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For years, John Lezdey, a co-inventor of potentially lucrative drug patents, wondered how the other side in a heated patent dispute knew his every move. Now Lezdey’s new attorney, Douglas Rovens of Los Angeles’ Rovens Lamb, said he may have an answer. Rovens alleges in court filings that while five lawsuits involving the patents were in full swing, investigators-former FBI agents at the behest of opposing counsel at Scottsdale, Ariz.’s Sacks Tierney-repeatedly broke into his client’s office and dove into garbage cans to gain propriety information. Co-inventor Allan Wachter-the party on the other side of these patent disputes-hired the investigators. They found documents related to the litigation and Lezdey’s business plans and trade secrets, according to court filings by Rovens and James E. McDonald, who represents a company in which Lezdey has an interest. David Tierney, a partner at Sacks Tierney who represents Wachter in Arizona litigation, denied his firm had a part in the alleged espionage scheme. A federal lawsuit filed in Florida by McDonald, of the Miami office of Philadelphia’s Duane Morris, alleges that the investigators who burglarized Lezdey’s office were employed by The Spinelli Corp., a Scottsdale, Ariz., private investigations firm headed by a former FBI agent. George Spinelli, the company’s co-founder, admitted in a sworn deposition that his employees-all former FBI agents-dove into garbage containers, but denied any break-ins. Spinelli asserted that the garbage was in cans on a public sidewalk. Over the course of a few years, Spinelli sent much of what was found to Wachter, he testified in depositions. When asked if he had provided the documents to Sacks Tierney, Spinelli said, “May have, but I don’t recall specifically.” Tierney has denied that his law firm ever saw any of these documents. McDonald, a former FBI agent himself and an ex-federal prosecutor, also alleges that Spinelli and Wachter misled the FBI into investigating Lezdey to put him out of business and take him out of the patent race. AlphaMed Pharmaceuticals v. Arriva Pharmaceuticals, No. 03-20078 CIV (S.D. Fla.). Spinelli is also a defendant in the case. Letters to the FBI from from Sacks Tierney and San Francisco’s Morrison & Foerster asserted that Lezdey’s sons had threatened, harassed and assaulted witnesses and others. (Morrison represents Arriva Pharmaceuticals in a San Francisco federal lawsuit against Lezdey and others. Both Lezdey and Wachter have an interest in Arriva.) The Lezdeys were also accused of stealing trade secrets in a report sent to the FBI by Spinelli. The Lezdeys denied these accusations. Extensive FBI and police investigations did not result in prosecution. Deposition testimony, declarations and FBI documents in the Florida case and in an Arizona breach of fiduciary duty case lend credence to McDonald’s allegations in the Florida suit. Wachter v. Lezdey, No. CV99-09334 (Maricopa Co., Ariz., Super Ct.). For example, a document in the FBI files written by Spinelli said that a private investigator “obtained written materials that were located in discarded trash behind the AlphaMed office.” That is on private property, according to several sources. “Trash was picked up from areas that were public, lawful and appropriate,” Spinelli said. But snooping in an opposing party’s trash can have fatal consequences in litigation. A 13-year-old suit against the Walt Disney Co. known as the “Winnie the Pooh case,” was recently dismissed as a sanction against the plaintiff for similar conduct alleged by McDonald and Rovens. Slesinger v. Disney, No. BC 022365 (Los Angeles Co., Calif., Super. Ct.). What this will all mean in the ongoing war between Lezdey and Wachter will be a matter for a judge to decide at an evidentiary hearing set for May 25 in the Maricopa County case. But a declaration by the man who installed the security system in Lezdey’s office said that he was questioned by an investigator about how the system worked and the locations of its various devices. The investigator, Norman Transeth, who was hired by Spinelli, denied in a deposition that he questioned the man about the system in any detail. Transeth said he’d been checking into Lezdey’s bankruptcy petition to see if receipts submitted to the bankruptcy court were phony. Transeth also denied that he had asked the landlord for a key to Lezdey’s office, as the landlord said in an affidavit. Transeth in his deposition said that he reported directly to the Sacks Tierney firm, and was paid by Sacks Tierney, he thinks, although he didn’t bill for everything he did. Transeth is also a defendant in McDonald’s suit. David Tierney denied in an interview that Transeth reported to, or was paid by, his firm. The patent dispute has a long history. John Lezdey, a patent lawyer and chemist, and Allan Wachter, a medical doctor, patented certain uses for Alpha 1-antitrypsin (AAT), a protein they claim is an effective treatment for pulmonary diseases. Bayer Pharmaceuticals, under its own patents, makes the protein out of plasma, which is in limited supply, said Tricia McKernan, a Bayer spokeswoman. Bayer treats about 4,000 people worldwide who have genetic emphysema with its product, called Prolastin. Bayer grossed $166 million from the drug last year. Lezdey and Wachter figured out how to make the protein out of yeast-the supply determined only by the number of vats they could keep going, Lezdey said. In July 1999, Lezdey, his lawyers claim, discovered that Wachter, on behalf of his and Lezdey’s licensing company, had cut a deal with Arriva Pharmaceuticals and Baxter Pharmaceuticals. Lezdey still doesn’t know the terms, his lawyers said. And they asserted that licensing agreements require the signatures of both Lezdey and Wachter. Lezdey never signed. Deb Spak, a spokeswoman for Baxter, confirmed that there has been “a co-development agreement in place with Arriva for several years.” Lezdey discovered another use for AAT-the treatment of eye and ear infections-and applied for patents. In July 1999, he, his sons and others formed AlphaMed Pharmaceuticals to pursue development and licensing agreements. Around that time in 1999, all hell broke lose. Wachter filed four lawsuits against Lezdey, his wife and sons in four states. Arriva filed another. The Lezdeys were accused of violating their fiduciary obligations to Arriva, Wachter and others. John Lezdey filed for bankruptcy in 2002. Over the years, the Lezdeys wondered how Wachter anticipated their legal strategies, said Darrin Lezdey, John’s eldest son. He also said their offices and homes suffered several break-ins, but nothing ever seemed to be missing. He installed a hidden surveillance camera, which recorded intruders, according to court documents. In Arizona, a $17 million judgment was entered against Darrin, his brother Jarett and their mother for breach of their fiduciary duty to Wachter. Dismissing their counterclaims, Judge Edward O. Burke found that the Lezdeys had conspired to commit fraud. The Lezdeys were not there or represented by counsel. In February 2002, Sacks Tierney submitted a cost bill to the court. It was through those records that the Lezdeys first discovered Spinelli’s involvement, Darrin Lezdey said. The records include numerous phone calls and meetings between Sacks Tierney and Spinelli. Billing records accompanying Rovens’ motion to dismiss the suit or to disqualify Sacks Tierney also reflect that the firm spent several hours preparing for a meeting with FBI special agent James Conner, Spinelli’s former colleague in the Phoenix field office. A nearly five-hour meeting was held with Conner on Feb. 23, 2001. Wachter was present, according to the billing records, and “questions on strategy and investigation” were discussed. Michael Weber, who was once in-house counsel for the Lezdeys, was contacted by Conner on several occasions. After those conversations, Weber sent Conner an 18-page letter, which includes a blueprint of Lezdey’s theories behind the litigation, and their business plan. After McDonald filed suit in Florida, alleging that Arriva had falsely claimed that they owned the right to the eye and ear uses for AAT that John Lezdey had patented, defense attorney Dale Friedman of Hollywood, Fla.’s Conroy, Simberg, Ganon, Krevens & Abel submitted a witness list to the court. It included the names of four FBI agents. McDonald eventually got the FBI file on its Lezdey investigation. One thing missing was the 18-page Weber letter. But Conner had received it. When Spinelli was deposed in early April, he recalled that Conner spoke to him about the Weber letter, although he denied seeing it. Conner has refused comment. In the pleadings, Tierney denied seeing any of the Spinelli-obtained documents until they were produced for him by Rovens.

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