2 companies reach $7.7-million settlement over allegations of selling fetal tissue

Two bioscience companies that once operated in Costa Mesa have reached a $7.785-million settlement with the Orange County district attorney’s office over allegations that they illegally sold fetal tissue to companies around the world, prosecutors said Friday.

According to the settlement signed Monday, DV Biologics LLC and sister company DaVinci Biosciences LLC, both based in Yorba Linda, must cease all operations in California within 60 to 120 days. The agreement also requires the companies to admit liability for violations of state and federal laws prohibiting the sale or purchase of fetal tissue for research purposes, prosecutors said.

Also named as defendants in the settlement are company principals Estefano Isaias Sr., Estefano Isaias Jr. and Andres Isaias.

“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. These companies will never be able to operate again in Orange County or the state of California,” District Attorney Tony Rackauckas said in a statement.

About $7.5 million of the settlement amount is the estimated scientific value of a planned donation of the company’s adult biological samples, tissues and cells to a nonprofit academic and scientific teaching institution affiliated with a major U.S. medical school, according to the agreement. Prosecutors did not disclose the name of the medical school.

The defendants also will donate and transfer laboratory storage containers and equipment estimated to be worth more than $10,000.

DV Biologics will pay the county $195,000 in civil penalties.

“This was a hotly contested case, to say the least. In the end, the parties forged a settlement that benefits medical research,” said Michael Tein, an attorney for the defendants. “DV’s donation is the largest of its kind in history. It allows physicians and scientists to continue to use these cells to find cures for the deadliest childhood and adult diseases. From the beginning, this has always been DV’s mission.”

Prosecutors opened an investigation into the companies in September 2015 after a complaint was submitted by the Irvine-based Center for Medical Progress. The anti-abortion group gained national attention in 2015 after releasing a video showing Planned Parenthood affiliates discussing the sale of aborted fetuses.

In October 2016, prosecutors filed a complaint against the companies in Orange County Superior Court, alleging unlawful, unfair and fraudulent business practices.

The lawsuit accused the companies of illegally selling cells from fetal brain tissue for up to $1,100 per vial from 2009 to 2015, prosecutors said. Fetal tissue and cells were sold to pharmaceutical companies and academic institutions in Japan, China, Singapore, South Korea, Germany, Switzerland, Australia, the Netherlands, Canada and the United Kingdom, authorities said.

DANIEL LANGHORNE is a contributor to Times Community News.

UPDATES:

This article was updated Dec. 10 at 11:40 a.m. with a statement from defendants’ attorney Michael Tein.

This article was originally published Dec. 8.