This is Chapter 12 of a 15 chapter series. The entire series is listed here

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“Black Wednesday at the FDA.”
That is how Dr. Mark Thornton, a former medical officer in the FDA’s Office of Oncology Products,
described the FDA’s decision not to approve Dendreon’s Provenge. In an op-ed for the Wall Street
Journal, Dr. Thornton described vaccines such as Provenge as the “Holy Grail of cancer treatment.”
Without directly referring to anyone by name, Dr. Thorton described Dr. Scher’s lobbying effort as
“arrogant” and “unprecedented.”
Dr. Thornton added that when the FDA succumbed to that lobbying, “the dawn of a new era in cancer
immunotherapy was driven back into the night. It will be years before we know the full impact of these
decisions and how many cancer patients…have had their lives cut short as a result.”
This scandal infuriated many other physicians and patient advocates (with the exception of those affiliated
with Milken’s Prostate Cancer Foundation). Some Dendreon supporters took to the streets.
On June 2, 2007, there was a protest in front of the American Society of Clinical Oncology. Two days
later, several prostate cancer advocacy groups rallied in Washington. On June 6, there was yet another
protest, this one attended by still more physicians who demanded to know why the FDA had failed to
approve Dendreon’s treatment.
“I’d like to explain in the most basic of terms,” said Dr. Mark Moyad of the University of Michigan medical
school, at the June 6 rally. “We think a mistake has been made. We are here in a friendly way to start the
process of correcting that mistake.”

That word — “friendly” – seems to me to perfectly describe Dendreon’s supporters. I might add
“intelligent,” and “fair,” and “engaged.” But the mainstream media played its customary role by portraying
such advocates as vexatious wackos (notwithstanding the fact that many of Dendreon’s supporters were
respected physicians).
“Oncologists do not usually need bodyguards…” began a story in the Washington Post, which was all
about the Dendreon “controversy.” The gist of this story was that people advocating for prostate cancer
patients might somehow be dangerous – that it was strange how vocal they were, it was strange that they
used the internet to get the word out – and Dr. Scher (the physician who helped derail Dendreon) feared
for his safety. He had even received some “threats.”
Nowhere in the story was it suggested that a great many prominent doctors were saying that the FDA had
made a “mistake” in failing to approve Dendreon’s application. Nowhere was it mentioned that Dr. Scher
played a significant role in engineering this “mistake.” And nowhere was it mentioned that Dr. Scher was
egregiously conflicted due to his financial ties to Michael Milken’s investment fund and Dendreon’s
competitors, Novacea and Cougar Biotechnology.
Essentially identical stories appeared in the Philadelphia Inquirer, the New York Times, the Boston Globe,
the Seattle Times, and on CNBC. Every one of these media outfits portrayed Dendreon’s supporters as
potentially dangerous lunatics. Every one of them stated unequivocally that Dr. Scher had been
“threatened.” Yet, not one of them specifically described the threats, or identified any source of the
threats, and as far as I can ascertain, there were no “threats.”
Clearly, there was a new party line – Dr. Scher was the victim. Given the near verbatim repetition of this
party line in so many newspapers, and given my experience working in the mainstream media, I can say
with near certainty that this was the work of an orchestrated public relations campaign – a campaign to
distract attention from what was really happening to Dendreon.
Meanwhile, Dendreon remained one of the most manipulated stocks on Nasdaq. On the day that the
Washington Post story appeared, SEC data showed that criminal naked short sellers had sold, and failed
to deliver, more than 13 million Dendreon shares. Following the mainstream media’s standard operating
procedures, no mention was made of this phantom stock in any of the stories on the Dendreon
“controversy.”

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By June of 2007, Dendreon’s stock price was averaging around $7 – down from its early April high of $25.
After such a drop there was no way the company could raise more money on the stock market, and so it
had to significantly scale back its work on Neuvenge, a promising treatment that fought breast cancer in
the same way that Provenge fought prostate cancer. In order to get enough cash to continue work on
Provenge, Dendreon issued over $100 million worth of convertible bonds.
Sometimes, hedge funds that buy a company’s convertible bonds are well-intentioned – they want the
company to succeed so that the company can repay the loan.
But, often, hedge funds that buy convertible bonds do not have the company’s best interests at heart.
Indeed, Deep Capture has obtained an internal client presentation given by a well-known investment
bank stating that the single largest segment of investors in convertible bonds are hedge funds that
actually intend to increase their bets against the companies that they are financing.
A convertible bond is debt that can be “converted” into stock. A hedge fund lends a company, say, $100
million. As repayment, the hedge fund can either receive the $100 million plus interest at maturity, or
instead it can receive, say, 10 million shares in the company.

If the share price is $8 at the time of the loan, those 10 million shares would be worth $80 million. But if
the share price rises to $20, the hedge fund can convert his $100 million loan into $200 million worth of
stock. If the hedge fund manager is a value investor who wishes the company well, he will make his loan
and wait for the stock to rise.
But there are various ways that convertible bonds can be put to malevolent use. Suppose a group of
hedge funds have launched a full scale short selling attack against a company, but the hedge funds want
to short sell even more stock. To do that legally, the hedge funds must first locate more stock to borrow,
and then sell it. But sometimes there is simply no more stock available for short sellers to borrow.
Now, suppose the share price has already been significantly hammered, so the company can no longer
raise money through the stock market. The hedge funds know this. And the hedge funds are important
clients of an investment bank. So the hedge funds and the investment bank hatch a plan.
It works like this: the investment bank tells the victim company that it can resolve the company’s cash
problems by brokering a convertible bond offering. If the company agrees, the investment bank says,
“great, but there’s just one hitch – you, the company, have to lend us, the investment bank, the shares
that the company would normally keep on hand in case the bond holders convert.”
To assuage any fears, the investment bank might promise the company that it will not re-lend those
shares to short sellers, but will merely sell them to long buyers – people who want to invest in the
company. The company says, “fine,” and issues, say, $100 million worth of debt convertible to 10 million
shares. The company also agrees to that “hitch” — so now the investment bank has wangled a “stock
loan” agreement that gives it exclusive rights to borrow those 10 million shares until such time as the
bond holders convert.
Meanwhile, the investment bank returns to that group of hedge funds, who agree to buy the convertible
bonds as a means to extricating those 10 million shares from the company. Once the investment bank is
in possession of those shares, it cannot (at least according to its agreement with the company) lend them
to the hedge funds for purposes of short selling. But it can do one better. It can broker swap contracts that
oblige counterparties to pay the hedge funds a certain amount of money in the event that the company’s
stock price decreases in value.
Then, the investment bank dumps those 10 million shares into the market all at once, causing the stock
price to further collapse. Meanwhile, the hedge funds and the investment bank might be engaging in
naked short selling – selling stock that has never been borrowed by anybody (i.e. stock that does not
exist).
If anyone asks about this illegal naked short selling, the hedge funds say they thought they had “a locate”
on stock that they could borrow and deliver. If anyone asks the hedge funds to be more specific, the
hedge funds say that they had “located” those 10 million shares that the investment bank had borrowed
from the victim company. If the SEC notes that the investment bank had an agreement not to lend those
shares to short sellers, the hedge funds say they didn’t know about that.
Of course, the SEC can generally be counted on not to ask hedge funds such impertinent questions, , but
the convertible bonds provide immunity, just in case.
As the stock price hits rock bottom, the company depletes the cash it raised from the bond offering. And
the only way for the company to receive new funding is to issue more convertible bonds to the hedge
funds, or do one of those dreaded “death spiral” PIPE deals.
If this were a game of chess, it would now be “check” for the hedge funds. The company knows that its
stock price and its financing depend entirely on the hedge funds, which are put in the position of being

able to drive (and trade ahead of) the company’s business decisions. This scheme might even allow a set
of hedge funds to take control of, say, a $700 million company, for a $100 million loan.
With the exception of the naked short selling, most of this scheme’s elements can be found in the
standard PowerPoint presentations that some banks deliver to their hedge fund clients behind closed
doors. The investment banks market the scheme as a way to profit from volatility in the stock. When the
stock crashes, the hedge funds make money from the swaps and their short selling. If the stock
subsequently increases in value, the hedge funds can convert their bonds and use some of the proceeds
to pay the counterparties to the swaps.
But sometimes the hedge funds intend to fully destroy the company. They make plenty on their short
positions and swaps, and their bonds pull in some money during the bankruptcy proceedings.
Sometimes, during bankruptcy, the hedge fund lenders get their hands on company assets (such as
blockbuster medical treatments) that are actually worth considerably more than what they spent on their
bonds.
At other times, the ultimate goal is not to destroy the company outright, but to crash the stock, and then
accumulate shares, giving the hedge funds still more influence over company decisions, and perhaps
paving the way for a hostile takeover.
I do not know for certain the motivations of the hedge funds that bought Dendreon’s convertible bonds. I
do not know if they engaged in naked short selling. After all, the identities of the naked short sellers and
the real amount of failed trades they are generating are, as far as the SEC is concerned, still a big secret.
Remember that the SEC says that releasing information about (illegal) naked short sales would reveal the
(criminal) hedge funds’ “proprietary trading strategies.” And the SEC cannot have that.
I do know, however, that nearly every one of Dendreon’s convertible bond holders are connected in
important ways to Michael Milken or the seven affiliated hedge fund managers who held large numbers of
put options in Dendreon prior to the strange occurrences of March 2007. This raises the suspicion that
the convertible bond holders were not typical investors (that is, investors who put in capital hoping that
the company would prosper).
Instead, the fact that the buyers of the converts were part of the same network that was placing large bets
against Dendreon (and taking steps, with help from Milken’s “philanthropy”, to derail Dendreon’s
treatment for prostate cancer) raises the distinct possibility that these bond investments were made as
part of a strategy to manipulate Dendreon’s stock price down, during which time members of this network
would (with help from Milken’s Prostate Cancer Foundation) pump up the stock prices of Dendreon’s
“competitors” – the companies controlled by Milken and his friends.
If this hypothesis is accurate, the natural play would be that, once the competing, Milken-connected
companies had been thoroughly pumped, and then dumped (on the news that their treatments were
worthless), it would be time to exert greater control over the one company–Dendreon–that actually had a
treatment that could extend lives.
As we will see, members of the Milken network – some of the hedge funds that bought the convertible
bonds, and some of the seven hedge funds that were betting big against Dendreon in 2007 – have, as a
group, recently become the company’s largest shareholders. Their precise intentions remain a mystery,
but this fact does fit the hypothesis described above.
Incidentally, in the two years that these shenanigans were going on, 60,000 American men died of
prostate cancer, a fact of no apparent concern to this network of miscreants.
While we do not have photo-perfect pictures of what was going on behind the scenes of Dendreon’s
bizarre trading (the SEC does not let that get public), we do know that this paradoxical play of

participating in a convertible bond in order to further a manipulative scheme against a company, is in fact
a standard play on Wall Street. Given this, we would be remiss not to name the colorful hedge funds that
bought Dendreon’s convertible bonds.

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As we have covered, Milken crony Carl Icahn founded the options department at Gruntal & Company,
which owed its existence to Michael Milken and was one of the more disreputable trading houses on the
Street. Ultimately, Gruntal was found to have employed several traders with ties to the Mafia, and soon
after, it was charged with a massive fraud and forced to pay what was then one of the largest fines in Wall
Street history.
Many of Gruntal’s former employees ended up working for White Rock Capital, which was run by the
alleged Russian mobster, Felix Sater, the fellow allegedly behind the threat to have Deep Capture
reporter Patrick Byrne murdered if he did not end his crusade against naked short selling and the “deep
capture” of important institutions.
As we also know, when Icahn left Gruntal, he handed over direction of the options department to Milken
crony Ron Aizer. The first trader Aizer hired was Steve Cohen, who was reportedly investigated by the
SEC for trading on inside information provided by Milken’s shop, and who later became “the most
powerful trader on Wall Street” — the fourth of those seven hedge fund managers prescient enough to bet
big against Dendreon before Milken’s other cronies derailed the company in 2007.
The second trader hired by Aizer was a man named Andrew Redleaf, who later went on to co-found two
hedge funds — Deephaven Capital Management and Whitebox Advisors. According to a media account
posted on Whitebox’s website, Redleaf’s family kept its investment accounts at Drexel Burnham Lambert,
where Michael Milken was then running his stock manipulation and junk bond empire. Redleaf was
recommended to Aizer by Andy Stillman, who was then managing Drexel’s propriety options trading.
In later years, Redleaf became well-known for investing in Sun Country Airlines in partnership with Tom
Petters, who was recently arrested at gunpoint amid allegations that he had orchestrated a massive Ponzi
fraud in cahoots with a fellow named Michael Catain. Catain’s father, Jack Catain, was a Genovese Mafia
enforcer and loan shark who had been involved, along with Michael Milken, in ZZZZ Best, a fraudulent
carpet cleaning company run by Barry Minkow.
Minkow was eventually imprisoned for the ZZZZ Best fraud, and when he was released, he began a
career as a self-described “fraud investigator.” He works in partnership with Sam Antar, the convicted
felon who masterminded a massive fraud in the 1980s at an appliance retailer called Crazy Eddie. Antar,
who is close to Milken and his network (members of which once tried to help Antar seize control of Crazy
Eddie) now spends most of his time on the internet, smearing and threatening people who work to expose
the crime of naked short selling.
For example, Antar once posted on the internet the names and address of Deep Capture reporter Judd
Bagley’s young daughters. Antar writes with almost daily regularity that Deep Capture reporter Patrick
Byrne is running a fraudulent company (Overstock.com), though he has produced nothing to support his
claims, and every reputable person who has examined his arguments has concluded that they are
absurd.
Meanwhile, Antar has littered the internet with all manner of falsehoods about me—stating, for example,
that I’m a drug addict and was fired from my last job. Ever the charmer, Antar has also let it be known that
he is friendly with violent people, including those who once ambushed me, punched me in the face, and
suggested that I should stop working with Patrick Byrne.

It is interesting to note that, these facts notwithstanding, in 2008 Fortune magazine saw fit to grace its
pages with a highly flattering 2,738 word profile of Antar (“It Takes One to Know One”). Fortune did this
even as it humbly acknowledged:
“As would-be fraudbuster, Sam E. [Antar] has yet to notch his first kill. (Although in fairness he
doesn’t hold himself out to be a full-time 10-Q detective. ‘I don’t have 40 people working for me
like the SEC,’ he says.) He hasn’t brought any companies down or caused any regulators to open
any investigations.”
That is, concerning a notorious swindler and convicted felon who threatens little girls, smears other
journalists, is denounced by public officials, and who has not actually been the source of any credible
investigation that Fortune can cite, Fortune published a perfectly complimentary puff piece. How odd of
Fortune Magazine.
As for the above-mentioned Andrew Redleaf, I noted that he is a founding partner in Deephaven Capital
Management. In 2006, Deephaven was sanctioned by the SEC for short selling 19 public companies
(almost all biotech firms) on inside information that his hedge fund colleagues were giving the companies
“death spiral” PIPEs finance.
As you will recall, similar schemes have involved Milken crony Carl Icahn (the founder of Gruntal’s options
department); Jeffrey Thorp (son of the Mafia-linked card counter who was the most important figure in
Milken’s stock manipulation network during the 1980s); Milken crony Lindsay Rosenwald (who used to
run the Mafia-linked D.H. Blair, the president of which was Milken’s former national sales manager); and
Gryphon Partners (which was tied to the Mafia-linked, nine-fingered Anthony Elgindy, a naked short seller
who is now serving an 11 year sentence for stock manipulation schemes and bribing two FBI agents).
My apologies for the repetition, but there are some who are new to this, and it is difficult for even the well
initiated to keep track of so many miscreants, so permit me to remind the reader that Gryphon’s founder
and Lindsay Rosenwald were among the seven colorful hedge fund managers who bet big against
Dendreon in March 2007, just before the company was derailed by strange occurrences engineered by
cronies of Michael Milken. Also among those seven hedge fund managers was Steve Cohen, who was,
earlier in his career, investigated for trading on inside information provided by Milken’s shop, and was the
first trader hired at Gruntal by Milken-crony Ron Aizer.
Andrew Redleaf, the second trader hired by Aizer at Gruntal, is, remember, not just a co-founder of
Deephaven Capital (sanctioned for short selling on inside information that companies were to receive
dubious financing), but also the proprietor of Whitebox Advisors.
And Whitebox Advisors is among those hedge funds that “financed” (by purchasing its convertible bonds)
a company called Dendreon, which suffered a two-year, sustained naked short selling attack while trying
to bring to market a treatment for dying cancer patients.

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A hedge fund called DKR Management also bought convertible bonds issued by Dendreon. DKR was
founded by Barry L. Klein and Gary S. Davis. Previously, Klein worked for Michael Milken as the
President of Drexel Burnham Lambert Trading. Davis also worked for Milken at Drexel.
In later years, Klein and Davis founded the predecessor to AIG Trading Group, a unit of American
International Group. AIG Trading Group was later run by Joseph Cassano, who had also been a Milken
employee at Drexel.

While at AIG, Cassano sold tens of billions of dollars worth of credit default swaps (contracts that pay out
if a company defaults on its debt) to hedge funds and investment banks.
Rolling Stone magazine’s Matthew Taibbi, who is one of the mainstream media’s finest journalists, was
among the first to establish that AIG Trading Group and Milken crony Cassano destroyed AIG, which
ultimately had to be nationalized by the U.S. government – contributing to the collapse of the financial
system last fall. Since then, several reports have also implicated Cassano’s Milken-tied predecessors,
Klein and Davis.
Meanwhile, various government investigations are seeking to know whether short sellers acquired and
manipulated the prices of AIG’s credit default swaps as a way to weaken their target companies –
including Lehman Brothers and Bear Stearns. The question that remains unanswered is whether the
short sellers that bought credit default swaps from Milken cronies Cassano, Klein and Davis were also
members of the Milken network (which would mean that some members of the Milken network wrecked
the world while the other members of the network bet that they would).
Another highly significant factor in the collapse of the financial system – as can be discerned from
statements by countless officials and by reports in virtually every newspaper in the land, though the
newspapers seem content not to investigate the matter or state this explicitly – was the naked short
selling of AIG, Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, and hundreds of other
companies.
In the years leading up to the financial cataclysm (and during the time when Dendreon was under attack
by naked short sellers), certain hedge funds orchestrated an effective public relations campaign aimed at
covering up the crime of naked short selling. As part of this public relations campaign, the hedge funds
would regularly trot out a certain Yale professor, who would do his utmost to defend the criminals.
This professor’s favorite stratagem was to divert discussion away from illegal naked short selling, and
repeat, over and over, that legal short selling was good for the markets–a fact that was never in dispute.
The professor’s capacity for obfuscation was unmatched, but he nonetheless became a favorite source
for some members of the media. He appeared regularly on CNBC and was quoted in dozens upon
dozens of articles – all of which communicated the non sequitor that illegal naked short selling is not bad
for the markets because legal short selling is good for the markets. Of course, this is like arguing that
sexual harassment is not bad because sex is good.
The name of this professor is Owen Lamont. To this day, the professor is still sought out by the press,
which dutifully regurgitates his baloney. But the professor does not work for Yale anymore.
Now he works for the above-mentioned DKR Management, one of the Milken-connected hedge funds that
bought Dendreon’s convertible bonds while Dendreon was brutally attacked by criminal naked short
sellers.

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There are interesting stories to be told about most every hedge fund that bought Dendreon’s convertible
bonds. One of them, Eagle Rock Capital, run by an Iranian fellow named Nadir Tavakoli, was once a
controlling investor in the International Fight League, a promoter of ultimate fighting matches. The other
controlling investor in the International Fight League (which went bankrupt amidst allegations of ultimate
fighting’s connections to the Japanese Yakuza and stories that fighters were committing suicides and
murders at alarming rates) was a “Russian whiz kid” (according to the media) named Dmitry Balyasny.
The first things to know about Dmitry Balyasny are that he is closely affiliated with Steve Cohen, and he is
the seventh of those seven hedge fund managers who were betting big against Dendreon by holding put
options on the company’s stock, after the FDA advisory panel had recommended that Provenge be

approved, and before Milken’s cronies successfully lobbied the FDA to ignore that recommendation. So I
will return to Balyasny soon.
But first, let’s continue with our list of hedge funds that held Dendreon’s convertible bonds.
One was GLG Partners. As we know from emails acquired in a lawsuit, GLG Partners received updates
on Steve Cohen’s attack on Canadian insurer Fairfax Financial, so it would be unsurprising if GLG was
also clued in to Cohen’s attack on Dendreon.
Recall also that (shortly before GLG bought Dendreon’s convertible bonds) French authorities fined GLG
for being part of an insider trading ring that included UBS O’Conner (a unit of UBS investment bank,
which, until March, 2007, was led by former Milken employee Ken Moelis) and Meditor Capital, a hedge
fund (also, of course, with ties to Steve Cohen) that had just made a large investment in Novacea, the
prostate cancer company that was then being promoted (by Milken’s fund and Milken’s “philanthropy”) as
a competitor to Dendreon.
In short, GLG was “in the mix.”
Another outfit that bought lots of Dendreon’s convertible bonds (shortly after it was caught running an
insider trading ring with Meditor and GLG Partners) was…UBS O’Conner. Meanwhile, of course, the
research department of UBS was continuing to trash Dendreon in its reports.
Then there was Quattro Partners, which bought Dendreon bonds convertible into a more than a million
Dendreon shares. The founding partner of Quattro is named Michael Baldock. He had a long career in
biotech investing after spending time as an investment banker at Michael Milken’s Drexel Burnham
Lambert.

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Another of the big investors in Dendreon’s convertible bonds was Forest Investment Management, a
hedge fund controlled by a man named Michael Boyd. Prior to founding Forest, Boyd was a partner in an
outfit called Forum Capital Markets. Boyd’s co-founder in Forum was C. Keith Hartley, yet another of
Milken’s disciples from Drexel, Burnham Lambert.
Boyd was also the co-founder of a brokerage called McMahan Securities. The vice president of that
operation was Santo Maggio, who later became chief executive officer of Refco Securities, the brokerage
that was allegedly processing the phantom stock sales of Rhino Advisors, which illegally naked shorted
companies after providing them with finance brokered by Milken crony Carl Icahn’s Ladenburg Thalmann.
When Refco was found to be fraudulently hiding $400 million worth of liabilities (liabilities that many
believe were related to naked short selling), Maggio pled guilty to two counts of securities fraud, one
count of conspiracy, and one count of wire fraud.
Another of Michael Boyd’s many accomplishments is his son, Roddy. Refco employed Roddy as a trader,
perhaps as a favor to his father’s former co-worker, the criminal Santo Maggio.
But Roddy soon abandoned the securities business to become a business journalist – first at the New
York Post and now at Fortune magazine. Roddy Boyd is a key figure among the small coterie of
journalists who turn up repeatedly in Deep Capture’s analyses.
Like all members of the coterie, Roddy has spent several years trying to cover up the naked short selling
scandal, ridiculing anyone who mentions the crime or the remarkable coincidence of companies
appearing on the Reg Sho list (the SEC’s list of companies suffering from naked short selling) when those

companies are the targets of a select group of hedge funds whose names will be familiar to the reader
who has made it this far.
In addition to covering up naked short selling crimes, Roddy writes hatchet jobs on the public companies
targeted by this same select group of short selling hedge funds. The sources of the information in
Roddy’s stories are, of course, the short sellers themselves, and most of the short sellers are, as has
been explained over and over, tied to Michael Milken or his close associates.
For example, Roddy spent a great deal of time working with a soon-to-be arrested criminal named Spyro
Contogouris, who had been hired by a subsidiary of Steve Cohen’s SAC Capital, to sabotage, harass,
and trash Fairfax Financial.
As mentioned, we have obtained a great number of emails between Cohen, Jim Chanos of Kynikos
Associates, and others in the network that was attacking Fairfax. In one email, hedge fund manager
Chanos writes to journalist Roddy Boyd, “your courtesy was a boon to me. Thank you!”
With the exception of Roddy’s particular clique of journalists, it is not typical for reporters to receive thank
you notes for the “courtesies” that they have extended to help hedge funds make money.
Another holder of Dendreon’s convertible bonds was CNH Partners, run by Todd Pulvino, who used to
work for Grosvenor Capital. Grosvenor is managed by Scott Lederman, who was the grad school
roommate of Steve Cohen and later the chief operating officer of Cohen’s SAC Capital. While Pulvino was
presenting himself as a legitimate investor in Dendreon’s debt, was he in touch with Steve Cohen, who
had bet big against Dendreon right before Provenge was derailed by the unprecedented lobbying effort of
Milken’s other cronies?
We can’t say. Just as we can’t say who was illegally naked short selling Dendreon’s stock. That,
remember, is a big secret – “proprietary trading strategies.”

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On October 12, 2007, Dendreon, still desperate for capital to continue clinical trials that might eventually
help its cancer treatment receive FDA approval, signed the paperwork on its first PIPE deal. A dreaded
PIPE – the sort of deal that dilutes equity and tends to attract naked short selling that sends a company’s
stock into a “death spiral.”
The provider of this PIPE finance was the Azimuth Opportunity Fund, managed by an outfit called Acqua
Wellington Asset Management.
Acqua Wellington is controlled by a “prominent” investor named Isser Elishis. In an otherwise flattering
article, Herb Greenberg – a journalist whose entire career (at TheStreet.com, MarketWatch.com and
CNBC) was devoted to granting “courtesies” to hedge funds in the Milken network – described Elishis as
the “banker of last resort.”
Herb, who disappeared from the world of journalism after he was exposed by Deep Capture, now owns a
company that ostensibly sells financial research to hedge funds in the Milken network (or, arguably,
merely receives payment from them for the extensive string of “courtesies” that Herb extended while
working as a journalist).
Among Azimuth’s first forays into the markets was an investment in a company called SulphCo, which
claimed to have a method for turning sulphrous crude into clean-burning oil. Elishis collaborated on this
deal with SulphCo’s principal investor, Zev Wolfson, who, you will recall, was the investor who financed

Milken cronies Carl Icahn, Saul Steinberg, John Mulheren, and various brokerages tied to the Mafia,
naked short selling, or both.
SEC data shows that on the day that Dendreon signed its PIPE deal with Azimuth, naked short sellers
flooded the market with more than 2 million phantom shares. During the following week, more than a
million Dendreon shares “failed to deliver” every day, despite (or perhaps because of) the news that
Dendreon had enrolled 500 patients in a trial to confirm its earlier positive results, putting Provenge back
on the track to FDA approval.

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In the late 1980s, a fellow named Jeffrey Yass and his two friends, Eric Brooks and Kenneth Brodie, set
up a partnership to place bets at horse racing tracks across the country. On one single day at Sportsman
Park in Chicago they pulled in winnings of more than $600,000. This seemed somewhat excessive, so
Sportsman Park banned the three friends from its premises. The punters filed a lawsuit claiming that
Sportsman Park had violated their rights to visit a public facility.
It’s not clear from public documents who won this case, but the court noted, “The proprietor wants to be
able to keep someone off his private property even if they only look like a mobster. As long as the
proprietor is not excluding the mobster look-a-like because of his national origin (or because of race,
color, creed, or sex) then the common law, and the law of Illinois, allows him to do just that.” There is no
evidence that Yass, Brooks or their friend were engaged in illegal activity. I merely note as point of
biographical interest that these fellows began their careers betting on the ponies.
At any rate, Jeffrey Yass and Eric Brooks eventually abandoned the business of betting on horse races
and instead pursued careers on Wall Street. Now they are “prominent” investors, the proprietors of a midsized investment and trading house called Susquehanna International.
In the spring of 2008, Susquehanna was introduced to Dendreon by a placement agent, Lazard Capital
Markets. It is not clear why Dendreon would want to do business with Lazard. After all, Lazard was home
to the singing Joel Sendek, who had been busily trashing Dendreon in his research reports.
Sendek had also been trumpeting Dendreon’s competitor, Cougar Biotechnology, as the next big thing in
cancer treatment. In turn, Cougar Biotechnology (the company then controlled by Milken crony Lindsay
Rosenwald, formerly of the Mafia-affiliated pump-and-dump shop D.H. Blair) had been quoting Sendek in
its SEC filings.
Sendek’s endorsement, Cougar seemed to be suggesting, was evidence that the company was making
progress toward bringing its prostate cancer treatment to market. This was odd, because most
pharmaceutical companies use data collected from clinical trials to demonstrate this, not quotes from
singing Wall Street analysts.
Meanwhile, it was widely understood that Lazard’s stock loan department was one of the go-to shops for
hedge funds looking to short sell Dendreon’s shares. We cannot say that Lazard was loaning phantom
stock to the short sellers (if it were, that would be a big secret), but Lazard’s coziness with short sellers
ought to have given Dendreon pause.
There was also the fact that Lazard Capital had only recently been spun off from Lazard Ltd. Given that
the two operations remained closely affiliated (sharing business and so forth), it might have been of some
concern that the chairman of Lazard Ltd. was Bruce Wasserstein, a close associate of Michael Milken.
In “Den of Thieves,” James Stewart, the Pulitzer Prize winning author, quotes a criminal named Denis
Levine as saying that Wasserstein was “owned” by Milken’s famous co-conspirator, Ivan Boesky. Given
that Denis Levine was indicted for participating in Boesky’s insider trading schemes, one would think he
knew of what he spoke, but there is no hard evidence to support his allegation.

In any case, Dendreon followed Lazard’s advice, and did a “registered direct offering” with Capital
Ventures International, an affiliate of Susquehanna, the firm founded by Yass and Brooks. A “registered
direct offering” is similar to a PIPE, the difference being that the securities sold to the investor are
registered with the SEC and immediately tradeable.
For most of March 2008, naked short sellers were failing to deliver less than 500,000 shares per day. As
negotiations for the “registered direct offering” were underway, the amount of phantom stock gradually
increased. And on the day the deal was signed, April 3, at least 1.6 million phantom shares had been sold
into the market and remained undelivered.
For the next two months, more than one million Dendreon shares remained “failed to deliver” every day.
This despite (or perhaps because of) the fantastic news, on March 12, 2008, that the FDA had agreed to
an amended “Special Protocol Assessment,” which would enable the company to release, one year
ahead of schedule, the results of an “IMPACT” trial that seemed likely to confirm the company’s Phase 3
trials showing substantial evidence that Provenge was safe and effective.
As Dendreon’s enemies must have known, it would soon be impossible to stymie the company with
arguments about data, but stock manipulators were not yet ready to end their campaign against the
company.