BROOKLYN, N.Y. (CN) – Denying an acquittal to Martin Shkreli, a federal judge ruled Monday that the former pharmaceutical executive’s securities fraud caused more than $10 million in losses.
The loss amount calculated by U.S. District Judge Kiyo Matsumoto in Brooklyn is separate from the still-undetermined amount that 34-year-old Shkreli will owe the government in forfeitures. The government has demanded $7.3 million in cash and assets including a Picasso painting, an unreleased album by Lil Wayne, and the only copy of the Wu-Tang Clan’s leather-bound album “Once Upon a Time in Shaolin.”
Defense attorney Benjamin Brafman noted disappointment in Monday’s ruling but said in an email that he hopes Judge Matsumoto “will find it in her heart to impose a reasonably lenient sentence on March 9.”
Shkreli faces up to 20 years in prison after a jury convicted him in August of looting revenue from his drug company Retrophin to compensate investors in his failing hedge funds — MSMB Healthcare and MSMB Capital.
At a forfeiture and loss hearing Friday morning over which Matsumoto presided, attorney Brafman repeated his argument that Shkreli should owe nothing, claiming that the Ponzi-like scheme did not profit Shkreli or hurt the investors.
“This has to be one of the most unusual securities fraud cases that I’ve ever been involved in,” Brafman said Friday. “There is no restitution … because at the end of the day, all the investors made substantial money.”
Matsumoto disagreed, calculating losses of $2.99 million on one count of securities fraud, $3.4 million on the other and $4 million on the count of securities-fraud conspiracy. She cited the Second Circuit, which “repeatedly has held that loss in fraud cases includes the amount of property taken, even if all or part has been returned.”
“The evidence also supports the jury’s conclusion that Mr. Shkreli did not manage MSMB Healthcare for the benefit of investors, but instead used it to fund his own personal or unrelated professional debts and to support the development of Retrophin,” Matsumoto wrote.
Friday’s hearing was Shkreli’s first court appearance since he was taken into custody in September after offering a bounty for a lock of Hillary Clinton’s hair. Sporting a trim beard, slate-blue prison garb and dark-rimmed glasses, Shkreli smiled throughout the hearing and made other mocking expressions that helped earn him the nickname “pharma bro” on the road to trial.
Before his 2015 indictment, Shkreli had gained notoriety for jacking up the price of life-saving AIDS drug Daraprim by 5,000 percent.
Matsumoto’s 96-page opinion Monday recaps much of the evidence presented at Shkreli’s trial and says that Shkreli and Retrophin’s outside counsel, Evan Greebel, had conspired to control trading of shares.
The government declined to comment on Matsumoto’s ruling Monday.
With Shkreli set to be sentenced on March 9, his defense team must submit their recommendations by Feb. 27. The government will have until March 5 to respond.