The Eastern District Courthouse in Cadman Plaza, Brooklyn (NYLJ/Rick Kopstein)
A biotechnology company in bankruptcy has brought malpractice claims against Nixon Peabody and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo.
In a suit filed Tuesday in the Eastern District, Neogenix Oncology Inc. said that at the direction of its former CFO, Peter Gordon, it paid commissions for sales of company stock, regardless of whether the “finders” were licensed to sell securities. The suit said the fee program violated securities laws because it compensated unlicensed finders based on their successful brokering the sale of stock.
The suit said Gordon and former outside counsel Samuel Feigin, then at Mintz Levin, did not disclose that rule to other officers. The suit said Mark Kass, another Mintz shareholder who attended board meetings, also failed to inform the board.
Feigin and Kass left Mintz for Nixon Peabody in 2008, bringing Neogenix with them. The suit said both lawyers still attended board meetings where the fee program was discussed without disclosing it was improper. “The negligence of Feigin and Kass—first at Mintz and then at Nixon—helped keep Gordon’s cover-up going,” the suit said.
Neogenix said Nixon was terminated in February 2011 due to escalating legal fees. An alert to the improprieties by the company’s new counsel then triggered an internal investigation. The SEC launched its own inquiry later in 2011.
The suit claims Neogenix matters generated nearly $750,000 for Mintz and almost $3.5 million for Nixon. The company is suing for legal malpractice and breach of fiduciary duty. It is suing Gordon for breach of fiduciary duty and Daniel Scher, its former chief legal officer, for malpractice. Reid Collins & Tsai attorneys William Reid and Rachel Fleishman represent Neogenix. Scher declined comment.
Representatives for Nixon Peabody and Mintz Levin declined comment. Feigin is a partner at Crowell & Moring in Washington, D.C., Kass is a partner at Nixon Peabody in Washington.