MANHATTAN (CN) – Fighting to overturn Martin Shkreli’s fraud conviction, attorneys for the onetime pharmaceutical wunderkind told the Second Circuit on Friday that bad jury instructions caused a split verdict.
Shkreli, 36, gained notoriety as the young CEO of Turing Pharmaceuticals for jacking up the price of the life-saving AIDS drug Daraprim by 5,000 percent in 2015. Today, however, the Brooklyn-born Shkreli is serving a seven-year stint at a low-security federal prison in Allenwood, Pennsylvania, for securities fraud.
Shkreli was convicted by a federal jury in August 2017 for looting revenue from Retrophin, another of his drug companies, to compensate investors in his failing hedge funds — MSMB Healthcare and MSMB Capital.
The jury found Shkreli guilty on three out of eight criminal counts – two counts of substantive securities fraud and one count of conspiracy to commit securities fraud.
He was found not guilty of five other counts, including wire fraud.
On appeal, Shkreli claims that U.S. District Judge Kiyo Matsumoto was wrong to include a so-called “no ultimate harm” instruction to jurors. He says the instruction was unduly prejudicial and caused jury confusion, resulting in the split verdict.
Shkreli’s attorneys argued in their appeals brief that the jury should have been instructed that, for Shkreli to be guilty of securities fraud, he must have made false statements “for the purpose of causing some loss to another.”
Shkreli is represented by attorney Mark Baker from Brafman & Associates, the firm that also represented him at trial.
“The split verdict in this case speaks volumes” as to the care that the jury took to the instructions, Baker said in court Friday.
Baker also argued that the jury’s split verdict “doesn’t make any sense unless they were confused,” noting that the jury had asked for clarification during deliberations of “fraudulent intent” and was directed in response to re-read the court’s instructions regarding “no ultimate harm.”
“It’s irrelevant to a count that doesn’t have that element in it,” Baker remarked about the jury instruction.
On rebuttal, Baker added that the “robust gains” that Shkreli paid back to investors were greater than what they had invested and should wipe out the forfeiture ordered by Judge Matsumoto.
Matsumoto in 2018 put the loss amount from Shkreli’s crimes at $10.4 million and ordered $7.36 million in forfeitures. Among these forfeited assets are a Picasso painting, the one-of-a-kind sole copy of the Wu-Tang Clan album “Once Upon a Time in Shaolin,” and a Lil Wayne album.
Shkreli was not present at the Second Circuit arguments in Manhattan on Friday.
Assistant U.S. Attorney Alixandra Smith, who prosecuted Shkreli in the Eastern District trial, represented the government at the Second Circuit hearing.
The three-judge panel who heard Shkreli’s arguments Friday was composed of U.S. Circuit Judges Dennis Jacobs, Debra Ann Livingston, and Joseph Bianco.
The panel took the arguments under consideration.
Last month, Shkreli sued two Retrophin directors and its ex-general counsel over his ouster from the company in 2014.
Three weeks later, a spokeswoman for the biopharmaceutical company said Shkreli and Retrophin had settled all outstanding disputes with Retrophin.