Two sister companies in Yorba Linda must shut down and cease doing business in California as part of a $7.8 million settlement with the Orange County District Attorney's office, which had sued them for unlawfully selling stem cells and fetal tissue for profit.
Before prosecutors investigated DV Biologics LLC and DaVinci Biosciences LLC, the companies' shady operations had been uncovered by Irvine-based anti-abortion activists pulling a hidden camera sting on Planned Parenthood. The case would go on to create an issue for Hillary Clinton's failed presidential campaign to deal with last year.
Under the terms of the settlement filed Friday in Orange County Superior Court, DaVinci and DV Biologics must permanently close and cease all business operations in California within 60 and 120 days, respectively, pay a settlement amount of $7,785,000 through the donation of assets and biological materials to a non-profit academic and scientific teaching institution affiliated with a major U.S. medical school, and pay $195,000 in civil penalties, according to the OCDA.
"This settlement seized all profits from DV Biologics and DaVinci Biosciences, which they acquired by viewing body parts as a commodity and illegally selling fetal tissues for valuable consideration," states District Attorney Tony Rackauckas in a release from his office. "These companies will never be able to operate again in Orange County or the State of California."
While fetal tissue and stem cells derived from the tissue have long been used in medical research in the U.S., it is illegal under state and federal law for a company to profit from the sale of the tissue itself, although processing and shipping fees can be charged.
The Center for Medical Progress in 2015 unveiled undercover videos of Planned Parenthood officials around the country meeting with David Daleiden, founder of CMP, and others from the activist group posing as fetal tissue traders. One such video featured a conversation where the name of an official with Planned Parenthood of Orange & San Bernardino Counties came up, as did DV Biologics and DaVinci Biosciences. Daleiden, who has faced prosecution and litigation himself for falsely identifying himself and allegedly doctoring his video "journalism," submitted a complaint with the Orange County District Attorney's office.
While announcing his office's case against the Yorba Linda companies, Rackauckas made it clear there was no evidence at that time of wrongdoing by Planned Parenthood. However, the House Select Investigative Panel on Infant Lives launched an investigation of its own last year.
"Documents produced to the panel show that, from 2008 through 2015, DaVinci Biosciences obtained its fetal tissue from Planned Parenthood of Orange & San Bernardino Counties (PPOSBC)," Rep. Marsha Blackburn (R-TN), the panel's chairwoman, stated at the time. "DaVinci has told the panel that PPOSBC 'donated' the fetal tissue. But DaVinci has also told the panel that its executives contributed thousands of dollars to PPOSBC starting before the Planned Parenthood affiliate began 'donating' fetal tissue to DaVinci. Planned Parenthood has said PPOSBC was its only affiliate that gave fetal tissue directly to a research company."
In Blackburn's mind, that shows the relationship between Planned Parenthood and DaVinci “appears to have created a market for the donation of human fetal tissue.”
Another shoe dropped last week, when Fox News reported the Department of Justice had formally launched a federal investigation into Planned Parenthood’s fetal tissue practices.
“The DaVinci companies’ admission of guilt for selling baby parts from Planned Parenthood is a ringing vindication of CMP’s citizen journalism methods and accuracy,” says Daleiden on his website. “In light of the news that Planned Parenthood is now under federal investigation by the U.S. Department of Justice for the sale of fetal body parts, the next step is for Planned Parenthood of Orange & San Bernardino Counties to be held accountable under the law for their seven-year-long aiding, abetting and profiting in DaVinci’s criminal scheme to sell baby parts for profit.”
That sentiment was echoed by the legal defenders of Daleiden and his CMP partner Sandra Merritt, who is the defendant in a $16 million Planned Parenthood lawsuit and 15-count criminal complaint filed by California Attorney General Xavier Becerra.
“Now that the Department of Justice has picked up the investigation of Planned Parenthood, it is time for the source that trafficked in baby body parts to also face justice," says Mat Staver, founder and chairman of Liberty Counsel, who also claims his client Merritt is being subjected to retaliatory legal moves. "These despicable acts by these companies and their owners underscores why our client Sandra 'Susan' Merritt should be applauded for revealing the seedy underbelly of Planned Parenthood.”
Planned Parenthood officials could not be reached for comment.
DaVinci Biosciences was incorporated in Delaware in November 2007, and DV Biologics was incorporated in March 2009, with their principal place of business in Orange County, including Costa Mesa and, in June 2015, facilities and labs in Yorba Linda. DaVinci Biosciences was jointly owned and operated by the same people who owned and operated DV Biologics. Andres, Estefano and Luis Isaias of Miami were listed in online documents as owners of DaVinci Biosciences. Andres and Luis Isaias were principals of DV Biologics.
The OCDA lawsuit alleged unlawful, unfair and fraudulent business practices. Members of the Isaias family are used to fraud allegations. Andres Isaias is the nephew of Roberto Isaias and William Isaias, who were convicted and sentenced to eight years in prison for driving their Ecuadoran bank into the ground and then using false documents to get a government bailout. Their fraud cost Ecuador $661.5 million and more than $200 million in assets were not recovered, according to government officials. However, rather than serving prison time, the brothers were granted expedited asylum in the U.S. from the Hillary Clinton-led State Department. That was after extended members of the Isaias family made $320,000 in political donations between 2010-14, including $90,000 to President Obama's reelection campaign, the New York Times previously reported.
Andres and Estefano Isaias Jr. are the sons of Estefano Isaias Sr., who the Ecuadoran government claims was also involved but not charged in the bank case. The Isaias family claims it is the government's fault for the collapse of their Filanbanco, which had for many years been the country's leading banking institution before being nationalized in 2001. While the patriarchs have been living in exile in the U.S., their family has successfully diversified into real estate, bioscience and telecommunications. Having owned television networks in Ecuador (that the government also eventually took over), Isaíases now own Miami-based Wreal LLC, which counts among its companies Fyre TV. In 2009, then-CEO Estefano Isaías Jr. envisioned Fyre TV would become "the Netflix of porn."
In 2009, DaVinci Biosciences started selling products derived from the cells and tissues they were collecting, processing, storing and using for research purposes, and DV Biologics began marketing the revenue-generating services, the OCDA says.
The two companies advertised prices: as low as $40 a vial for the "total RNA" [ribonucleic acid] cells from several fetal tissue sources to as high as $1,100 a vial for specific cells derived from fetal brain tissue; from $300 to $375 a vial for fetal lung derived products; $300-$450 a vial for fetal kidney derived products; $500-$700 a vial for fetal heart derived products; and $250-$700 a vial for fetal liver derived products, states the complaint.
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Between 2009 and 2011, the companies nearly tripled sales revenues and by the end of 2011 they unlawfully sold fetal-derived tissues and cells harvested in the U.S. to Japan, China, Singapore, Korea, Germany, Switzerland, Spain, Australia, Netherlands, Canada and the United Kingdom, according to the OCDA, which adds that by 2012, the companies had more than 500 products in their inventory that they valued at more than $4.4 million.
Prosecutors say they uncovered an email exchange between the companies in July 2014, when the pricing of prenatal renal fibroblasts was discussed. Noting they were currently selling the "product" for $350 per vial, a rise to $375 per vial was suggested because "1000% gross does not seem unreasonable based on infrastructure and lack of competition." It was further stated, "If the market can handle a higher price then we will go with [that] since we will be giving discounts to the distributors." After the discussion, the 2015 list price for prenatal renal fibroblasts was set at $450 per vial, it is alleged.
The California Franchise Tax Board forfeited DV Biologics' powers, rights and privileges in November 2014. The same fate would befall DaVinci Biosciences in July 2015, which was a month after it began sharing office space, management and employees with DV Biologics in Yorba Linda, according to the OCDA.
Prosecutors, who opened their investigation of the companies in September 2015, allege that both continued to operate illegally until December 2016.