The Orange County District Attorney’s Office Wednesday filed a lawsuit alleging that two sister companies and its owners sold fetal tissue and stem cells for a profit margin that exceeded state law.
Companies that sell the genetic material can charge researchers for the cost of expenses such as preparing the tissue for a vial. But they are prohibited from making a profit, District Attorney Tony Rackauckas said in announcing the suit against DV Biologics, DaVinci Biosciences and its owners, Andres Isaias, Estefano Isaias Sr. and Estefano Isaias Jr.
“This case is not about whether it should be lawful to sell fetal parts or whether fetal tissue research is ethical or legal,” Rackauckas told reporters. “We are simply charging these defendants with illegally selling hundreds of fetal tissue products for profit.”
The sale of fetal tissue for “valuable consideration” is against state and federal law. Valuable consideration is defined legally as costs above and beyond a checklist of allowed expenses such as for removal, processing, disposal, preservation, quality control, storage, transplantation or implantation of a part, according to prosecutors.
DaVinci Biosciences was incorporated in November 2007, and DV Biologics was formed in March 2009, according to prosecutors, who say the companies mainly did business in Costa Mesa and Yorba Linda.
The law does not allow for criminal penalties, so the District Attorney’s Office filed a civil action alleging unfair and unlawful fraudulent business practices and seeking penalties, costs and restitution for the scientists and researchers that bought the fetal tissue at allegedly marked-up prices, said Deputy District Attorney Kelly Ernby.
The lawsuit alleges the defendants hired a marketing consultant and, between 2009 and 2011, nearly tripled sales revenues by illegally selling tissues and cells from fetuses throughout the world.
An email from the defendants in October 2009 reads, “It costs us roughly $25 per unit to manufacture and we are selling for $170,” according to the lawsuit.
“From 2009 to 2015, the defendants obtained aborted fetus donations from Planned Parenthood and turned those donations into a profit-driven business,” Rackauckas alleged. “The companies advertised and sold these, what they refer to as ‘prenatal products,’ from 2009-2015 to companies all around the world, earning hundreds of thousands of dollars in revenue.”
Rackauckas alleged the defendants “set their prices as high as possible in an effort to maximize their profits. Sales and marketing staff were hired, paid commissions, and pressured to push sales in order to meet increasing revenue objectives and expenses.”
The county’s top prosecutor emphasized that Planned Parenthood did nothing wrong in donating the tissue. It is routine for the organization to donate the tissue to scientists for research, he acknowledged.
“The violation is they were sold for profit,” he said. “We’re not indicating that Planned Parenthood did anything unlawful.”
Ernby said that even though Planned Parenthood could have charged fees for expenses, the organization simply donated the tissue without cost.
“We did not have any evidence they were charging anything,” Ernby said.
—City News Service