SoCal Firms Accused|of Selling Fetal Tissue

     SANTA ANA, Calif. (CN) — In a civil complaint that’s already sparked political fireworks, the Orange County district attorney says two medical products companies and the family that owns them made huge, illegal profits by selling fetal tissue to researchers from samples donated by Planned Parenthood.
     Entering the politically charged area of embryonic stem cells and abortion, District Attorney Tony Rackauckas seeks civil penalties of $3 million or more from, DV Biologics and DaVinci Biosciences, and their owner-operators Andres Isaias, Estefano Isaias Sr. and Estefano Isaias Jr.
     Planned Parenthood is not a party to the lawsuit, nor is it accused of wrongdoing.
     Rackauckas said at a news conference that Planned Parenthood did nothing wrong and did not receive any money from the defendants.
     Donations of stem cells and tissues from aborted fetuses are legal, but “the sale of fetal tissue and cells for ‘valuable consideration’ is illegal under both California and federal law,” Rackauckas says in the Oct. 11 complaint in Orange County Court.
     He says the companies, which operate out of the same address in Yorba Linda and are jointly owned and managed by the Isaias family, “obtained aborted fetus donations from Planned Parenthood and turned those donations into a profit-driven business.”
     They sold vials of fetal tissue for as much as $700 — a 2,700 percent markup from the $26 it cost to produce, Rackauckas says.
     “Defendants’ conduct was knowing and intentional and in complete disregard of the law,” the complaint states. “Indeed, rather than attempt to limit their income on sales to allowable amounts, defendants ignored their legal obligations entirely and affirmatively set forth, at the direction of the Isaias defendants, a business objective and plan to profit on their sales efforts.”
     An attorney for the defendants, Michael Tein, said in a statement that Rackauckas’s office has the numbers all wrong — that they “do not reflect the full costs of developing each bio-sample.”
     Tein, with Lewis Tein in Coconut Grove, Fla., said his clients never turned a profit.
     “This is a civil lawsuit over cost-accounting issues,” Tein said. “We look forward to explaining the full story to the court.”
     The district attorney’s lawsuit began from an anonymous, confidential complaint from a member of the public, according to Kelly Ernby, the deputy district attorney in charge of the case. She said the case is about enforcing the law, not politics.
     “This case is not about whether it should be lawful to sell fetal parts or whether fetal tissue research is ethical or legal,” Rackauckas said in a statement.
     While there is a “right to conduct stem cell research” in the California Constitution, the defendants were “treating human parts as commodities instead of giving it the respect the law intended,” Rackauckas said. “This lawsuit is aimed at taking the profit out of selling body parts.”
     Anti-abortion groups quickly trumpeted the lawsuit to bolster their accusations against the nationwide women’s healthcare provider.
     “This suit vindicates the brave whistleblowers of the Center for Medical Progress and every pro-life American who demanded the nation’s largest abortion business, Planned Parenthood, and their partners in the harvest and sale of baby body parts be held accountable,” Susan B. Anthony List president Marjorie Dannenfelser said in a statement.
     The Center for Medical Progress is the Irvine-based organization that secretly filmed Planned Parenthood representatives two years ago, allegedly discussing the sale of fetal parts. The videos the group released were heavily edited. A federal appellate panel heard arguments Tuesday about preventing the group from releasing additional secret videos.
     The center’s founder, David Daleiden, posted a statement on the company blog last week also calling for Planned Parenthood to be “held accountable.”
     DaVinci Biosciences began in 2008 as a biotechnology research laboratory. In 2009, its founders launched DV Biologics as “a revenue-driven unit” to sell “products derived from the cells and tissues they were already collecting,” according to the lawsuit.
     They realized that using small samples, such as fetal tissue donated by Planned Parenthood, they could grow many more cells and sell them to other researchers for almost any price, according to the complaint.
     Using one fetus donation, plus “just a few hours of time, and very little cost … DV scientists created hundreds of vials of fetal stem cells, which they packaged separately for sale on a per vial basis,” the complaint states.
     As the company grew, it added marketing and sales staff and sold products across the globe, to Australia and China, Germany and Spain.
     From 2012 through 2015, DV Biologics made many hundreds of sales, bringing in more than $1.5 million in revenue, according to the complaint, and turning a profit in every year but the first. At one point, DV had a combined inventory of “pre-natal” and “post-natal” cell products worth $4.4 million, the complaint states, citing company documents.
     Prices were set high to allow profits while leaving room for negotiations and discounting. The lawsuit lists costs and prices for several of the company’s top-selling products, such as one derived from fetal heart cells. Vials cost less than $26 to produce and sold for $350 to $700, depending on discount.
     The California Health and Safety Code section that prohibits selling fetal tissue for more than cost “is a very specific statute right on point” in this case, Ernby said.
     That constitutes unfair competition, the district attorney says. He seeks a court order preventing further violations and fines of up to $2,500 apiece for 503 illegal sales made since 2012.
     The two companies also apparently have run afoul of California’s income tax agency, the Franchise Tax Board. Rackauckas says the board forfeited DaVinci’s “powers, rights and privileges” in 2014 and DV’s last year. He seeks civil penalties of $2,500 for every day the companies operated in California since the forfeitures.
     Andres Isaias is president of both companies. He is the brother of Estefano Isaias Jr. All three are founders and managers of the companies, according to the complaint.

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