MANHATTAN (CN) – The Second Circuit on Thursday affirmed the conviction of “Pharma Bro” Martin Shkreli, who has been in federal prison since he was found guilty of securities fraud and conspiracy charges two years ago.
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% 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. Thanks to Thursday’s decision, he’ll stay there.
In his appeal to the Manhattan-based Second Circuit, Shkreli argued the instructions to jurors before they began their deliberations were “incorrect and confusing,” according to the ruling.
Shkreli specifically claimed that U.S. District Judge Kiyo Matsumoto was wrong to include a so-called “no ultimate harm” instruction on the securities fraud charges. He says the instruction was unduly prejudicial and caused jury confusion, resulting in a split verdict.
He was convicted by the 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.
Shkreli’s attorneys had argued in their appeals brief 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.” His investors did not actually lose money, they pointed out.
The Second Circuit disagreed.
“We agree with the government that a securities fraud charge without the [no ultimate harm] instruction would actually have constituted a windfall for Shkreli, whose defense was ‘exactly the kind of improper argument that the [no ultimate harm] instruction was designed to address,’” the unsigned seven-page ruling states.
The three-judge panel also upheld the order of forfeiture against Shkreli for over $7.3 million.
In arguing against the forfeiture amount, Shkreli had cited a court case that held “that the robust returns received by investors should reduce the forfeiture amount required of the defendant to zero.”
“However…we have held that ‘forfeiture is gain based,’ not based on the losses (or gains) to victims,” the ruling states. (Parentheses in original.)
The decision by the Second Circuit came nearly three weeks after the parties appeared for oral arguments. The panel in Shrekli’s case was comprised of U.S. Circuit Judges Dennis Jacobs, Debra Ann Livingston and Joseph Bianco.
Shkreli’s appeals lawyer Mark Baker said in a statement, “We’re obviously disappointed in the results and we’re considering whatever options are still available to us.”
Baker said he will consider whether an appeal to the U.S. Supreme Court is “in the client’s interest.”