Angry Shareholders Sue Miami Billionaire Phillip Frost Over Pump-and-Dump Allegations

Angry Shareholders Sue Miami Billionaire Phillip Frost Over Pump-and-Dump Allegations
Hal Dunn via YouTube / Knight Foundation via Flickr
In September, the U.S. Securities and Exchange Commission slapped Miami biotech billionaire Phillip Frost with a lawsuit accusing him of stock fraud. According to the SEC, Frost and his co-conspirators artificially inflated the price of stocks and then exited with millions, leaving other investors with virtually worthless shares. After the charges were announced in the national media, stock prices for Frost's company, Opko Health, plummeted.

Now Frost is being sued by six Opko shareholders who lost money because of the alleged pump-and-dump scheme. The lawsuits, which have been filed in Florida, New Jersey, and New York, are brought by plaintiffs Charles Steinberg, Jason Kerznowski, Michael Brennan, Paul Camhi, Andy Yu, and a sports agency called Adsport that's run by CEO Gary Knudson.

Frost, the namesake of Miami's Frost Museum of Science and Frost Art Museum, has not yet responded to the complaints in court. A spokesman for the octogenarian did not return a call from New Times Wednesday, but in an earlier statement, Frost denied the SEC's allegations.

"Nothing is more important to me than my integrity... I intend to fight the charges that have been brought against me and will fight to clear my name," wrote Frost, who has not been criminally charged with any wrongdoing.

In the six new lawsuits against Frost, shareholders accuse him of intentionally making false or misleading statements about the finances and operations of Opko. Attorneys for the shareholders argue that as CEO of Opko, Frost knew or should have known about the alleged activity spelled out in the SEC's claim.

Most of the suits contain similar language and allegations, but one of the cases filed last week in Miami federal court, by New York resident Andy Yu, goes into greater detail about the way Frost financially benefited from Opko. According to Yu's complaint, Frost rented his own office space to Opko for $81,000 per month beginning in January 2014 and then hiked it up to $86,000 per month in 2018. If the claim is true, Frost made about $4.45 million acting as landlord for his own company.

The lawsuit also says Frost billed Opko a total of $659,000 for use of his private plane in the 2016 and 2017 fiscal years.

"As the company’s highest officer and as chairman of the board, he conducted little, if any, oversight of the company’s engagement in the scheme to make false and misleading statements, consciously disregarded his duties to monitor such controls over reporting and engagement in the scheme, and consciously disregarded his duties to protect corporate assets," the complaint alleges.

Yu's attorney, Walter Mathews, did not return a call from New Times Wednesday. As of now, no court hearings have been scheduled. 
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Jessica Lipscomb is news editor of Miami New Times and an enthusiastic Florida Woman. Born and raised in Orlando, she has been a finalist for the Livingston Award for Young Journalists.
Contact: Jessica Lipscomb