October 26, 2019

To:
DOJ and SEC agents (by bcc)

RE: Last Days of the Frost Gang

Dear All,

Billionaire securities fraudster Phillip Frost is in a deep hole, but Frost keeps right on
digging. On October 25, Opko filed a prospectus to sell 50 million shares at a buck-fifty per
share - over 90% lower than the peak price in 2015. It’s obvious to anyone paying attention that
raising $75 million will only delay resolution of the fundamental problems at Opko, while
worsening Frost’s legal problems. Dr. Frost, if you read this, I have some friendly advice for
you. It’s time for you to put down the shovel.
A glance at Opko’s public SEC’s filings reveals a company in crisis:
-- Negative operating capital.
-- Negative net asset value when excluding intangible assets.
-- Opk losing $50 million per quarter.
-- No real prospect of increasing revenues significantly.
-- Multiple lawsuits.
-- Denial of insurance coverage for class action and derivative suits.1
-- False Claims Act (Medicare fraud) allegations by the SDNY.
-- Allegations of illegal physician subsidies by the SDNY.
Broadening the perspective from just Opko to the Frost gang empire as a whole, Frost’s
situation looks even worse.
-- Ongoing discovery and litigation in ​SEC v Honig​.
-- Ongoing criminal investigations by the DOJ, with charges likely coming soon.
-- High likelihood that Frost gang members and associates will cooperate with the government in
civil and criminal prosecutions.
-- Ongoing SEC investigations of multiple Frost gang companies, including PolarityTE (PTE).
-- Likelihood of RICO (racketeering) charges, with potential for treble monetary damages and
lengthy prison sentences.
Frost has always been a man of action, but he is at the point where further action will
only make matters worse for him. The proposed financing at Opko is a prime example. Despite
1
“​Our primary and side A directors and officers’ liability insurance carrier has denied coverage
for the class action and derivative suits filed against us and our directors and officers concerning
the allegations in the Complaint.” Prospectus, page S-31.
44 pages of risk factor disclosures in the prospectus, the proposed financing is essentially an
attempt to prolong a series of ongoing frauds with yet another fraud, thereby creating potential
new civil liabilities. The proposed financing also creates potential new criminal liabilities for
Frost and other members of his gang.
For many years, the Frost gang has silenced its critics with litigation and the threat of
litigation, as well as misleading the public with false public relations and promotional
campaigns. Now Frost has lost his swagger. This letter is an example of my response to the
change in the Frost gang’s attitude and tactics. Until recently, the Frost gang would not hesitate
to start groundless civil litigation to silence its critics, but I know Frost will not sue me for
several reasons. One reason is that he has no legitimate claims against me. Another reason is
that he doesn’t want to draw attention to my messages (#PrisonTimeForWhiteCollarCrime and
#BernieMadoffOfBiotech). Another reason is that he doesn’t want to go through discovery. The
main reason is this, though: If Frost sues me, he will open himself to cross-examination by me
with him on the witness stand, and Frost knows that would not go well for him at all.

This letter is being posted at Scribd, with a link from Twitter.

Lee Pederson

Cc.
SEC OIG
Joe Dixon (attorney for Phillip Frost)
Minnie Baylor-Henry (℅ Maggie Dalton)

Bcc:
Journalists and business writers
Other interested persons