Judge says Honig’s attorney Harvey Kesner can be Sued for Fraud and Malpractice : $MBVX

A California federal judge has ruled former Sichenzia Ross Ference LLP attorney Harvey Kesner can be sued for fraud in a malpractice suit filed by biopharma firm Mabvax. Mabvax says whiles attorney Kesner was working for them he didn’t disclose a conflict of interest in his role advising Barry Honig who was an investor in MabVax. On top of that Kesner stands accused of leaking confidential company information that benefited Honig financially and for charging MabVax to help them in their SEC investigation while recommending decisions that benefited Honig who was also being investigated. The fraud claim against Sichenzia Ross Ference also survived the motion to dismiss.

Attorney Kesner was profiled last year in a Barron’s article for his questionable role with MabVax and Barry Honig. The story titled The Lawyer at the Center of the SEC Pump and Dump Case highlighted the internal emails that said Kesner’s partners and associates were realizing the firm had a conflict of interest between representing Barry Honig & his band of investors and representing MabVax when the SEC started asking questions. The emails showed lawyers at Sichenzia Ross Ference saying the SEC subpoena is really all about the investors (meaning Barry Honig and friends). The SEC was asking for documents because they had concerns Team Honig was not disclosing their true size of stock ownership in MabVax and that the group was trading as an undisclosed affiliate. MabVax lawsuit says it was Harvey Kesner and lawyers at his firm who had advised MabVax to write their SEC filings in a way that hid this information so it would benefit Team Honig.

Honig was charged by the SEC in September for being the ring leader of a pump and dump ring that netted him and his co-defendants at least $27 million. Kesner is not a named defendant in the SEC lawsuit but the SEC details a lawyer allegedly aiding Honig’s securities fraud. That lawyer is believed to be Harvey Kesner. Half of the defendants in the SEC case of agreed to settle the case and be banned from involvement with penny stocks. Last month the SEC said in a court filing it now has a tentative settlement with Honig which needs approval from the SEC commissioners. It will be interesting to see if that settle included Honig turning government witness against others involved in the scheme that have not yet been charged.

Just days before the SEC brought their case against Kesner’s long time client Honig, I broke the news he was leaving the law firm that bore his name as partner. People inside the firm were talking about Kesner being forced out and that the partners would allow him to call it a retirement. There was no press release announcing any retirement from the law firm but days after the SEC’s lawsuit was filed Sichenzia Ross Ference rushed to remove any resemble of ties to attorney Kesner taking down his profile and press releases touting his legal work. They also quickly changed the name of the firm removing Kesner’s name.

Kesner’s has been Honig’s lawyer for a long time and the MabVax suit shows the Honig often forces a company he investment with to also hire Kesner as their counsel if they want continued investments from Honig. Kesner is then allegedly in a position to 1)share confidential company information with Honig 2) advise the company to be vague in their SEC disclosures of who is actually invested in the company.

Chris Carey reported on similar disclosure problems this week in a company called Marathon Patent ($MARA). Honig and his pal John O’Rourke were invested heavily in $MARA and Kesner was the lawyer advising the company last year when it was touting a merger with a bitcoin company. O’Rourke has also been charged by the SEC. Carey’s story at Sharesleuth.com highlights the merger never happen but it sure helped the stock run up. Revere Investments was the name of the company O’Rourke used to hold a large chunk of Marathon shares that were allegedly dumped at the height of the stock price. Carey estimated Team Honig raked in $20 million from cheat debt warrants turned into common stock in Marathon unbeknownst to regulators and investors. Marathon is not a named company in the current SEC lawsuit against Team Honig.

With Kesner learning the MabVax lawsuit is going forward last week (the Judges decision was filed on May 9th) he has gone into full vengeance mode. You see the insurance the law firm has that would pay for any damages lobed against Kesner in the MabVax suit might not pay out if the court finds there was fraud committed. Insurance firms can invalidate a policy for fraud. Kesner already has his own lawyer in the suit, separate from his former law firm, but we could see the two dukeing it out on who has to pay. Now it’s rare a law firm would even move onto the next stage of the case allowing discovery because all their dirty laundry would be public in court filings. So we will have to watch to see if Sichenzia settles leaving Kesner to fight the case alone.

Yesterday I received a letter from a lawyer from Virginia representing Harvey Kesner asking for some of my reporting on Kesner leaving his law firm and my speculation that the SEC is looking at Kesner also or he is working as a confidential witness for the government to be taken down. This request is coming nearly a year after I began the reporting. Kesner’s new lawyer, Steven Biss, who I have never heard of, also threaten to sue me if I don’t apologize to attorney Kesner for even thinking that he could be involved in Honig’s securities fraud. And for some reason this Virginia lawyer is now citing Florida case law that I have to preserve any source information I used to report my stories in case a lawsuit is filed.

I obviously stand behind all the reporting and any opinion I wrote is protected against libel laws, which Kesner and his new friend Steven Biss know. They even tried to claim it’s libelous to link to and repeat the Barron’s story headline about Kesner, which they both also know appellate courts have recently decide a journalist can’t be held liable for repeating another publications reporting. Harvey can’t afford to go through detailed discovery with me and knows after watching Honig try to sue me and loose that I will get a pro-bono lawyer and have a history of never turning over source information even if it means going to jail. So why sue? He is either trying to harass an independent jouranlist or it’s something even more troubling. You see the lawsuit attempt could be all about trying to get the name of the person or persons from his old law firm that were leaking news about why he was leaving the firm. He could try to use this to get leverage on his old firm if they are facing a battle over who is going to have to pay MabVax big bucks to settle.

Additionally attorney Biss has had problems of his own regarding his conduct as a lawyer. In 2008 a three judge panel in Virginia suspended him for year for:

On October 17, 2008, a three-judge panel of the Chesterfield County Circuit Court imposed a suspension of one year and one day on Steven Scott Biss, effective January 1, 2009. In a corporate and securities matter, he violated professional rules that govern competence, scope of representation, and misconduct that involves deliberately wrongful acts that reflect adversely on his fitness to practice. RPC 1.1; 1.2(c); 8.4(b)

Kesner recently moved his main residence to South Florida which is a homestead state. Meaning your home can’t be seized if you have judgments or government fines against you. Kesner had previously lived in New Jersey for decades. Kesner is now set up as a sole practitioner and still has his New York law license. It’s unclear if he has any clients now and wouldn’t answer any questions about the MabVax suit or who his current clients are. MabVax’s outside counsel wouldn’t respond for comment on their recent win allowing the case to move forward.

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