And yet again, more slime from these creeps: B.

And yet again, more slime from these creeps:

B. Defendants’ “Jurisdictional” Arguments are Baseless and Not Jurisdictional
Defendants argue that this case should be dismissed for two reasons that defendants refer
to as “jurisdictional.” As a preliminary matter, neither of these issues is jurisdictional. It is blackletter
law that “venue is not jurisdictional.” Johnson v. Bryson, 851 F. Supp. 2d 688, 704 (S.D.N.Y.
2012). As to early notice, in the only case cited by Defendants where a court found notice to be
deficient, the court did not suggest that the deficiency was jurisdictional, and did not even dismiss
the case, but instead instructed the Plaintiff to republish notice. Teamsters Local 445 Freight Div.
Pension Fund v. Bombardier Inc., No. 05 CIV. 1898 (SAS), 2005 WL 1322721, at *2 (S.D.N.Y.
June 1, 2005). If the concern were jurisdictional, it could not be remedied by reissuing the notice.
1. Venue is Proper in this District
When evaluating venue, the Second Circuit has held that the Court is not limited to the four
corners of the Complaint, but if the Court does not hold an evidentiary hearing, and instead relies
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on the pleadings and affidavits3
submitted by the parties, dismissal is improper where the Plaintiff
makes a prima facie showing of venue. Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353, 355 (2d Cir.
2005). The Second Circuit has specifically held that the same standard of review applies in a
motion to dismiss for improper venue as a motion to dismiss for lack of personal jurisdiction. Id.
Therefore, following the Second Circuit’s holding regarding the standards for evaluating personal
jurisdiction, the court should take as true facts that are “either uncontested or appear from the
plaintiff's papers and affidavits”, unless the Court holds an evidentiary hearing. CutCo Indus., Inc.
v. Naughton, 806 F.2d 361, 363 (2d Cir. 1986); see also Williams v. Preeminent Protective Servs.,
Inc., 81 F. Supp. 3d 265, 269 (E.D.N.Y. 2015) (“Where, as here, the Court relies solely on the
submissions of the parties in ruling on the motion, plaintiffs satisfy that burden by pleading facts
sufficient to demonstrate a prima facie showing of jurisdiction or venue by way of the complaint's
allegations, affidavits, and other supporting evidence, which are evaluated in the light most
favorable to them.”).
For lawsuits under the Exchange Act, “[a]ny suit or action to enforce any liability or duty
created by this chapter or rules and regulations thereunder, or to enjoin any violation of such
chapter or rules and regulations, may be brought in any such district or in the district wherein the
defendant is found or is an inhabitant or transacts business.” 15 U.S.C.A. § 78aa (West). The
Complaint states that a significant portion of Defendants’ actions and the subsequent damages took
place in New York. ¶10. Cellceutix traded on the OTC Pink Market, which is headquartered in
New York. ¶ 13, Declaration of Jonathan Stern Exhibit 1. When the target of a securities fraud is
a stock that is traded on the OTC Market, venue is proper in the Southern District of New York.
S.E.C. v. Boock, No. 09 CIV. 8261(DLC), 2010 WL 2398915, at *3 (S.D.N.Y. June 15, 2010). In

3
In the alternative, the matters addressed in the documents attached to the Declaration of Jonathan Stern are
judicially noticeable, as set forth in the accompanying request for judicial notice.
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addition, as one Court has held, when the Defendant corporation “was a publicly traded company
on the NASDAQ National Market and the alleged misstatements were widely disseminated and
defrauded a nationwide class, plaintiffs could theoretically have brought suit under section 27 in
any district in the United States.” In re Geopharma, Inc., No. 04 CIV. 9463 (SAS), 2005 WL
1123883, at *1 (S.D.N.Y. May 11, 2005). Cellceutix has also made investor presentations in New
York on September 9, 2013, September 9, 2014, and May 21, 2015. Declaration of Jonathan Stern,
Exhibit 2, see also Declaration of Michael Sullivan, Exhibit 14, referencing the 2013 presentation.
By marketing CTIX stock to investors, Defendants committed “non-trivial” acts in furtherance of
their fraudulent scheme in New York. Greenwood Partners v. New Frontier Media Inc., No. 99
CIV. 9099 WK, 2000 WL 278086, at *6 (S.D.N.Y. Mar. 14, 2000). Therefore, venue here is
proper.
2. There is No Requirement that the PSLRA Early Notice be Republished
Defendants argue that the PSLRA early notice must be republished because the Second
Amended Complaint extended the class period. However, Defendants have virtually no authority
for this proposition. Indeed, the only case they cite notes that “previous courts have addressed the
question of whether a new notice need be issued when the class period is amended-and have
generally answered that question in the negative” Teamsters Local 445 Freight Div. Pension Fund
v. Bombardier Inc., No. 05 CIV. 1898 (SAS), 2005 WL 1322721, at *2 (S.D.N.Y. June 1, 2005).
And the Court’s conclusion in Bombardier is correct. “Courts, however, disfavor republication of
notice under PSLRA when a class period is extended beyond the period contained in the first-filed
securities class action.” Turner v. ShengdaTech, Inc., No. 11 CIV. 1918 TPG, 2011 WL 6110438,
at *3 (S.D.N.Y. Dec. 6, 2011). Bomardier ordered republication because the Amended Complaint
included a new class of securities, specifically distinguished that situation from extending the class
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period, which didn’t warrant republication, and rather than dismiss the complaint, the Court simply ordered republication. Bombardier Inc., 2005 WL 1322721, at *2-3.
C. The Complaint Identifies Material False Statements
1. The Complaint Alleges the Falsity of the Claim that Menon attended
Harvard
The Complaint alleges that Menon falsely told Future Woman Magazine that he received
a PhD from Harvard. ¶22. That article quoted Menon, who was interviewed for the article, and
contained a detailed (and false) story of how Menon came to receive a PhD from Harvard. Id.
Exhibit 10 to the Declaration of Michael Sullivan (Docket No. 39-10). The Complaint also alleges
that Ehrlich, as CEO, had a duty to correct the Company’s pre-class-period statements that Menon
received a PhD from Harvard. This is a violation of Item 401(e)(1) of Regulation S-K, which
requires disclosure of the qualifications of directors. 17 C.F.R. § 229.401. Defendants
acknowledge that Menon did not attend Harvard and that, before the class period, Defendants
falsely claimed that Menon received a PhD from there. Instead, Defendants argue, with respect to
the Future Woman article, that Menon was not the “maker” of the statement, and with respect to
the duty to correct allegation, that Defendants corrected the misstatement before the class period
by removing the inaccurate information from Defendants’ annual report.
The Complaint plausibly alleges that Menon was the “maker” of the statement that
appeared in “Future Woman.” The Second Circuit has held that a defendant can be liable for a
misstatement disseminated by an analyst report where the complaint establishes that the defendant
“intentionally fostered a mistaken belief concerning a material fact that was incorporated into
reports.” Novak v. Kasaks, 216 F.3d 300, 314 (2d Cir. 2000) (internal quotes and brackets
omitted). There is no reason this precedent should not apply equally to media reports. The
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Complaint properly establishes a plausible inference that Menon intentionally fostered the false
claim that he went to Harvard. The Future Woman article quoted Menon and stated that it was
based on an interview of him. It not only stated that Menon had attended Harvard, it also told a
detailed story about how Menon came to attend Harvard, stating that Thomas Frei, of the Dana
Farbert Institute, admitted Menon to Harvard as a PhD student so that Menon would be eligible to
work at the lab. ¶22, n.1. It is hard to imagine where this story would come from if not Menon
himself, as the article does not state that Frei was interviewed. Nor does it quote Frei. It is certainly
a plausible inference that during the interview, Menon provided this information to Future Woman.
Therefore, at the pleading stage, there is no basis to reject this allegation on the basis of Janus.
Janus Capital Grp., Inc. v. First Derivative Traders, 564 U.S. 135, 131 S. Ct. 2296, 180 L. Ed. 2d
166 (2011), see U.S. S.E.C. v. Geswein, 2 F. Supp. 3d 1074, 1080 (N.D. Ohio 2014) (“Whether or
not Geswein possessed ‘ultimate authority’ over the allegedly false statements, their content, or
how they were communicated; whether Geswein is the ‘maker’ because he signed Diebold
documents or signed Sarbanes–Oxley certifications; and the extent of Geswein's involvement in
the preparation of press releases, all require fact-intensive discovery.”). Defendants claim that this
statement is inapplicable because Menon did not, subsequent to the release of the Future Woman
Report, place his “imprimatur” on the report. But the case they rely on, Elkind, held that third party
statements are attributable to corporate officers either “where management intentionally fosters a
mistaken belief concerning a material fact” or where they place there imprimateur on a statement.
Elkind v. Liggett & Myers, Inc., 635 F.2d 156, 164 (2d Cir. 1980); see also Novak v. Kasaks, 216
F.3d at 314 (interpreting Elkind).
The Complaint also properly alleges that Ehrlich failed to correct Menon’s false claim to
have received a PhD from Harvard. The Second Circuit has recognized a duty to correct false statements under Section 10(b). Overton v. Todman & Co., CPAs, P.C., 478 F.3d 479, 487 (2d Cir.
2007). Defendants argue that they did correct the inaccurate information by stating that Menon
received a PhD from Kerala University, and by ceasing to falsely claim that he received a PhD
from Harvard. But there is not merely a duty to cease making false statements when a party realizes
that they are false. There is also a duty to correct the false statements, and Defendants never
affirmatively corrected the false statement during the class period that Menon did not go to
Harvard. Defendants have also suggested that the truth was “on the market” because Cellceutix’s
SEC filings ceased claiming that Menon received a PhD from Harvard. But the Cellceutix SEC
filings never actually denied that Menon received a PhD from Harvard. Therefore, shareholders
would not have been on notice that Menon had not received one.
Moreover, the misstatement was material. “[W]hen presented with a Rule 12(b)(6) motion,
‘a complaint may not properly be dismissed ... on the ground that the alleged misstatements or
omissions are not material unless they are so obviously unimportant to a reasonable investor that
reasonable minds could not differ on the question of their importance.’” Ganino v. Citizens
Utilities Co., 228 F.3d 154, 162 (2d Cir. 2000) (citing Goldman v. Belden, 754 F.2d 1059, 1067
(2d Cir.1985)). This Court has held that when a corporate officer fails to properly disclose their
background, whether that information is material is not to be resolved on a motion to dismiss.
Nanopierce Techs., Inc. v. Southridge Capital Mgmt. LLC, No. 02 CIV. 0767 (LBS), 2003 WL
22882137, at *4 (S.D.N.Y. Dec. 4, 2003) ). The Northern District of Illinois recently found that a
Defendant made a materially misleading omission by concealing that an officer was associated
with Stratten Oakmont, the notorious boiler room co-founded by the “Wolf of Wall Street” Jordan
Belfort. Kelsey v. Allin, No. 14 C 7837, 2016 WL 825236, at *3 (N.D. Ill. Mar. 2, 2016. Defendants
cite a Fourth Circuit case to argue that an officer lying about their education is immaterial.However, the Court did not hold such fraud is always immaterial. “[W]e do not hold as a matter
of law that a key manager's education could never be material.” Greenhouse v. MCG Capital
Corp., 392 F.3d 650, 658 (4th Cir. 2004). And the court in MCG held that in context, MCG’s
omission was immaterial because there was virtually no other issue with MCG’s public statements.
Here, by contrast, Menon was a serial fabulist about his reputation. Menon misrepresented his role
in working on blockbuster drugs at Ely Lily. ¶52. Menon also exaggerated his role in the invention
of Kevetrin. ¶54. Greenhouse itself cited other cases where courts have found misstatements
regarding Defendants’ resume to be material. SEC v. Physicians Guardian Unit Inv. Trust, 72
F.Supp.2d 1342 (M.D.Fla.1999); SEC v. Suter, No. 81 C 3865, 1983 WL 1287 (N.D.Ill.1983).