Vikhrieva et al v. Stemedica Cell Technologies, Inc. et al

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
NINA VIKHRIEVA and SERGEY
LESHKOV,
Plaintiffs,
v.
STEMEDICA CELL TECHNOLOGIES,
INC.; ZIUZHITANG CO., LTD.;
ZHUHAI HENGQIN JIUZHITANG
YONGHE QIHANG FUND;
JIUZHITANG MAKER (BEIJING)
CELL TECHNOLOGY CO., LTD.;
MAYNARD A. HOWE; ROGER J.
HOWE; DAVID HOWE; NIKOLAI I.
TANKOVICH; DIRK P. O’HARA;
SIMON GUO; CRAIG W. CARLSON;
MICHAEL K. STEINHAUSER;
SANOSTEM GLOBAL, LLC; DUNIYA
SANOSTEM, INC.; SHIVINDER S.
DEOL,
Defendants.
Case No. 25-cv-00459-BAS-SBC
ORDER:
(1) GRANTING DAVID HOWE’S
MOTION TO DISMISS
(ECF No. 37);
(2) GRANTING IN PART AND
DENYING IN PART MAYNARD
HOWE, NIKOLAI TANKOVICH,
CRAIG CARLSON, ROGER
HOWE, AND DIRK O’HARA’S
MOTION TO DISMISS
(ECF No. 38); AND
(3) DENYING MICHAEL
STEINHAUSER’S MOTION TO
DISMISS (ECF No. 39)
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This 	action 	stems 	from 	a 	failed 	$20 	million 	investment 	in 	a 	clinical-stage
biotechnology company that pursued stem cell treatments for cardiovascular diseases.
Plaintiffs Nina Vikhrieva and Sergey Leshkov are trying to hold six entities and nine
individuals responsible for their loss. 	They bring two claims under the Racketeer
Influenced and Corrupt Organizations Act and an array of state law causes of action against
the Defendants.
Presently before the Court are three motions to dismiss. Seven Defendants contend
Plaintiffs’ claims are barred by the statute of limitations or lack plausibility. The motions
are fully briefed.
For the following reasons, the Court grants David Howe’s Motion to Dismiss. 	In
addition, the Court grants in part and denies in part Maynard Howe, Nikolai Tankovich,
Craig Carlson, Roger Howe, and Dirk O’Hara’s Motion to Dismiss. 	Finally, the Court
denies Michael Steinhauser’s Motion to Dismiss.
BACKGROUND
I. 	The Failed Investment in CardioCell
Plaintiffs’ allegations span a hundred pages, and the Court provides only a snapshot
here. (First Am. Compl. (“FAC”), ECF No. 32.) The Court draws the following facts from
the First Amended Complaint and accepts them as true to resolve the Motions to Dismiss.
At the epicenter of this dispute is the relationship between CardioCell, LLC and
Defendant Stemedica Cell Technologies, Inc. 	(FAC ¶ 1.) 	Stemedica is “a clinical-stage
biopharmaceutical company focused on the development and commercialization of stem
cell and protein therapeutics.” 	(Id. ¶ 7.) 	In 2013, Stemedica created a subsidiary,
CardioCell, to focus on commercializing stem cell therapies for cardiovascular disease.
(Id. ¶¶ 1, 7.) Around the same time, Stemedica granted CardioCell an exclusive, worldwide
license to use Stemedica’s stem cell technology for cardiovascular indications. (Id.)
Plaintiffs tied their fortunes to the CardioCell subsidiary. They invested $5 million
in 2013. (FAC ¶ 8; see also id. ¶¶ 37–39.) Plaintiffs contributed another $15 million to
other Stemedica affiliates during 2013 and 2014. (Id. ¶¶ 8–10.) Then, in 2018, Plaintiffs
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consolidated 	those 	other 	interests 	into 	CardioCell, 	for 	an 	aggregate 	exposure 	of
approximately $20 million. (Id. ¶ 21.)
In the mid-2010s, CardioCell completed preliminary clinical trials that allegedly
demonstrated the safety and efficacy of its stem cell therapies. (FAC ¶¶ 96–98, 100–01.)
Plaintiffs 	contend, 	however, 	that 	the 	parent 	company—Stemedica—reneged 	on 	its
commitments to CardioCell, which sealed the subsidiary’s fate. 	Stemedica purportedly
failed to provide promised funding to complete the clinical trials, failed to deliver the stem
cells needed for CardioCell’s treatments, and instead burdened the subsidiary with
substantial administrative charges. (Id. ¶¶ 11, 16, 24–26, 90, 117–18, 121–39, 171, 173–
81.)
By 2020, Stemedica owed CardioCell nearly $28 million in stem cells. (FAC ¶ 383.)
Stemedica was busy trying to raise funds from new investors, but Plaintiffs allege
Stemedica was not disclosing its stem cell debt to CardioCell or the parent company’s
“egregious breaches” of several related contracts. (Id. ¶¶ 383–84.)
By 2024, however, Stemedica “could not pay its rent and other expenses.” 	(FAC
¶ 392.) The company began exploring a dissolution or sale. (Id. ¶¶ 392–93.) Allegedly,
“to avoid liability to Plaintiffs and other Stemedica creditors,” Stemedica was sold to “a
newly created company,” Defendant SanoStem Global, LLC. 	(Id. ¶ 30.) 	This sale
allegedly 	included 	all 	of 	Stemedica’s 	assets, 	including 	the 	rights 	to 	CardioCell’s
investigational therapies and its regulatory filings. (Id. ¶¶ 393–401.)
Plaintiffs further allege that two brothers, Defendants Roger Howe and Maynard
Howe, orchestrated a “fraudulent scheme” through Stemedica to destroy Plaintiffs’
investments. (FAC ¶ 3.) Plaintiffs claim that these Defendants and others “used Stemedica
to induce Plaintiffs’ investments in CardioCell and other Stemedica affiliates under false
pretenses to enrich themselves at Plaintiffs’ expense.” 	(Id. ¶ 2.) 	Plaintiffs claim
Defendants then orchestrated the sale of Stemedica while refusing to provide information
to 	shareholders, 	which 	would 	have 	revealed 	that 	the 	Howe 	brothers 	“have 	been
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misappropriating funds and evading inquiries that would reveal their wrongdoing.” 	(Id.
¶ 387; see also id. ¶¶ 400–03.)
Plaintiffs seek to hold Roger Howe, Maynard Howe, and thirteen other Defendants
responsible in this lawsuit. (FAC ¶¶ 41–65.) Although Plaintiffs cast a wide net in their
Complaint, the Court focuses on seven of the Defendants in these Motions to Dismiss.
II. 	The CardioCell Defendants
Five of the seven Defendants moving to dismiss are connected to CardioCell and its
board of directors. 	These are the two “Howe brothers” who allegedly orchestrated the
fraudulent scheme—Maynard Howe and Roger Howe—as well as three other individuals:
Nikolai Tankovich, Craig Carlson, and Dirk O’Hara. 	(FAC ¶¶ 54–58, 60.) 	All these
individuals served as Stemedica-appointed members of CardioCell’s board of directors
during at least part of the events alleged in the Complaint. 	(See id.) 	Four of the five
individuals also held roles at Stemedica: Maynard Howe “is Stemedica’s co-founder and
vice chairman of the board of directors,” Roger Howe “is Stemedica’s co-founder and
board chairman,” Tankovich “is Stemedica’s current President and Chief Medical Officer,”
and Carlson “is Stemedica’s former Chief Executive Officer.” (Id. ¶¶ 54–55, 57, 60.) For
simplicity, the Court refers to these five individuals as the CardioCell Defendants.
In their ninth and tenth claims, Plaintiffs sue the CardioCell Defendants for
violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). (FAC ¶¶
488–515.) 	In addition, some of Plaintiffs’ state law causes of action implicate the
CardioCell Defendants. These are:
o 	The first claim for fraudulent inducement to invest in CardioCell against the
Howe brothers and Nikolai Tankovich (id. ¶¶ 419–26);
o 	The second claim for fraudulent inducement to enter into an equity exchange
agreement against the Howe brothers and Dirk O’Hara (id. ¶¶ 427–39);
o 	The third claim for breach of fiduciary duty against the CardioCell Defendants
(id. ¶¶ 440–47);
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o 	The fifth claim for fraudulent concealment against Roger Howe and Nikolai
Tankovich (id. ¶¶ 454–65);
o 	The eighth claim for aiding and abetting a fraudulent transfer against the Howe
brothers and Nikolai Tankovich (id. ¶¶ 480–87); and
o 	The twelfth claim for unjust enrichment against the CardioCell Defendants (id.
¶¶ 525–30).
The CardioCell Defendants move to dismiss the RICO claims and the state law
causes of action under Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure.
(CardioCell Defs.’ Mot. to Dismiss, ECF No. 38.)
III. 	Michael Steinhauser
The sixth Defendant moving to dismiss is Michael Steinhauser. He “is Stemedica’s
current Chief Executive Officer and Interim Chairman of Stemedica’s Board of Directors.”
(FAC ¶ 61.) 	He “has a close relationship with Defendants Roger Howe and Maynard
Howe.” 	(Id.) 	Steinhauser supposedly “assisted the Howe brothers with the sale of
Stemedica to SanoStem to escape liability to Plaintiffs and other Stemedica creditors.”
(Id.)
Steinhauser is named in Plaintiffs’ eighth cause of action for aiding and abetting a
fraudulent transfer. (FAC ¶¶ 480–87.) He also appears to be named in the twelfth cause
of action for unjust enrichment. 	(See id. ¶¶ 525–30.) 	Steinhauser moves to dismiss the
eighth cause of action under Rules 12(b)(6) and 9(b). (Steinhauser’s Mot. to Dismiss, ECF
No. 39.) 	He also filed a Joinder in the CardioCell Defendants’ Motion, which seeks
dismissal of the unjust enrichment claim.1 (ECF No. 40.)
1 	The Court denies Plaintiffs’ request to strike Steinhauser’s Joinder and instead incorporates
Plaintiffs’ Opposition to the CardioCell Defendants’ Motion to Dismiss to the extent it is relevant to
Steinhauser’s Joinder in the Motion. (See Pls.’ Opp’n to Steinhauser’s Mot. 1 n.1.)
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IV. 	David Howe
The final Defendant moving to dismiss is David Howe, who is the brother of Roger
Howe and Maynard Howe.2 (FAC ¶ 56.) David Howe served as Stemedica’s Senior Vice
President and Medical Director from 2005 to 2011. 	(Id.) 	Plaintiffs claim he then
“remained associated with Stemedica” and “was identified as a medical consultant to
Stemedica.” (Id.)
According to Plaintiffs, David Howe helped recruit U.S. patients for cardiovascular
and other stem cell treatments at clinics in Mexico, which used stem cells purchased from
Stemedica. (FAC ¶¶ 56, 66, 69; see also id. ¶¶ 327–30.) David Howe allegedly “accepted
payments” 	in 	return 	“for 	marketing 	Stemedica’s 	stem 	cells 	to 	U.S. 	patients 	and
accompanying them to Mexico and other countries.” (Id. ¶ 332.)
Plaintiffs include David Howe as a Defendant in their ninth and tenth causes of
action for violations of RICO. 	(FAC ¶¶ 488–515.) 	Finally, they sue him for unjust
enrichment in their twelfth claim. (Id. ¶¶ 525–30.) David Howe moves to dismiss the three
claims against him under Rules 12(b)(6) and 9(b). (D. Howe’s Mot. to Dismiss, ECF No.
37.)
Plaintiffs oppose all three Motions to Dismiss. (Opp’n to D. Howe’s Mot., ECF No.
47; Opp’n to CardioCell Defs.’ Mot., ECF No. 46; Opp’n to Steinhauser’s Mot., ECF No.
48.) The Court finds these motions suitable for determination on the papers submitted and
without oral argument. See Fed. R. Civ. P. 78(b); CivLR 7.1(d)(1).
LEGAL STANDARDS
I. 	Failure to State a Claim
To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual
allegations; rather, it must plead “enough facts to state a claim to relief that is plausible on
its face.” 	Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 	“A claim has facial
2 	To stay consistent with the Complaint, when the Court refers to the “Howe brothers,” it is
referring to only the alleged masterminds of the scheme—Maynard Howe and Roger Howe—and not
David Howe. (See FAC ¶ 2.)
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plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” 	Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). “Where a complaint
pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the
line between possibility and plausibility of entitlement to relief.’” Id. (quoting Twombly,
550 U.S. at 557).
In resolving a motion to dismiss, the court must assume the truth of the complaint’s
“well-pleaded factual allegations.” Iqbal, 556 U.S. at 679. The court does not credit legal
conclusions—including those masquerading as factual allegations—or other conclusory
assertions. Id. at 678–79.
II. 	Pleading Fraud with Particularity
Rule 9(b) provides that when “alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake. 	Malice, intent, knowledge,
and other conditions of a person’s mind may be alleged generally.” “Rule 9(b) demands
that the circumstances constituting the alleged fraud be ‘specific enough to give defendants
notice of the particular misconduct . . . so that they can defend against the charge and not
just deny that they have done anything wrong.’” Kearns v. Ford Motor Co., 567 F.3d 1120,
1125 (9th Cir. 2009) (quoting Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir.
2001)). “This means that allegations of fraud must be stated with ‘specificity including an
account of the time, place, and specific content of the false representations as well as the
identities of the parties to the misrepresentations.’” E.g., SVGRP LLC v. Sowell Fin. Servs.,
LLC, No. 5:16-cv-7302-HRL, 2017 WL 1383735, at *4 (N.D. Cal. Apr. 18, 2017) (quoting
Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007)).
ANALYSIS
I. 	RICO
Two of the three Motions to Dismiss challenge Plaintiffs’ ninth and tenth RICO
claims, which are at the heart of their federal lawsuit. (FAC ¶¶ 488–515.) “Although the
RICO statute was originally enacted to combat organized crime, ‘it has become a tool for
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everyday fraud cases brought against respected and legitimate enterprises.’” 	Painters &
Allied Trades Dist. Council 82 Health Care Fund v. Takeda Pharms. Co. Ltd., 943 F.3d
1243, 1248 (9th Cir. 2019) (quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 499
(1985)).
“RICO, codified at 18 U.S.C. §§ 1961–1968, extends civil and criminal penalties for
acts performed as part of an ongoing criminal organization or enterprise, known as
‘prohibited activities.’” Glob. Master Int’l Grp., Inc. v. Esmond Nat., Inc., 76 F.4th 1266,
1270 (9th Cir. 2023) (quoting H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 232 (1989)). As
to civil liability, RICO provides a private cause of action for persons “injured in [their]
business or property by reason of a violation of [18 U.S.C. § 1962].” 18 U.S.C. § 1964(c).
Section 1962 in turn defines a series of “prohibited activities” under RICO. 	18
U.S.C. § 1962. 	Subsections (a) through (c) prohibit certain “pattern[s] of racketeering
activity” in relation to an “enterprise.” Id. § 1962(a)–(c). The remaining subsection, (d),
makes it illegal to conspire to violate subsections (a), (b), and (c). Id. § 1962(d).
Thus, the elements of a civil RICO claim are: “(1) conduct (2) of an enterprise
(3) through a pattern (4) of racketeering activity (known as ‘predicate acts’) (5) causing
injury to plaintiff’s business or property.” 	Glob. Master Int’l Grp., Inc., 76 F.4th at 1271
(quoting United Bhd. of Carpenters & Joiners of Am. v. Bldg. & Const. Trades Dep’t, AFL-
CIO, 770 F.3d 834, 837 (9th Cir. 2014)). Further, to state a RICO conspiracy claim, the
plaintiff 	must 	“adequately 	plead 	a 	substantive 	violation 	of 	RICO.” 	Sanford 	v.
MemberWorks, Inc., 625 F.3d 550, 559 (9th Cir. 2010).
In their ninth claim against eleven Defendants, Plaintiffs allege those Defendants
violated 18 U.S.C. § 1962(c) by participating in an enterprise and scheme “to defraud
investors such as Plaintiffs.” (FAC ¶ 493.) Plaintiffs identify twenty purported predicate
acts for their RICO claim, including supposed extortion and commercial bribery offenses
under California state law. (Id. ¶ 503.) Plaintiffs claim the injury to their “business and
property” is that they “lost their $20 million investment” in CardioCell and the other
Stemedica subsidiaries. 	(Id. ¶ 505.) 	Their tenth claim alleges a RICO conspiracy claim
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under 18 U.S.C. § 1962(d) because “Defendants conspired to violate 18 U.S.C. § 1962(c).”
(Id. ¶ 509.) Thus, the tenth claim is closely tied to the ninth claim. See Sanford, 625 F.3d
at 559.
Having sketched the contours of the RICO claims, the Court turns to Defendants’
Rule 12(b)(6) challenges. 	Defendants first argue the RICO claims must be dismissed
because they are untimely.
A. 	Statute of Limitations
Plaintiffs ordinarily do not need to plead around an anticipated affirmative defense
in their complaint. Rivera v. Peri & Sons Farms, Inc., 735 F.3d 892, 902 (9th Cir. 2013).
“When an affirmative defense is obvious on the face of a complaint, however, a defendant
can raise that defense in a motion to dismiss.” Id. Consequently, a claim may be dismissed
as untimely under Rule 12(b)(6), but “only when the running of the statute of limitations
is apparent on the face of the complaint.” 	Thomas v. Cnty. of Humboldt, California, 124
F.4th 1179, 1191 (9th Cir. 2024).
The statute of limitations for civil RICO claims is four years. Agency Holding Corp.
v. Malley-Duff & Assocs., Inc., 483 U.S. 143, 156 (1987). 	Plaintiffs filed this action on
February 27, 2025. (ECF No. 1.) Thus, to be timely, Plaintiffs’ RICO claims ordinarily
need to have accrued no earlier than February 27, 2021. 	See Agency Holding Corp., 483
U.S. at 156. Most of Plaintiffs’ factual allegations arose before this date, however, which
brings the statute of limitations to the forefront. (See generally FAC ¶¶ 1–407.)
Plaintiffs anticipated this affirmative defense. 	They allege the parties tried to
negotiate a resolution of this far-ranging dispute in 2021. (FAC ¶ 410.) As part of those
negotiations, “Plaintiffs and Defendants signed an agreement tolling the limitations period
for these claims (the ‘Tolling Agreement’)” on June 24, 2021. (Id.) Plaintiffs allege the
parties “signed six subsequent amendments to the Tolling Agreement, which continued to
toll the limitations period through February 28, 2025.” 	(Id.; see also id. ¶¶ 411–17
(identifying the amendments to the Tolling Agreement).)
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Most federal statutes of limitations can be tolled by agreement. 	See Heimeshoff v.
Hartford Life & Acc. Ins. Co., 571 U.S. 99, 107 (2013) (explaining that usually “parties are
permitted to contract around a default statute of limitations” and can “agree not only to the
length of a limitations period but also to its commencement”). The civil RICO limitations
period is borrowed from the Clayton Act, see Agency Holding Corp., 483 U.S. at 156,
which does not expressly prohibit tolling, see 15 U.S.C. § 15b. Cf. Hexcel Corp. v. Ineos
Polymers, Inc., 681 F.3d 1055, 1060 (9th Cir. 2012) (referencing a similar tolling
agreement for antitrust claims brought under the Clayton Act). Thus, contractual tolling is
permissible here. See Heimeshoff, 571 U.S. at 107.
Accepting the contractual tolling allegations as true, the statute of limitations was
tolled from June 24, 2021, to February 28, 2025—for a total of about 3 years and 9 months.
(See FAC ¶¶ 410–17.) Because the case was filed on February 27, 2025, there is no gap
between the expiration of the Tolling Agreement and the commencement date. (See ECF
No. 1.) Therefore, looking backward, the Court begins with the date the tolling agreement
went into effect: June 24, 2021, and then subtracts the full four-year limitations period. See
Agency Holding Corp., 483 U.S. at 156. 	That means the earliest date Plaintiffs’ RICO
claims could have accrued and remained timely—the cutoff date—is June 24, 2017. 	Cf.
Hexcel Corp., 681 F.3d at 1060.
Some of the events described in the Complaint occurred after the cutoff date, but
many events still arose beforehand during 2013 to 2016. (See, e.g., FAC ¶¶ 8–12, 96–100,
169–71.) Defendants highlight those earlier allegations to argue Plaintiffs must have been
aware of their RICO claims before June 24, 2017. 	To resolve this challenge, the Court
starts by reviewing the Ninth Circuit’s injury discovery rule for RICO claims. The Court
then turns to when Plaintiffs’ RICO claims allegedly accrued.
June 24,
2017
Four Years
Limitations
Period
June 24,
2021
Tolling
Agreement
February
27, 2025
Filing Date
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1. 	Injury Discovery Rule
“Accrual is the date on which the statute of limitations begins to run.” Lukovsky v.
City & Cnty. of San Francisco, 535 F.3d 1044, 1048 (9th Cir. 2008). 	The Ninth Circuit
has “faithfully followed the ‘injury discovery’ rule” for RICO claims. Grimmett v. Brown,
75 F.3d 506, 511 (9th Cir. 1996). Under this rule, the claim accrues based on discovery of
the injury, not based on discovery of the last predicate act or the pattern of racketeering
activity.3 Id.; see also Rotella v. Wood, 528 U.S. 549, 555 (2000) (“But in applying a
discovery accrual rule, we have been at pains to explain that discovery of the injury, not
discovery of the other elements of a claim, is what starts the clock.”).
Consistent with this rule, the limitations clock starts “when a plaintiff knows or
should know of the injury which is the basis for the action.” 	Stitt v. Williams, 919 F.2d
516, 525 (9th Cir. 1990); accord Volk v. D.A. Davidson & Co., 816 F.2d 1406, 1415 (9th
Cir. 1987); see also Beneficial Standard Life Ins. Co. v. Madariaga, 851 F.2d 271, 275 (9th
Cir. 1988) (holding that a civil RICO claim accrues “when [the plaintiff has] actual or
constructive knowledge of the fraud”). 	“Thus, the ‘injury discovery’ rule creates a
disjunctive two-prong test of actual or constructive notice, under which the statute begins
running under either prong.” Pincay v. Andrews, 238 F.3d 1106, 1109 (9th Cir. 2001).
i. 	Actual Notice
Under the first prong of the injury discovery rule, a RICO claim accrues when the
plaintiff has actual notice of the injury. Pincay, 238 F.3d at 1109. The stage-setting case
is Grimmett v. Brown, 75 F.3d 506, 509 (9th Cir. 1996). There, Joanne Siragusa divorced
her husband in 1983 and, as part of the divorce, relinquished her community property
interest in his shares of several medical practices in exchange for monthly payments. 	Id.
3 The limitations period for a criminal RICO charge runs from the most recent predicate act, but
the Supreme Court rejected such a rule for civil RICO claims. Klehr v. A.O. Smith Corp., 521 U.S. 179,
188 (1997). 	Then, in Rotella v. Wood, 528 U.S. 549, 553 (2000), the Court likewise rejected another
relaxed rule—the injury and pattern discovery rule—which provided that “a civil RICO claim accrues
only when the claimant discovers, or should discover, both an injury and a pattern of RICO activity.”
Although the Supreme Court did not “settle upon a final rule” for RICO claims, the Court left undisturbed
the injury discovery rule used by the Ninth Circuit. Id. at 554 n.2.
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at 509. When he failed to pay, Siragusa obtained a state court judgment in 1987, and the
ex-husband filed for bankruptcy in 1989. Id.
That same year, the bankruptcy trustee filed an adversary complaint alleging that
Siragusa’s ex-husband, his attorney Patricia Brown, and others conspired to deprive
Siragusa of her divorce proceeds by reorganizing the medical practices and using “secret
side agreements” to pay the ex-husband. 	Grimmett, 75 F.3d at 509. 	Five years later,
Siragusa filed a civil RICO action alleging that attorney Brown “masterminded the entire
scheme.” Id. The court dismissed the suit as untimely. Id.
On appeal, Siragusa argued the suit was timely because she did not learn of Brown’s
pattern of racketeering until 1990—when another victim of the scheme came forward.
Grimmett, 75 F.3d at 511. The Ninth Circuit rejected this argument and applied the injury
discovery rule, holding that the 1989 adversary complaint in bankruptcy court made it
“clear that Siragusa knew in May 1989 that she had suffered injury.” Id. at 512. Because
Siragusa had actual notice of her injury on that date, she had until May 1993 to file suit.
See id. Dismissal was proper because she did not file her RICO case until November 1994.
Id.
ii. 	Constructive Notice
Under the second prong of the injury discovery rule, a RICO claim accrues when the
plaintiff “should know” of that injury. 	Grimmett, 75 F.3d at 510. 	Ordinarily, the court
“leaves the question of whether a plaintiff knew or should have become aware of a fraud
to the jury.” 	Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 365
(9th Cir. 2005) (citation modified) (quoting Beneficial Standard Life Ins. Co., 851 F.2d at
275). 	However, a plaintiff is “deemed” to have constructive notice if the plaintiff “had
enough information to warrant an investigation which, if reasonably diligent, would have
led to discovery of the fraud.” Id. (quoting Pincay, 238 F.3d at 1110).
Two Ninth Circuit cases applying the constructive notice prong are instructional.
First, in Pincay v. Andrews, 238 F.3d 1106, 1107 (9th Cir. 2001), the plaintiffs were
“professional horse racing jockeys who have been inducted into the sport’s Hall of Fame.”
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From 1969 to 1988, the defendant investment advisors and their company recommended
the plaintiffs “dozens of investment opportunities, and they partook in many of these.” Id.
The relationship soured, and the plaintiffs sued, alleging a RICO claim based on the
defendants taking “more than 5% of their yearly income” from the investments. 	Id. at
1110. A jury found in the plaintiffs’ favor. Id.
On appeal, the Ninth Circuit held the verdict on the RICO claims must be reversed
because the plaintiffs were deemed to have constructive notice of their injury. Pincay, 238
F.3d at 1110. 	The Ninth Circuit pinpointed written disclosures the plaintiffs received of
the defendants’ financial interest in many of the investments. Id.; see also id. at 1107–08.
“It 	is 	hard 	to 	imagine 	what 	would 	constitute 	‘enough 	information 	to 	warrant 	an
investigation’ if receiving a written disclosure of one’s purported injury does not.” 	Id. at
1110. 	Therefore, as a matter of law, the appellate court held the plaintiffs “received
constructive notice of their injuries at least as early as 1980,” which made their RICO
claims untimely. 	Id.; see also Volk, 816 F.2d at 1414–15 (affirming summary judgment
on similar grounds).
Conversely, in Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353,
365 (9th Cir. 2005), the Ninth Circuit found there was a genuine issue of material fact as
to whether the plaintiffs “knew of or should have discovered the fraud.” That case arose
from DuPont fraudulently withholding evidence of a contaminated fungicide, which had
killed the plaintiffs’ plants. 	Id. at 356–58. 	One key fact was that DuPont had been
sanctioned in the District of Georgia for the fraud. Id. at 358. The district court reasoned
the Hawaii-based plaintiffs “had constructive notice” of the fraud no later than the date of
that sanctions order, which would have made the RICO claim untimely. Id.
The Ninth Circuit reversed. It reasoned there was a question of fact as to whether
“the attention received” by the sanctions order issued in Georgia could be imputed to the
Hawaiian plaintiffs as a matter of law. 	Living Designs, Inc., 431 F.3d at 365. The court
pointed to an analogous case that reasoned newspaper articles could not be relied upon as
a matter of law to impute knowledge to the plaintiffs about reported environmental
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contamination. 	Id. at 365–66 (citing O’Connor v. Boeing N. Am., Inc., 311 F.3d 1139,
1152–53 (9th Cir. 2002)). 	Further, the Ninth Circuit rationalized that the plaintiffs
introduced “evidence that their attorney did not realize the import of the [sanctions] order
until much later.” 	Id. 	“This, along with other evidence in the record, [was] sufficient to
create a triable factual issue as to whether these parties should have known about the
alleged fraud when [the] sanction[s] order was issued.” Id.
2. 	Plaintiffs’ Discovery of Their Injury
Injury. 	To apply the injury discovery rule here, the Court starts by identifying
Plaintiffs’ alleged RICO injury. See, e.g., Pincay, 238 F.3d at 1110. Plaintiffs allege they
suffered an injury to their property when they “had their multi-million-dollar investments
destroyed.” (FAC ¶ 3.) They contend Defendants’ alleged interference with CardioCell’s
fundraising efforts and Stemedica’s failure to provide the promised stem cells for clinical
trials “effectively destroyed Plaintiffs’ investments and CardioCell.” (Id. ¶ 366; see also
id. ¶ 505.)
The CardioCell Defendants cast Plaintiffs’ injury in a different light. 	They argue
Plaintiffs’ purported injury is “the diminution in value of their investment in CardioCell,”
which is “based on conduct dating back to 2013.” 	(CardioCell Defs.’ Mot. 7:23–8:1.)
Meaning, from Defendants’ vantage point, Plaintiffs suffered an injury when the value of
their investments started to decrease, as opposed to when those investments were allegedly
“destroyed” in the late 2010s. (Id.)
Defendants’ argument is a reasonable one, but it depends on factual determinations
that are inappropriate at the Rule 12(b)(6) stage. Indeed, it may very well be that, by the
cutoff date, Plaintiffs’ investments in CardioCell and the Stemedica subsidiaries were
worth pennies on the dollar, and Plaintiffs were aware of that fact. 	If so, Plaintiffs
potentially suffered a cognizable RICO injury before the cutoff date. But the Complaint
does not include factual allegations to that effect. And to reach that conclusion, the Court
would need to draw reasonable inferences in favor of Defendants, which is not the
framework under Rule 12(b)(6). See Shields v. Credit One Bank, N.A., 32 F.4th 1218, 1220
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(9th Cir. 2022). 	Thus, at this stage, the Court accepts as true Plaintiffs’ allegations
regarding their RICO injury.
Actual Notice. Plaintiffs’ RICO claims are untimely if they had actual notice of their
injury outside of the limitations period. 	Pincay, 238 F.3d at 1109. 	Having read the
hundred-page Complaint cover to cover, the Court concludes it does not reveal that
Plaintiffs had actual notice of their injury before June 24, 2017. 	For example, the
Complaint does not show instances where Defendants provided written disclosures to
Plaintiffs stating that the investments would be destroyed. 	See id. at 1110. Nor does the
Complaint reveal Plaintiffs were party to a prior proceeding where they raised this injury,
which the Court could rely on to conclude they must have had notice by that date. 	See
Grimmett, 75 F.3d at 512. Hence, as to the actual notice prong, the Court concludes the
Complaint does not show the RICO claims accrued outside of the statute of limitations.
Constructive Notice. 	Alternatively, Plaintiffs’ claims are time-barred if they “had
enough information to warrant an investigation which, if reasonably diligent, would have
led to discovery of the fraud.” 	See Living Designs, Inc., 431 F.3d at 365. 	Even at the
pleadings stage, this prong is a closer call.
Plaintiffs argue the Complaint shows they did not have enough information to
warrant an investigation until during the limitations period. (Opp’n to CardioCell Defs.’
Mot. 3:9–11.) 	They highlight the Complaint’s allegation that they “had no reason to
suspect any issues or wrongdoing of any sort before July 27, 2018.” (FAC ¶ 409.) That
date is when Plaintiffs claim they first “realized that Stemedica was not planning to provide
the funds and stem cells necessary for the critical clinical trials and instead was prioritizing
delivery of stem cells to other companies.” (Id. ¶ 182; see also id. ¶ 408.) Plaintiffs also
point to Stemedica’s failure on September 24, 2019, to make a $250,000 clinical trial
payment, which was purportedly critical for CardioCell’s survival. (Id. ¶ 289.) If Plaintiffs
had notice of their injury as of either of these dates, their claims would be timely in light
of the parties’ Tolling Agreement discussed above.
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Defendants, 	however, 	contend 	the 	lengthy 	Complaint 	shows 	Plaintiffs 	had
knowledge of facts that would warrant an investigation into the alleged fraud before the
cutoff date. Defendants are not short on ammunition. They rely on allegations that include:
o 	In the fall of 2014, a deal between CardioCell and AstraZeneca allegedly fell apart
after Maynard Howe provided an “investor with highly sensitive, confidential
information about the acquisition and AstraZeneca, a publicly-traded company.”
(FAC ¶ 344.) 	“According to CardioCell’s CEO, after his meeting with Maynard
Howe, the third-party investor called AstraZeneca to confirm the details about the
CardioCell 	deal 	that 	Maynard 	Howe 	had 	provided.” 	(Id. 	¶ 	345.) 	“When
AstraZeneca learned that its highly confidential information had been leaked to third
parties, it withdrew from the deal.” (Id.)
o 	In August 2016, the Howe brothers represented to one of Plaintiffs “that a high-
profile investor from Saudi Arabia and his son had obtained their country’s
government approval to invest $400 million in both Stemedica and CardioCell and
that the money was already in the United States ready to be transferred to Stemedica
and CardioCell.” 	(FAC ¶ 169.) 	But after “they later confirmed that the Saudi
Arabian investor had wired $400 million, the Howe brothers and Stemedica never
contributed those funds to CardioCell, as promised.” 	(Id. ¶ 171.) 	And despite
Plaintiffs’ “multiple inquiries regarding the $400 million wire transfer that seemed
to have disappeared, the Howe brothers failed to provide an explanation, and it never
became clear what happened to that enormous investment.” (Id.)
o 	In 2017, CardioCell had “negotiated an investment deal with Bayer—the world’s
number one pharmaceutical company in the field of cardiovascular indications.”
(FAC ¶ 349.) 	“Bayer successfully completed the due diligence process and was
ready to acquire CardioCell.” (Id.) “However, just before the parties were able to
close on the deal, the Tiara Lawsuit was filed against Stemedica, the Howe brothers,
and Nikolai Tankovich accusing them of defrauding investors. 	As a result, Bayer
withdrew from the deal.” (Id. ¶ 350.)
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o 	In the referenced Tiara Lawsuit, an investor in Stemedica—Tiara Holdings II,
LLC—alleged “the Howe brothers had operated a nearly ten-year fraudulent
investment scheme where they had raised over $110 million from investors for
purportedly funding and establishing Stemedica, but instead used the investors’
funds to benefit themselves.” (FAC ¶ 372.) “Tiara alleged that the Howe brothers
had concealed and perpetrated [the] fraud through the use of purported operating
subsidiaries, which permitted them to divert millions of dollars to benefit themselves
without raising questions or concerns from Stemedica’s investors and shareholders.”
(Id. ¶ 373.)
(CardioCell Defs.’ Mot. 9:9–12:4 & App. A.)
Defendants’ constructive notice argument has considerable force, but like their
injury argument above, it is not dispositive at this stage of the litigation. Under the default
rule, the Court should leave the issue of whether Plaintiffs “knew or should have become
aware of a fraud to the jury.” See Living Designs, Inc., 431 F.3d at 365. The Court agrees
with Defendants that Plaintiffs’ allegations suggest there may be enough information for a
factfinder to determine Plaintiffs had constructive notice of their injury before the date they
now allege in their Complaint. But when the allegations are construed in Plaintiffs’ favor,
there is not enough here for the Court to deviate from the default rule and deem that
Plaintiffs had constructive knowledge before the cutoff date as a matter of law. See id.
Take, for example, Plaintiffs’ allegations concerning the Tiara Lawsuit brought by
other investors against Stemedica in Nevada state court. (FAC ¶¶ 372–77.) That lawsuit
was filed in April 2017—only three-and-a-half months before the cutoff date. 	(See id. ¶
372.) Plaintiffs allege they “immediately asked for an explanation from Roger Howe and
Nikolai Tankovich,” who told Plaintiffs that “the allegations were baseless and that the
lawsuit would be dismissed.” (Id. ¶ 377.) The case then settled. (Id. ¶ 375.)
When reasonable inferences are drawn in Plaintiffs’ favor, the fact that several
Defendants were accused of similar wrongdoing is not tantamount to DuPont being
sanctioned for $115 million by a district court in Living Designs, Inc., 431 F.3d at 358.
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And in that case—where the court had the benefit of a summary judgment record—the
Ninth Circuit still found there was a “genuine issue of material fact as to when [the
plaintiffs] knew of or should have discovered the fraud.” Id. at 365. The Court is limited
to reviewing the Complaint here, and with that narrow prism, the Court cannot conclude
the Tiara Lawsuit provided Plaintiffs with inquiry notice of their RICO injury. 	Cf. E.W.
French & Sons, Inc. v. Gen. Portland Inc., 885 F.2d 1392, 1400 (9th Cir. 1989) (reasoning
that “[t]he filing by others of a similar lawsuit against the same defendants” is not
equivalent “to actual or constructive knowledge of the . . . claim . . . ‘because that suit
might well be frivolous or baseless’” (quoting In re Beef Industry Antitrust Litigation, 600
F.2d 1148, 1171 (5th Cir. 1979))).
Nor is the Court persuaded by Defendants’ other arguments. 	Defendants contend
the RICO statute of limitations should have started from the discovery of each of the
predicate acts listed in the Complaint, such as the funds that allegedly disappeared from a
Saudi Arabian investor in August 2016. (CardioCell Defs.’ Mot. 8:8–12:4.) But the test
is whether Plaintiffs had notice of their injury, not whether they had knowledge of one part
of the pattern of racketeering activity. 	See, e.g., Grimmett, 75 F.3d at 510. At this point,
the Court cannot resolve the factual issue of whether this predicate act put Plaintiffs on
constructive notice that their investments in several subsidiaries would later be destroyed.
See Living Designs, Inc., 431 F.3d at 365. 	Stated differently, when viewed under Rule
12(b)(6)’s framework, the Complaint does not reveal the RICO claims accrued in August
2016 as a matter of law.
Overall, given the parties’ Tolling Agreement, Plaintiffs plausibly allege their RICO
claims accrued within the limitations period under the Ninth Circuit’s injury discovery
rule.4 It is not “apparent on the face of the complaint” that the claims are time-barred. See
4 	Because the Court resolves the Motions to Dismiss on this ground, the Court does not reach
Plaintiffs’ arguments concerning: (a) the Ninth Circuit’s separate accrual rule, or (b) fraudulent
concealment as a basis for tolling the statute of limitations. (See Opp’n to CardioCell Defs.’ Mot. 9:28–
15:7.)
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Thomas, 124 F.4th at 1191. 	Consequently, Defendants’ statute of limitations defense is
not persuasive at the pleadings stage. See id.
B. 	Standing
The CardioCell Defendants next argue Plaintiffs lack standing under RICO because
their injuries are derivative of CardioCell’s injuries, and Plaintiffs do not satisfy RICO’s
proximate cause requirement. (CardioCell Defs.’ Mot. 13:11–16:19.) When plaintiffs sue
under RICO, they must satisfy the statutory standing requirement. 	See Canyon Cnty. v.
Syngenta Seeds, Inc., 519 F.3d 969, 975 (9th Cir. 2008). 	RICO plaintiffs only have
standing if, “and can only recover to the extent that,” they have been injured in their
“business or property by the conduct constituting the violation.” 	Id. (quoting Sedima,
S.P.R.L., 473 U.S. at 496). 	Thus, to demonstrate statutory standing, the plaintiffs must
allege: (1) that their alleged harm qualifies as an injury to their business or property; and
(2) “that [their] harm was by reason of the RICO violation,” which requires demonstrating
proximate cause. 	Glob. Master Int’l Grp., Inc., 76 F.4th at 1271 (quoting Just Film, Inc.
v. Buono, 847 F.3d 1108, 1118–19 (9th Cir. 2017)). The Court assesses each requirement
in turn.
1. 	Qualifying Injury
To satisfy the first statutory standing requirement, the plaintiffs must demonstrate
“(1) harm to a specific property interest cognizable under state law, and (2) that the injury
resulted in ‘concrete financial loss.’” 	Glob. Master Int’l Grp., Inc., 76 F.4th at 1274
(citation omitted) (quoting Canyon Cnty., 519 F.3d at 975); see also Diaz v. Gates, 420
F.3d 897, 900 (9th Cir. 2005) (en banc) (“Without a harm to a specific business or property
interest—a categorical inquiry typically determined by reference to state law—there is no
injury to business or property within the meaning of RICO.”). 	Moreover, the plaintiffs’
injury must not be derivative. See Sparling v. Hoffman Const. Co., 864 F.2d 635, 640 (9th
Cir. 1988), abrogated on other grounds by Smith v. Spizzirri, 601 U.S. 472, 473–74 & n.1
(2024). For instance, if the plaintiffs are shareholders in a corporation, and the corporation
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is the one that suffered the injury, the plaintiffs do not have standing under RICO to assert
a claim for those indirect injuries. Id. at 640–41.
To illustrate, in Sparling v. Hoffman Construction Co., the plaintiffs were the sole
shareholders of a corporation that acted as a subcontractor for the construction of a high
school. 	864 F.2d at 636. 	As part of the project, the plaintiffs’ corporation “provided
payment and performance bonds” to the defendant general contractor. 	See id. 	Plaintiffs
brought a RICO suit against the general contractor, but their individual claims were
dismissed because the district court reasoned that any RICO claim belonged to the
corporation that issued the performance bonds, not the individual shareholders.5 Id. at 640.
The plaintiffs appealed, arguing that because they were both shareholders and the
“guarantors of the bonds given by [the corporation], they had standing to bring the RICO
claim.” Id. at 640.
The Ninth Circuit affirmed the dismissal, joining other circuits “in holding that there
is no shareholder standing to assert RICO claims where the harm is derivative of harm to
the corporation.” 	Sparling, 864 F.2d at 636. 	“If it is derivative, the shareholder has no
standing to assert the RICO claim.” 	Id. 	The Ninth Circuit reasoned that the individual
plaintiffs “must show either an injury distinct from that to other shareholders or a special
duty between [the defendant] and the [individual plaintiffs] if they are to have standing to
assert RICO claims based on injury to the corporation.” Id. Because the wrong alleged in
Sparling was “a fraud on the corporation,” and because the individual plaintiffs could not
“show an injury distinct from that to other shareholders,” they could not demonstrate
standing. Id.; cf. Pan Pac. Retail Props., Inc. v. Gulf Ins. Co., 471 F.3d 961, 967 (9th Cir.
2006) (“The derivative claims sought relief based on injuries to the corporation and only
indirectly to the shareholders, in particular the decreased consideration paid for the
shareholders’ shares.”).
5 The plaintiffs’ wholly owned corporation also brought a RICO claim against the defendant, but
the trial court dismissed that claim because it was subject to arbitration. See Sparling, 864 F.2d at 637.
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The CardioCell Defendants argue Sparling and similar decisions are on all fours
here. 	(CardioCell Defs.’ Mot. 13:11–15:16.) 	They contend the Complaint contains
“numerous allegations that make it clear that CardioCell was the actual target of
Defendants’ alleged wrongdoing.” 	(Id.) 	And when CardioCell failed to perform,
Defendants argue Plaintiffs were “harmed the same way as any other investor.” (Id.)
The Court is unconvinced, as it appears the Complaint was carefully crafted with
this potential roadblock in mind. The Complaint includes many factual allegations about
actions taken towards Plaintiffs individually, as opposed to the CardioCell entity. 	As
summarized in one paragraph:
Plaintiffs were directly damaged by Defendants’ actions because Defendants
manipulated Plaintiffs in a unique way and caused them to increase their
investment to $20 million by creating the impression that Plaintiffs were
investing in a diverse portfolio of four Stemedica subsidiaries, each focused
on different stem cell indications and different multi-billion-dollar products,
including 	cardiovascular 	and 	skin 	therapeutic 	products. 	Defendants
subsequently persuaded Plaintiffs that it was in Plaintiffs’ best interest to roll
all of their interest into CardioCell by exchanging their subsidiaries’ shares
for CardioCell shares. Defendants then collapsed CardioCell and eliminated
Plaintiffs 	from 	the 	picture. 	Importantly, 	before 	Plaintiffs 	invested 	in
CardioCell, CardioCell had no funds, so Plaintiffs’ investment was the one
used to establish CardioCell and generate the valuable clinical data and launch
the clinical trials. No other CardioCell shareholder was targeted, manipulated,
and damaged like Plaintiffs.
(FAC ¶ 35.) 	Supporting factual allegations for these claims are found throughout the
Complaint. (See generally id. ¶¶ 77–407.) Plaintiffs also claim that some of the predicate
acts occurred before they invested in CardioCell, such as when certain Defendants
allegedly provided Plaintiffs with a business plan containing false and misleading
statements about clinical trials and the value of the business’s technology. 	(Id. ¶ 503.)
Accepting these allegations as true, Plaintiffs plausibly plead they were injured not simply
because of “a fraud on [CardioCell],” but rather because they suffered a distinct injury. See
Sparling, 864 F.2d at 636.
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Moreover, it is difficult to squarely fit Plaintiffs’ allegations into the garden-variety
shareholder case. 	Sparling, 864 F.2d at 636. 	Plaintiffs’ allegation that they were
personally targeted to combine their large equity interests in several different subsidiaries
into CardioCell through a fraudulently induced contract suggests they suffered “an injury
distinct from that to other shareholders.” 	See id. at 641. 	Consequently, the Court is
unpersuaded by the CardioCell Defendants’ challenge to the first component of statutory
standing for RICO.
2. 	Causation
In Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 268 (1992), the
Supreme Court interpreted the phrase “by reason of” in 18 U.S.C. § 1964(c) to require, as
elements for a civil RICO recovery, both proximate and but-for causation. 	“The
requirement 	of 	proximate 	cause 	seeks 	to 	‘limit 	a 	person’s 	responsibility 	for 	the
consequences of that person’s own acts.’” Takeda Pharms. Co., 943 F.3d at 1248 (quoting
Holmes, 503 U.S. at 268). “Put another way, ‘the proximate-cause requirement generally
bars suits for alleged harm that is too remote from the defendant’s unlawful conduct.’” Id.
(citation modified) (quoting Lexmark Int’l, Inc. v. Static Control Components, Inc., 572
U.S. 118, 133 (2014)).
Hence, this requirement “demand[s] . . . 	some direct relation between the injury
asserted and the injurious conduct alleged.” 	Holmes, 503 U.S. at 268. The Ninth Circuit
uses three factors from Holmes to gauge this requirement. 	See Oregon Laborers-Emps.
Health & Welfare Tr. Fund v. Philip Morris Inc., 185 F.3d 957, 963 (9th Cir. 1999) (listing
factors). “When factual questions control the outcome of the analysis,” the plaintiffs “must
be allowed to make their case through presentation of evidence.” Alaska v. Express Scripts,
Inc., 774 F. Supp. 3d 1150, 1172 (D. Alaska 2025) (citing Mendoza v. Zirkle Fruit Co.,
301 F.3d 1163, 1171 (9th Cir. 2002)).
The CardioCell Defendants argue there is not a sufficient link between Plaintiffs’
injury 	and 	Defendants’ 	alleged 	conduct. 	(CardioCell 	Defs.’ 	Mot. 	15:17–16:10.)
Defendants 	contend 	Plaintiffs’ 	allegations 	show 	“CardioCell 	was 	destroyed 	by
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Stemedica’s numerous contract breaches.” (Id.) Defendants thus argue the but-for cause
of Plaintiffs’ injuries is Stemedica’s failure to perform on its stem cell commitments, not
the purported racketeering activity. (Id.)
This argument is missing the persuasive force found in some of Defendants’ other
plausibility challenges. Plaintiffs allege Defendants controlled Stemedica and caused the
purported breaches as part of the fraudulent scheme, as well as that multiple Defendants
personally engaged in fraud. (See, e.g., FAC ¶¶ 490, 503.) Plaintiffs plausibly allege that
Defendants’ conduct was the but-for cause of their injuries. And they “have satisfactorily
alleged that Defendants proximately caused their claimed damages at the pleadings stage.”
See Takeda Pharms. Co., 943 F.3d at 1260. 	The Court thus denies Defendants’ Rule
12(b)(6) challenge on this ground.6
C. 	Pattern of Racketeering Activity
David Howe and the CardioCell Defendants’ Motions challenge whether Plaintiffs
sufficiently plead a pattern of racketeering activity—the third and fourth elements of a
RICO claim. See Glob. Master Int’l Grp., Inc., 76 F.4th at 1271. A pattern of racketeering
activity is “a series of related predicates that together demonstrate the existence or threat
of continued criminal activity.” 	RJR Nabisco v. Eur. Cmty., 579 U.S. 325, 330 (2016)
(citing H.J. Inc., 492 U.S. at 239). 	Such acts are “known as predicate acts.” 	Eller v.
EquiTrust Life Ins. Co., 778 F.3d 1089, 1092 (9th Cir. 2015). 	There are two potential
pleading defects with this component of Plaintiffs’ RICO claims.
6 Defendants also argue the RICO claims fail because Plaintiffs’ allegations “(1) demonstrate that
the alleged fraudulent misrepresentations underlying the RICO claims were true, and (2) contradict their
theory that Defendants secretly planned from the outset to ‘systematically destroy’ CardioCell.”
(CardioCell Defs.’ Mot. 16:20–18:12 (quoting FAC ¶ 10).) This attack is a nonstarter under Rule 12(b)(6).
The Complaint alleges the statements were fraudulent not because CardioCell and the subsidiaries’
“intellectual property was worthless and had no potential, but because Defendants allegedly intended to
induce the investment under false pretenses and then systematically destroy the subsidiaries and
CardioCell by depriving them of resources while retaining their valuable intellectual property.” (FAC ¶
10.) Defendants’ argument requires the Court to construe the Complaint in their favor, which the Court
cannot do here. See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 989 (9th Cir. 2009).
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1. 	David Howe’s Predicate Acts
David Howe moves to dismiss the substantive RICO claim, arguing the Complaint
does not sufficiently allege he committed a predicate act. (D. Howe’s Mot. 6:24–10:23.)
RICO’s definition of racketeering activity includes “any act or threat involving . . . bribery
. . . which is chargeable under State law and punishable by imprisonment for more than
one year.” 18 U.S.C. § 1961(1)(A).
The Complaint lists twenty predicate acts, some of which the Court excerpted above.
(FAC ¶ 503.) As to David Howe, the Complaint invokes California’s commercial bribery
statute, California Penal Code section 641.3(c). 	(Id.) 	This offense is punishable by
imprisonment not to exceed one year if the bribe is one thousand dollars or less, but a
longer 	sentence 	is 	authorized 	“if 	the 	amount 	of 	the 	bribe 	exceeds 	one 	thousand
dollars.” Cal. Penal Code § 641.3(c). Therefore, for bribes that are over a thousand dollars,
California’s commercial bribery offense qualifies as “racketeering activity” under RICO.
See 18 U.S.C. § 1961(1)(A); see also Bunnett & Co., Inc. v. Gearheart, No. 17-cv-01475-
RS, 2018 WL 1070298, at *5 (N.D. Cal. Feb. 27, 2018) (analyzing alleged California
commercial bribery predicates for a civil RICO claim).
So, California’s commercial bribery law fits into RICO’s mold, but Plaintiffs must
plausibly plead David Howe committed that offense as part of the pattern of racketeering
activity. See, e.g., Wilcox v. First Interstate Bank of Oregon, N.A., 815 F.2d 522, 531 n.7
(9th Cir. 1987) (“In addition, the plaintiff must also prove the elements of the predicate
act.”). The commercial bribery statute provides:
Any employee who solicits, accepts, or agrees to accept money or any thing
of value from a person other than his or her employer, other than in trust for
the employer, corruptly and without the knowledge or consent of the
employer, in return for using or agreeing to use his or her position for the
benefit of that other person, and any person who offers or gives an employee
money 	or 	any 	thing 	of 	value 	under 	those 	circumstances, 	is 	guilty
of commercial bribery.
Cal. Penal Code § 641.3(a). 	Under this offense, “employee” is defined as “an officer,
director, agent, trustee, partner, or employee.” Id. § 641.3(d)(1). The offense also defines
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“corruptly” as a specific intent to defraud “(A) his or her employer, (B) the employer of
the person to whom he or she offers, gives, or agrees to give the money or a thing of value,
(C) the employer of the person from whom he or she requests, receives, or agrees to receive
the money or a thing of value, or (D) a competitor of any such employer.” Id. § 641.3(d)(3).
The “corruptly” element “does not necessarily require proof of intent to injure.”
People v. Riley, 240 Cal. App. 4th 1152, 1163 (2015). “An intent to defraud is an intent to
deceive another person for the purpose of gaining a material advantage over that person or
to induce that person to part with property or alter that person’s position by some false
statement, false representation of fact, wrongful concealment or suppression of the truth,
or by any artifice or act designed to deceive.” Id. (quoting People v. Pugh, 104 Cal. App.
4th 66, 72 (2002)). Such an intent can also be shown through a “dishonest stratagem.” Id.
(quoting People v. Dieguez, 89 Cal. App. 4th 266, 279 (2001)).
According to the Complaint, David Howe worked for Stemedica between 2005 and
2011 as its Senior Vice President and Medical Director. (FAC ¶ 56.) However, when it
comes to describing David Howe’s relationship with Stemedica after 2011, the Complaint
is vague. 	(See id.) 	Plaintiffs allege that after 2011, David Howe “remained associated”
with the entity “by means of recruiting U.S. patients for NovaStem and Rivadavia’s
cardiovascular and other stem cell treatments at Clinica Santa Clarita and other clinics in
Mexico using Stemedica’s stem cells,” and he was identified as a “medical consultant” for
Stemedica. (Id.) As for how David Howe contributed to the RICO violation, the Complaint
alleges in the sixteenth predicate act that:
Between 2013 and 2020, Maynard Howe, Roger Howe, and David Howe
repeatedly recruited U.S. patients for cardiovascular and other stem cell
treatments in Mexico and elsewhere using Stemedica’s stem cells. 	In
exchange, David Howe received payments in the amount of approximately
$10,000 per patient without knowledge of Stemedica and/or Stemedica’s
shareholders. 	David Howe committed this predicate act multiple times, as
detailed herein.
(Id. ¶ 503.)
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David Howe contends the Complaint is missing the necessary allegation that he was
an officer, director, agent, trustee, partner, or employee of Stemedica from 2013 to 2020.
(D. Howe’s Mot. 7:19–8:1.) He also contends the Complaint does not adequately allege
he acted “corruptly” within the meaning of the commercial bribery statute. (Id. 8:1–4.) In
response, Plaintiffs posit that David Howe acted as an “agent” within the meaning of the
statute by recruiting patients for medical tourism, and they argue the Complaint sufficiently
alleges Howe was part of the overarching RICO scheme. (Opp’n to D. Howe’s Mot. 19:3–
24:2.) 	The parties also tussle over whether Rule 9(b)’s particularity requirement should
apply to this claim, but that issue is not dispositive.
Under Rule 12(b)(6), the Court agrees that Plaintiffs do not allege a plausible
commercial bribery offense involving David Howe. The Complaint lacks non-conclusory
allegations demonstrating David Howe acted as an “employee” of Stemedica within the
meaning of California Penal Code section 641.3(d)(1). Plaintiffs claim he was an “agent,”
but that is a legal conclusion, which must be supported by the attendant factual allegations.
See, e.g., Falcocchia v. Saxon Mortg., Inc., 709 F. Supp. 2d 860, 864 n.4 (E.D. Cal. 2010);
see also Iqbal, 556 U.S. at 680–81.
Further, although the Complaint rivals a tome, the Court does not discern
allegations demonstrating that David Howe acted corruptly with a specific intent to defraud
within the meaning of California Penal Code section 641.3(d)(3). 	Therefore, David
Howe’s arguments are persuasive, and the Court grants his Motion to Dismiss the ninth
claim. 	And because Plaintiffs do not allege a substantive RICO violation against David
Howe, the Court also grants his request to dismiss the tenth claim for RICO conspiracy.
See Sanford, 625 F.3d at 559. The Court has not previously addressed these claims against
David Howe, so they are dismissed with leave to amend. 	See Fed. R. Civ. P. 15(a); see
also Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004) (listing the five leave-to-
amend factors).
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2. 	The CardioCell Defendants’ Pattern
The CardioCell Defendants contend the Complaint fails to sufficiently allege the
pattern element of the RICO claim against them. (CardioCell Defs.’ Mot. 18:13–19:9.) A
pattern under RICO “requires at least two acts of racketeering activity” within a ten-year
period. 18 U.S.C. § 1961(5). The statute’s “statement that a pattern ‘requires at least’ two
predicates implies ‘that while two acts are necessary, they may not be sufficient.’” 	H.J.
Inc., 492 U.S. at 237 (quoting Sedima, S.P.R.L., 473 U.S. at 497 n.24). 	Thus, RICO’s
statutory requirement “concerns only the minimum number of predicates necessary to
establish a pattern; and it assumes that there is something to a RICO pattern beyond simply
the number of predicate acts involved.” Id. at 238.
To allege a pattern, the plaintiffs “must show that the racketeering predicates are
related, and that they amount to or pose [an implicit or explicit] threat of continued
criminal activity.” United States v. Freeman, 6 F.3d 586, 596 (9th Cir. 1993) (quoting H.J.
Inc., 492 U.S. at 239); see also id. at 597. 	These two elements are referred to as
“relatedness” and “continuity.” H.J. Inc., 492 U.S. at 239–40.
“Racketeering predicates are related if they ‘have the same or similar purposes,
results, participants, victims, or methods of commission, or otherwise are interrelated by
distinguishing characteristics and are not isolated events.’” 	Freeman, 6 F.3d at 596
(quoting H.J. Inc., 492 U.S. at 233). 	“Continuity,” on the other hand, “is both a closed-
and open-ended concept, referring either to a closed period of repeated conduct, or to past
conduct that by its nature projects into the future with a threat of repetition.” H.J. Inc., 492
U.S. at 241–42.
Plaintiffs’ RICO claim relies on over five hundred paragraphs of allegations and
identifies twenty predicate acts under 18 U.S.C. § 1962(c). Having sorted the predicates
into their proper bins, the Court notes the five CardioCell Defendants are implicated in the
following acts:
o 	Maynard Howe: Acts 1, 2, 3, 4, 5, 8, 9, 10, 12, 16, 17, and 20.
o 	Roger Howe: Acts 1, 2, 3, 5, 6, 7, 8, 10, 12, 16, and 20.
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o 	Nikolai Tankovich: Acts 1, 2, 3, 4, 5, 6, 8, and 20.
o 	Craig Carlson: Acts 11 and 12.
o 	Dirk O’Hara: Acts 10 and 12.
(See FAC ¶ 503.)
The CardioCell Defendants argue that even though Plaintiffs allege numerous
predicate acts, Plaintiffs “fail to sufficiently assert how they are related or the existence of
continuity.” 	(CardioCell Defs.’ Mot. 18:13–19:9.) 	The Court finds this argument is
persuasive as to some—but not all—of these Defendants.
i. 	The Howe Brothers and Nikolai Tankovich
With respect to Defendants Maynard Howe, Roger Howe, and Nikolai Tankovich,
the Court is satisfied that Plaintiffs sufficiently plead both elements to satisfy RICO’s
pattern requirement. The Complaint ties these three Defendants to numerous predicate acts
that span multiple years and several phases of the alleged scheme. (See FAC ¶ 503.) At
the Rule 12(b)(6) stage, those allegations are sufficient to support both the relatedness and
continuity requirements under RICO.
Starting with relatedness, the alleged predicates are not isolated or disconnected
events. The Complaint alleges that, beginning in 2013, Maynard Howe, Roger Howe, and
Nikolai Tankovich repeatedly made false statements to Plaintiffs about CardioCell’s value,
clinical progress, exclusivity, and commercialization prospects during meetings, calls,
written business materials, and presentations. (FAC ¶ 503.) Plaintiffs further allege that:
(1) Roger Howe and Nikolai Tankovich entered into secret agreements from 2014 to 2018
to sell CardioCell’s exclusive cardiovascular rights without CardioCell’s knowledge;
(2) Roger Howe and the others made additional false statements in March 2018 to induce
Plaintiffs 	to 	exchange 	valuable 	shares 	into 	additional 	equity 	in 	CardioCell; 	and
(3) Maynard Howe allegedly attempted to extort CardioCell’s CEO in May 2018 to
pressure Plaintiffs into a highly unfavorable deal. 	(Id.) 	Read together, those allegations
plausibly describe acts with the “same or similar purposes,” including inducing or coercing
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Plaintiffs’ 	investment 	decisions, 	diverting 	or 	encumbering 	CardioCell’s 	rights 	for
Stemedica’s benefit, and concealing the resulting harm. See Freeman, 6 F.3d at 596.
As for continuity, the Complaint alleges all three Defendants engaged in repeated
fraudulent conduct starting in 2013, and it alleges that Roger Howe and Nikolai Tankovich
continued the scheme through secret agreements lasting from 2014 to 2018. 	(See FAC
¶ 502.) The pleading further alleges that: (1) all three participated in the March 1, 2018,
consolidation-related misrepresentations; (2) Maynard Howe engaged in the May 3, 2018,
extortion of CardioCell’s CEO; and (3) all three participated in the alleged February 2025
transfer of Stemedica and its assets “to avoid liability to Plaintiffs and other creditors.”
(Id.) Those allegations, taken as true, describe more than a short-lived burst of purported
criminal activity. They depict repeated predicate conduct extending over years, which is
enough to support continuity at the pleading stage. 	See H.J. Inc., 492 U.S. at 241–42.
Accordingly, the Court denies Maynard Howe, Roger Howe, and Nikolai Tankovich’s
Motion to Dismiss the RICO claims based on the pattern requirement.
ii. 	Craig Carlson and Dirk O’Hara
In contrast, the Complaint does not adequately allege a RICO pattern as to Defendant
Craig Carlson or Defendant Dirk O’Hara. 	The Complaint names each of them in two
alleged predicate acts, but that alone is insufficient. 	See H.J. Inc., 492 U.S. at 237.
Plaintiffs also must satisfy the relatedness and continuity elements. 	See Freeman, 6 F.3d
at 596.
As to Craig Carlson, the Complaint first alleges that on September 4, 2018, Carlson
emailed Plaintiff Leshkov with a falsified amendment to the ALTACO Agreement to show
that the stem-cell-based cardiovascular indication was excluded from that agreement.7
7 	The ALTACO Agreement is allegedly a “manufacturing and distribution agreement with a
Kazakhstan company, ALTACO.” (FAC ¶ 189.) Under the ALTACO Agreement, Stemedica allegedly
granted ALTACO “exclusive rights for all stem cell indications, including cardiovascular indications, in
Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan.” (Id. ¶ 191.) Plaintiffs contend this
agreement violated the exclusive license that Stemedica granted CardioCell for the manufacturing,
exploration, and commercialization of cardiovascular therapy using stem cells across the globe. 	(Id. ¶
193; see also id. ¶ 7.)
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(FAC ¶ 503.) Second, the Complaint alleges more generally that between May 2018 and
March 2019, Carlson, along with others, made false statements by phone and email that
Stemedica would amend the Rivadavia Agreement, and those statements were purportedly
made to induce Plaintiffs to enter into amendments to the Equity Exchange Agreement.8
(Id.) 	Under that deal, Plaintiffs consolidated their investments into CardioCell by
exchanging their ownership interests in other Stemedica subsidiaries for additional shares
in CardioCell. (See id. ¶ 21; see also id. ¶¶ 218–49.)
As to Dirk O’Hara, the pleading is similarly narrow. It alleges that he participated
in a May 4, 2018, conference call proposing two allegedly sham deal options, and that he
joined 	the 	same 	generalized 	misrepresentations 	regarding 	amending 	the 	Rivadavia
Agreement during May 2018 to March 2019 to induce Plaintiffs to modify the Equity
Exchange Agreement. (FAC ¶ 503.)
Even assuming those alleged acts are sufficiently related, the Complaint does not
plausibly allege continuity as to either Defendant. 	The allegations against O’Hara span
from May 2018 to March 2019, and the allegations against Carlson are confined to that
same general period, with a specific September 2018 email, plus the broader May 2018-to-
March 2019 misrepresentations. (See FAC ¶ 503.) That is a short, closed period tied to a
discrete commercial objective: persuading Plaintiffs to accept particular deal terms,
amendments, or positions regarding the ALTACO and Rivadavia arrangements and the
Equity Exchange Agreement. 	Nothing in the alleged facts suggests that Carlson’s or
O’Hara’s alleged conduct extended beyond that period, or that their alleged acts projected
into the future with a threat of repetition. See Freeman, 6 F.3d at 596 (explaining continuity
requires showing the related acts “pose a threat of continued criminal activity”).
8 Like the ALTACO Agreement, the Rivadavia Agreement is allegedly a master manufacturing
and distribution agreement with Rivadavia, which granted Rivadavia exclusive rights for all stem cell
indications in Mexico. 	(FAC ¶ 196.) 	Plaintiffs similarly allege that this side agreement violated
CardioCell’s exclusive license from Stemedica. (Id. ¶¶ 196–200.)
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This deficiency is sharpened by the absence of broader, non-conclusory allegations
that connect either Defendant to the longer-running predicate acts that are pleaded against
other Defendants. Carlson is not alleged to have participated in the 2013–2014 investment-
pitch misrepresentations, the 2014–2018 secret rights agreements, the March 2018
extortion allegations, the 2020–2021 financial statement allegations, or the alleged
fraudulent transfer. 	(See FAC ¶ 503.) 	O’Hara likewise is not named in those earlier or
later predicate acts. 	(See id.) 	Thus, Carlson and O’Hara are linked to a handful of acts
clustered around about a year, all of which are directed toward a related dispute that
allegedly involved fraud on Plaintiffs in connection with the Equity Exchange Agreement.
(See id.)
Given these allegations, Plaintiffs plead Carlson and O’Hara participated in a limited
episode of activity, but not the kind of continued criminal activity that RICO’s pattern
requirement demands. See H.J. Inc., 492 U.S. at 243 (“Congress was concerned in RICO
with long-term criminal conduct.”). Thus, the Complaint does not plead a plausible RICO
claim against these Defendants, and the Court grants Carlson and O’Hara’s Motion to
Dismiss the RICO claims.9
II. 	State Law Causes of Action
Looking beyond the RICO claims, Plaintiffs allege ten state law causes of action.
Both parties cite Delaware law for the third claim for breach of fiduciary duty against the
CardioCell Defendants. (See CardioCell Defs.’ Mot. 23 n.10; Opp’n to CardioCell Defs.’
Mot. 22:12–13.) The parties apply California law to the remaining claims. (See generally
CardioCell Defs.’ Mot.; Steinhauser’s Mot.; Opp’n to CardioCell Defs.’ Mot.) The Court
9 Because Plaintiffs do not plead a substantive violation of RICO against Craig Carlson or Dirk
O’Hara, the Court is unconvinced that Plaintiffs plead a plausible RICO conspiracy against these
Defendants. There are insufficient factual allegations demonstrating that Carlson and O’Hara knew about
and agreed to facilitate the alleged sprawling RICO scheme. Cf. Salinas v. United States, 522 U.S. 52, 65
(1997) (“The evidence showed that Marmolejo committed at least two acts of racketeering activity when
he accepted numerous bribes and that Salinas knew about and agreed to facilitate the scheme. 	This is
sufficient to support a conviction under § 1962(d).”).
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follows the parties’ lead. Cf. Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1267 (9th Cir.
2006).
A. 	Statute of Limitations
As an initial matter, the CardioCell Defendants raise a parallel challenge to the state
law 	fraud 	and 	breach 	of 	fiduciary 	duty 	claims 	on 	statute of 	limitations 	grounds.
(CardioCell Defs.’ Mot. 19:6–21:2.) 	This argument is unavailing for many of the same
reasons the Court discussed above when assessing the timeliness of the RICO claims. Both
California and Delaware law allow for contractual tolling. See Wind Dancer Prod. Grp. v.
Walt Disney Pictures, 10 Cal. App. 5th 56, 78–80 (2017); ISN Software Corp. v. Richards,
Layton & Finger, P.A., 226 A.3d 727, 737 (Del. 2020). Each jurisdiction has a “discovery
rule” that may delay accrual of Plaintiffs’ claims or toll the statute of limitations, and each
rule can be triggered by inquiry notice. See Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th
797, 808 (2005) (“The discovery rule only delays accrual until the plaintiff has, or should
have, inquiry notice of the cause of action.”); Wal-Mart Stores, Inc. v. AIG Life Ins. Co.,
860 A.2d 312, 319 (Del. 2004) (noting that under Delaware’s discovery rule, the limitations
period is tolled, and it runs on discovery of the basis of the cause of action or of facts
sufficient to put a person on notice).
The Court again underscores that it is only appropriate to dismiss Plaintiffs’ state
law claims “when the running of the statute of limitations is apparent on the face of the
complaint.” See Thomas, 124 F.4th at 1191. Considering the parties’ Tolling Agreement,
as well as allegations in the Complaint that support application of the respective
jurisdictions’ discovery rules, the Court finds Plaintiffs’ state law fraud and breach of
fiduciary duty claims are not subject to dismissal under Rule 12(b)(6) on this basis. See id.
B. 	Fraudulent Inducement
Several of the CardioCell Defendants seek dismissal of Plaintiffs’ two claims for
fraudulent inducement. (CardioCell Defs.’ Mot. 21:3–22:16.) “Fraud in the inducement”
occurs when the promisors know what the agreement they are signing contains, but their
consent is induced by fraud. Rosenthal v. Great W. Fin. Sec. Corp., 14 Cal. 4th 394, 415
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(1996). 	To prove a claim of fraudulent inducement, plaintiffs must show: (1) a
misrepresentation, false representation, concealment, or nondisclosure, (2) knowledge of
falsity; (3) intent to defraud or to induce plaintiffs to enter into a contract; (4) justifiable
reliance; and (5) resulting damage. See Lazar v. Superior Ct., 12 Cal. 4th 631, 638 (1996).
Plaintiffs’ first cause of action is for “fraudulent inducement to invest in CardioCell”
against Maynard Howe, Roger Howe, and Nikolai Tankovich. 	(FAC ¶¶ 419–26.)
Plaintiffs allege these Defendants made misrepresentations, including that “CardioCell had
$35 million of stem cells at its disposal and did not have to manufacture any stem cells for
the duration of the clinical trials,” and that “CardioCell had the exclusive worldwide license
for the cardiovascular indication and stem cell manufacturing know-how.” (Id. ¶ 421.)
Under Plaintiffs’ second claim, they allege they were fraudulently induced to enter
into the Equity Exchange Agreement. 	(FAC ¶¶ 427–49.) 	Plaintiffs contend “the Howe
brothers made false statements to Leshkov and Vikhrieva about the value of the
[Stemedica] subsidiaries as to induce them to roll their interest in the subsidiaries into
CardioCell.” (Id. ¶ 428.)
The CardioCell Defendants generally argue the two fraudulent inducement claims
lack 	plausibility 	because 	“Plaintiffs’ 	own 	allegations 	concede 	Defendants’ 	alleged
statements about the potential of CardioCell were not false.” 	(CardioCell Defs.’ Mot.
21:12–14.) This argument was unpersuasive when Defendants levied it against the RICO
claims above, and it remains unpersuasive here. The Court cannot construe the Complaint
in Defendants’ favor. 	Their other arguments are similarly unpersuasive. 	(See id. 21:3–
22:16.) Hence, the Court denies Maynard Howe, Roger Howe, and Nikolai Tankovich’s
Motion to Dismiss the first cause of action. The Court likewise denies Defendants Roger
Howe and Maynard Howe’s Motion to Dismiss the second cause of action.
However, having applied Rules 12(b)(6) and 9(b), the Court is not persuaded that
the second cause of action states a fraudulent inducement claim against the other named
Defendant, Dirk O’Hara. 	Plaintiffs allege O’Hara committed fraud because he offered
Plaintiffs “two deals that made no economic sense,” which were intended to deceive
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Plaintiffs “about their options with respect to the subsidiaries.” 	(FAC ¶ 433.) 	O’Hara
allegedly “proposed the two unacceptable deals to induce Leshkov and Vikhrieva to enter
into a deal consolidating their interest in the subsidiaries into CardioCell as the only viable
option.” 	(Id. ¶ 434.) 	The Court is unpersuaded that Plaintiffs adequately plead O’Hara
made “a misrepresentation” under Rules 12(b)(6) and 9(b). See Lazar, 12 Cal. 4th at 638.
Nor is the Court convinced that Plaintiffs plausibly plead “justifiable reliance” for this
claim. 	See Lazar, 12 Cal. 4th at 638. The Court thus dismisses the second claim against
O’Hara with leave to amend.
C. 	Fraudulent Concealment
In the same vein, Defendants Roger Howe and Nikolai Tankovich attack the
plausibility of the fifth cause of action for fraudulent concealment. “The required elements
for fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a
defendant with a duty to disclose the fact; (3) the defendant intended to defraud the plaintiff
by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact
and would have acted differently if the concealed or suppressed fact was known; and (5)
plaintiff sustained damage as a result of the concealment or suppression of the material
fact.” Rattagan v. Uber Techs., Inc., 17 Cal. 5th 1, 40 (2024).
In moving to dismiss this claim, Roger Howe and Nikolai Tankovich again make
factual arguments that the Court finds are unsuitable for resolution at the pleadings stage.
Defendants focus on one aspect of the fraudulent concealment claim—the lead up to the
Equity Exchange Agreement—to argue Plaintiffs must have been aware of the allegedly
concealed facts. 	(See CardioCell Defs.’ Mot. 23:1–19.) 	This argument relies on a
restrictive interpretation of the claim that is not supported by the Complaint or Rule
12(b)(6)’s framework. (See FAC ¶¶ 454–65.) Because Defendants’ plausibility challenge
misses the mark, the Court denies the Motion to Dismiss the fifth cause of action for
fraudulent concealment.
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D. 	Breach of Fiduciary Duty
The Court switches gears from the fraud claims to the breach of fiduciary duty claim.
Under Delaware law, a claim “for breach of fiduciary duty has only two formal elements:
(i) the existence of a fiduciary duty and (ii) a breach of that duty.” 	Leo Invs. Hong Kong
Ltd. v. Tomales Bay Cap. Anduril III, L.P., 342 A.3d 1166, 1191 (Del. Ch. 2025).
The CardioCell Defendants draw the Court’s attention to the breach of fiduciary duty
claim and raise arguments under Rule 12(b)(6). 	(CardioCell Defs.’ Mot. 23:20–24:23.)
However, having reviewed the claim, the Court finds it is subject to dismissal under Rule 8.
The breach of fiduciary duty claim starts to run afoul of Rule 8 when the Complaint bundles
all five CardioCell Defendants together. 	(FAC ¶ 441.) 	Then, in one paragraph, the
Complaint alleges those five CardioCell Defendants
breached their fiduciary duties by, inter alia: (i) failing to disclose and
concealing the Organismo Agreement, Rivadavia Agreement, and ALTACO
Agreement; (ii) causing Stemedica to enter into those agreements and provide
CardioCell’s rights and stem cells to Organismo, Rivadavia, and ALTACO at
CardioCell’s 	expense; 	(iii) 	making 	misrepresentations 	and 	misleading
statements to CardioCell’s shareholders, Leshkov and Vikhrieva, about
CardioCell’s potential and independence as to induce them to enter into the
Equity 	Exchange 	Agreement 	and 	roll 	their 	$15 	million 	interest 	in
StemProtein, StemCutis, and Stemedica International into CardioCell; (iv)
making misrepresentations about CardioCell’s potential business deals with
JZT and their revenue-generating potential; (v) failing to assist CardioCell
with resolving Stemedica’s inadequate stem cell supply to CardioCell; (vi)
failing to assist with returning the CardioCell rights for Mexico; (vii) failing
to answer investors’ questions about stem cell availability to CardioCell
required to complete the clinical trials; (viii) interfering with CardioCell’s
fund-raising efforts; and (ix) failing to disclose that Stemedica’s plan was to
deprive CardioCell of funds and stem cells and prevent the completion of the
clinical trials and commercialization of the products.
(FAC ¶ 444.)
As the Ninth Circuit has made clear, this claim is subject to dismissal as a disfavored
“shotgun pleading.” See Gibson v. City of Portland, 165 F.4th 1265, 1288 (9th Cir. 2026).
The third cause of action asserts multiple breach of fiduciary duty claims “against multiple
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defendants without specifying which of the defendants are responsible for which acts or
omissions.” 	See id. (quoting 35A C.J.S. Fed. Civ. Proc. § 310 (2025)). 	The claim also
incorporates by reference the Complaint’s 439 paragraphs of prior allegations, which is
another indicator of a shotgun pleading. 	(FAC ¶ 440.) 	See Gibson, 165 F.4th at 1288.
And although breach of fiduciary duty claims can be based on group action taken by a
company’s directors, most of Plaintiffs’ allegations do not fit into that bucket. 	See Smith
v. Van Gorkom, 488 A.2d 858, 893 (Del. 1985).
To untangle the alleged violations, the Court would need to sift through hundreds of
paragraphs of allegations and match each potential breach of fiduciary duty to the
respective CardioCell Defendant. The Court declines to do so. 	See Gibson, 165 F.4th at
1290 (“Rule 8 provides district courts with an additional tool that they may use to dismiss
shotgun pleadings when identified—not a rule necessarily requiring district courts to do
so, however prudent it may be.”). Therefore, the Court dismisses this claim with leave to
amend under Rule 8(a).
E. 	Fraudulent (Voidable) Transfer
Three of the CardioCell Defendants and Michael Steinhauser move to dismiss the
Complaint’s eighth cause of action. In that claim, Plaintiffs allege Roger Howe, Maynard
Howe, Nikolai Tankovich, and Michael Steinhauser aided and abetted a violation of
California’s law governing voidable transfers. (FAC ¶¶ 480–87.) “California’s version of
the Uniform Voidable Transactions Act (Civ. Code, § 3439 et seq.; UVTA) governs claims
for voidable or fraudulent transfers—transfers that invalidly place certain property beyond
the reach of the original owner’s creditors.” 	MACH-1 RSMH, LLC v. Darras, 103 Cal.
App. 5th 1288, 1292–93 (2024). “The UVTA is a contemporary retooling of the common
law remedies available to unsecured creditors seeking payment from debtors who evade
collection.” 	Nagel v. Westen, 59 Cal. App. 5th 740, 747 (2021). 	“Originally enacted as
the 	Uniform 	Fraudulent 	Transfer 	Act 	in 	1986, 	its 	retitling 	in 	2016 	reflected 	the
Legislature’s intent to reduce misconceptions that the law requires proof of fraudulent
intent.” Id. (citation modified).
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“The UVTA sets forth the elements of a claim challenging the transfer of a debtor’s
asset.” 	Darras, 103 Cal. App. 5th at 1300 (citing Cal. Civ. Code §§ 3439.04, 3439.05).
Among other things, the law provides “a transfer is voidable if the debtor made the transfer
with ‘actual intent to hinder, delay, or defraud any creditor.’” Id. (citing Cal. Civ. Code §
3439.04(a)(1)). The UVTA defines a “transfer” as “every mode, direct or indirect, absolute
or conditional, voluntary or involuntary, of disposing of or parting with an asset or an
interest in an asset, and includes payment of money, release, lease, license, and creation of
a lien or other encumbrance.” Cal. Civ. Code § 3439.01(m). A “creditor” is “a person that
has a claim.” Id. § 3439.01(c). A “claim” is “a right to payment, whether or not the right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, 	undisputed, 	legal, 	equitable, 	secured, 	or 	unsecured.” 	Id. 	§ 	3439.01(b).
“Importantly, while California law originally required creditors to reduce their underlying
claims to judgment before seeking to set aside voidable transfers, the UVTA allows
creditors to maintain a voidable transfer action before obtaining a judgment on the
underlying claim.” Darras, 103 Cal. App. 5th at 1300–01 (citations omitted) (citing Brown
v. Campbell, 100 Cal. 635, 644 (1893); Cortez v. Vogt, 52 Cal. App. 4th 917, 930–31
(1997)).
Plaintiffs plead two fraudulent transfer claims in their sixth and seventh causes of
action against Stemedica, SanoStem, and another Defendant not at issue here. 	(FAC
¶¶ 466–79.) 	Plaintiffs allege Stemedica has been sold to SanoStem. 	(FAC ¶ 31.) 	Their
sixth and seventh claims allege this transfer is voidable because it was done “with actual
intent to hinder, delay, or defraud Plaintiffs as Stemedica’s creditors.”10 (Id. ¶ 470; see
also id. ¶ 478.)
10 	After the filing of the Complaint, Stemedica went bankrupt. 	(See ECF No. 50.) 	Thus, the
claims against Stemedica have been automatically stayed. See 11 U.S.C. § 362(a); see also, e.g., In re
Mellor, 734 F.2d 1396, 1398 (9th Cir. 1984) (“The automatic stay arises by operation of law upon the
filing of a petition for bankruptcy, and prevents creditors of the bankrupt [entity] from seeking to enforce
any lien on the property of the estate.”). “As a general rule, the automatic stay of section 362(a) protects
only the debtor, property of the debtor or property of the estate. It does not protect non-debtor parties or
their property. Thus, section 362(a) does not stay actions against guarantors, sureties, corporate affiliates,
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The Motions to Dismiss concern the eighth claim, which alleges aiding and abetting
liability based on the alleged fraudulent transfer found in the earlier causes of action. (See
FAC ¶¶ 480–87.) 	“Several California cases have held that a party may be liable for
fraudulent transfer as a coconspirator or aider and abettor.” 	Optronic Techs., Inc. v.
Celestron Acquisition, LLC, 108 Cal. App. 5th 770, 784–85 (2025) (collecting cases).
To illustrate, in Optronic Techs., Inc., the plaintiff, Orion, had sued a Chinese
company, Ningbo Sunny, in federal court in an antitrust action. 108 Cal. App. 5th at 775.
“The federal court entered a judgment in favor of Orion for over $50 million.” Id. Further,
to defeat a request seeking an asset-related restraining order, Ningbo Sunny filed a
declaration where it promised to “not transfer any of its cash or other assets located in the
United States to a location outside of the United States other than in the ordinary course of
business while post-trial motions and appeals remain pending.” 	Id. at 777. In a separate
lawsuit, Orion sued Celestron Acquisition, LLC under the UVTA, alleging “that after the
federal court entered judgment against Ningbo Sunny, but before Orion was permitted to
collect on the judgment, Celestron and Ningbo Sunny arranged to have Celestron pay an
approximately $4.2 million debt to Ningbo Sunny that was not yet due.” Id. In doing so,
“Celestron undermined Orion’s ability to collect on its judgment by eliminating a
significant accounts receivable asset, and by sending the funds to China, effectively putting
them out of Orion’s reach.” Id.
On appeal, the California Court of Appeal held Celestron could not be directly liable
to Orion for purposes of the UVTA because there is no authority holding that “a debtor’s
debtor may be held directly liable to the debtor’s creditor as a transfer beneficiary under
the UVTA.” 	Optronic Techs., Inc., 108 Cal. App. 5th at 783–84. That conclusion raised
the follow-up question of whether Orion could hold Celestron vicariously liable under a
or other non-debtor parties[.]’” 	In re Chugach Forest Prods., Inc., 23 F.3d 241, 246 (9th Cir. 1994)
(citation modified).
No party has asked the Court to deviate from the general rule in this case. The Court therefore
proceeds to address the aiding and abetting claim against the remaining Defendants, even though this
claim is related to the fraudulent transfer claims against Stemedica. See id.
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conspiracy or aiding and abetting theory. Id. at 783. The court concluded Orion adequately
alleged such a claim. 	Id. at 785–86. 	It reasoned that “Orion alleged that Celestron and
Ningbo Sunny arranged and completed the transfer outside the course of ordinary business
for the purpose of thwarting Orion’s efforts to collect on its judgment against Ningbo
Sunny.” Id. at 786. Further, Orion “alleged that Celestron was aware of Orion’s judgment
and [the] declaration about not transferring assets out of the country.” Id. Finally, “Orion
alleged that Celestron ‘directly participated in a scheme to orchestrate the Fraudulent
Transfer,’ and was ‘separately liable because [Celestron] aided and abetted and conspired
in the wrongful conduct.’” Id. (alteration in original). The Court of Appeal thus held the
trial court erred in dismissing the fraudulent transfer claim. Id. at 787.
Turning to the allegations here, Plaintiffs allege Roger Howe, Maynard Howe,
Nikolai Tankovich, and Michael Steinhauser “were aware of Plaintiffs’ draft complaint
and/or Plaintiffs’ claims before February 4, 2025.” 	(FAC ¶ 482.) 	Indeed, Plaintiffs
contend the parties entered into a Tolling Agreement on June 24, 2021, as well as six
amendments to that contract, which tolled the statute of limitations for Plaintiffs’ claims
through February 28, 2025. (See FAC ¶¶ 410–17.) Plaintiffs further aver that on February
4, 2025, “Stemedica transferred its assets to SanoStem with [an] actual intent to hinder,
delay, or defraud Plaintiffs as Stemedica’s creditors.” 	(Id. ¶ 483.) 	Plaintiffs claim
Defendants “knew this transfer was being made to evade Plaintiffs’ collection efforts.”
And despite their knowledge, these “Defendants assisted with the fraudulent transfer by,
among other things, preparing and signing documents and advising Stemedica on how to
evade Plaintiffs’ claims.” (Id. ¶ 486.) There are additional factual allegations to support
these averments. (See id. ¶¶ 391–407.)
The Court starts with the more straightforward challenge to the eighth claim. 	Roger
Howe, Maynard Howe, and Nikolai Tankovich argue the Complaint fails to allege a
fraudulent transfer claim because “the gravamen of Plaintiffs’ claim is that Stemedica
destroyed CardioCell by failing to comply with contractual obligations to supply stem cells
and funding.” 	(CardioCell Defs.’ Mot. 24:25–26:7.) 	In other words, these Defendants
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contend the fraudulent transfer claim must fail because Plaintiffs’ other causes of action
fail. 	(See id.) 	Because the Court was unpersuaded above by Defendants’ challenge to
some of the underlying claims, this argument, too, is unpersuasive.
Second, these Defendants posit that the eighth claim fails because Plaintiffs “do not
allege they were a creditor of the moving Defendants, nor do they allege the moving
Defendants were recipients of the fraudulent transfer.” (CardioCell Defs.’ Mot. 25:4–6.)
This argument overlooks that the eighth claim pleads vicarious liability for aiding and
abetting a fraudulent transfer, which is recognized under California law. 	See Optronic
Techs., Inc., 108 Cal. App. 5th at 784–85. Because Defendants do not address that theory,
their challenge misses the mark, and the Court denies Roger Howe, Maynard Howe, and
Nikolai Tankovich’s Motion to Dismiss the eighth cause of action.
Michael Steinhauser’s Motion to Dismiss comes closer to the target. 	He argues:
“Because Plaintiffs have alleged no facts, nor could they, to show that an alleged fraudulent
transfer of Stemedica to SanoStem occurred, Plaintiffs cannot show that Steinhauser ‘aided
and abetted’ in a fraudulent transfer.”11 (Steinhauser’s Mot. 5:25–28.) See In re Ryan, No.
05-32933DM, 2008 WL 4829947, at *3 (Bankr. N.D. Cal. Oct. 29, 2008) (“Without the
underlying tort of fraudulent transfer, under California law the [plaintiffs] have no
independent claim against defendant . . . for a conspiracy to commit, or aid and abet in, the
tortious act of fraudulent transfer.”).
The decisive issue for Steinhauser’s Motion, then, is whether a transfer between
Stemedica and SanoStem has occurred. Steinhauser argues that “Plaintiffs admit in their
Amended Complaint that no transfer has occurred yet.” 	(Steinhauser’s Mot. 6:25–28.)
11 	Plaintiffs and Michael Steinhauser disagree over whether Rule 9(b) applies to this cause of
action. (See Steinhauser’s Mot. 4:24–5:10; Opp’n to Steinhauser’s Mot. 9:14–25.) This Court has applied
Rule 9(b) to claims “for actual fraudulent transfer,” as opposed to claims for “constructive fraudulent
transfer,” which do not include an element of fraud. Bank of Texas v. Patel, No. 16-CV-2692-BAS(BGS),
2017 WL 2985133, at *3 (S.D. Cal. July 12, 2017); see also, e.g., Kelleher v. Kelleher, No. 13-CV-05450-
MEJ, 2014 WL 94197, at *5–6 (N.D. Cal. Jan. 9, 2014). Regardless, the arguments raised in Steinhauser’s
Motion to Dismiss more readily fit under Rule 12(b)(6), as opposed to Rule 9(b)’s particularity
requirement. So, the Court finds this issue does not impact the outcome of Steinhauser’s Motion.
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“Plaintiffs acknowledge that Shivinder Deol, SanoStem’s Global Chairman, e-mailed
Plaintiffs’ counsel on March 12, 2025, asserting, among other things, that ‘no money has
been paid to date. If the sale does get voided, that will mean eventually, no money will be
transferred’ in connection with the sale of Stemedica to SanoStem.” (Id. 7:3–7 (emphasis
omitted) (quoting FAC ¶ 407).) 	Plaintiffs respond that the email Steinhauser selectively
quotes from the Complaint “clearly state[s] that a sale has occurred which may get voided
(presumably if this lawsuit is successful).” (Opp’n to Steinhauser’s Mot. 11:13–20.) “The
fact that the email says no money has yet been paid does not mean that the referenced sale
that was publicly announced has not occurred.” (Id. 11:18–20.)
The Court repeats the familiar rule that it must accept the Complaint’s factual
allegations as true and construe them in Plaintiffs’ favor when resolving Steinhauser’s Rule
12(b)(6) Motion. See Iqbal, 556 U.S. at 679. Whether a transfer has in fact occurred may
be a disputed issue, but the Complaint plainly alleges such a transfer has taken place. (See,
e.g., FAC ¶ 30 (“[T]he Howe brothers engineered a sale of Stemedica to a newly created
company, SanoStem.”); id. ¶ 31 (alleging “SanoStem’s website (sanostem.com) announced
the February 4, 2025 ‘full acquisition’ in Stemedica”); 	id. 	¶ 398 (alleging one of
Defendants wrote to Plaintiffs: “Dear Nina and Sergey, Duniya SanoStem Inc. (SanoStem)
has fully acquired Stemedica’s assets including all the IND”).) Suffice it to say, the Court
cannot pierce the allegations and determine which party is telling the truth. See Iqbal, 556
U.S. at 679. 	There are sufficient allegations to plead the existence of a “transfer” under
the UVTA’s broad definition. 	See 	Cal. Civ. Code § 3439.01(m). 	Consequently,
Steinhauser’s Motion to Dismiss is denied.12
12 	Michael Steinhauser also echoes the CardioCell Defendants’ argument that Plaintiffs are not
“creditors” under the UVTA because they do not allege a viable theory of recovery with respect to their
underlying claims. (Steinhauser’s Mot. 7:13–20.) 	Steinhauser’s challenge comes up short for the same
reason the CardioCell Defendants’ argument fails above.
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F. 	Unjust Enrichment
Defendants move to dismiss the twelfth cause of action, which is styled as a claim
for “unjust enrichment.” 	In their final claim, Plaintiffs allege Defendants enriched
themselves, and Plaintiffs “seek an order from this Court disgorging all profits, benefits,
and other compensation obtained by the individual Defendants due to their wrongful
conduct.” (FAC ¶¶ 525–30.)
As David Howe’s Motion points out, “[t]here is no cause of action in California
labeled ‘unjust enrichment.’” City of Oakland v. Oakland Raiders, 83 Cal. App. 5th 458,
477 (2022). Plaintiffs respond that this Court “recently denied a motion to dismiss a similar
claim.” (Opp’n to D. Howe’s Mot. 25:1–2 (citing Cosmonova, LLC v. BioFilm, Inc., 763
F. Supp. 3d 1157, 1171 (S.D. Cal. 2025)).) 	But this Court did not make that decision.
Rather, the undersigned has routinely dismissed claims for unjust enrichment at the
pleadings stage. 	See, e.g., Greenley v. Kochava, Inc., 684 F. Supp. 3d 1024, 1055 (S.D.
Cal. 2023) (“Plaintiff’s final cause of action is for ‘unjust enrichment,’ which is not a stand-
alone cause of action.” (citing Hill v. Roll Int’l Corp., 195 Cal. App. 4th 1295, 1307
(2011))). Consequently, the Court grants the request to dismiss the unjust enrichment cause
of action. Because amendment would be futile, this claim is dismissed with prejudice.
CONCLUSION
In light of the foregoing, the Court GRANTS David Howe’s Motion to Dismiss.
(ECF No. 37.) 	In addition, the Court GRANTS IN PART and DENIES IN PART
Defendants Maynard Howe, Nikolai Tankovich, Craig Carlson, Roger Howe, and Dirk
O’Hara’s Motion to Dismiss. 	(ECF No. 38.) 	Finally, the Court DENIES Michael
Steinhauser’s Motion to Dismiss. (ECF No. 39.) Specifically:
(1) 	The Court GRANTS the request to dismiss the ninth and tenth claims for violations
of RICO against David Howe, Craig Carlson, and Dirk O’Hara. These claims are
dismissed WITHOUT PREJUDICE.
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(2) 	The Court GRANTS the request to dismiss the second claim for fraudulent
inducement 	against 	Dirk 	O’Hara. 	This 	claim 	is 	dismissed 	WITHOUT
PREJUDICE.
(3) 	Under Rule 8, the Court DISMISSES the third claim for breach of fiduciary duty
against Maynard Howe, Nikolai Tankovich, Craig Carlson, Roger Howe, and Dirk
O’Hara. This claim is dismissed WITHOUT PREJUDICE.
(4) 	The Court GRANTS the request to dismiss the twelfth claim for unjust enrichment
against Maynard Howe, Nikolai Tankovich, Craig Carlson, Roger Howe, Dirk
O’Hara, David Howe, and Michael Steinhauser. 	This claim is dismissed WITH
PREJUDICE.
(5) 	As to all other claims, the Motions to Dismiss are DENIED.
If Plaintiffs choose to file a Second Amended Complaint, it must be filed no later
than April 9, 2026. 	Plaintiffs may not add any new parties or causes of action without
leave of court. If Plaintiffs do not file a Second Amended Complaint, then any outstanding
Answer to the First Amended Complaint must be filed no later than April 16, 2026.
IT IS SO ORDERED.
DATED: March 26, 2026
Hon. Cynthia Bashant, Chief Judge
United States District Court
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