not limited to, at least the following:
(a) failing to speak to any member of management of HBI;
(b) failing to speak to or visit any of the numerous principal clinical investigators involved in the clinical development of AMPLIGEN;
(c) failing to visit HBI;
(d) failing to contact any of the strategic partners of HBI;
(e) failing to contact a single patient advocacy group, doctor, scientific or business partner, or clinician involved in the development and testing of AMPLIGEN or its related technologies; and
(f) failing to engage a competent scientific or medical professional to review the comments and research prior to publication.
79. The aforementioned actions of defendants have been willful, wanton, outrageous, and undertaken with the intent of causing great harm to HBI or with a reckless indifference to the rights and interests of HBI.
80. As a direct and proximate result of defendants negligence and/or recklessness, HBI has sustained substantial financial harm, which harm is continuing.
WHEREFORE, plaintiff Hemispherx Biopharma, Inc. requests judgment in its favor and against Defendants Asensio and ACI in an amount sufficient to compensate HBI for its losses, punitive damages in an amount sufficient to punish defendants for their willful, wanton, outrageous and fraudulent conduct, together with interest, costs and attorneys fees incurred in connection with this action, and such other relief as this Court deems appropriate.
David C. Franceski, Jr. (I.D. No. 32664)
Keith R. Dutill (I.D. No. 46387)
Jennifer R. Beecroft (I.D. No. 78524)
STRADLEY, RONON, STEVENS & YOUNG, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
(215) 564-8000
Attorneys for Plaintiff,
Hemispherx Biopharma, Inc.
OF COUNSEL:
Michael Arthur Walsh
CHOATE, HALL & STEWART
53 State Street
Boston, MA 02109
(617) 227-5020
Dated: September 30,1998 |
