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Monday, July 15, 2024 | Back issues
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Shkreli to Learn Sentence Friday for Securities Fraud

Already jailed these last six months after trollish antics led to revocation of his bond, Martin Shkreli will learn Friday what sentence awaits him for three counts of securities fraud and conspiracy.

BROOKLYN, N.Y. (CN) - Already jailed these last six months after trollish antics led to revocation of his bond, Martin Shkreli will learn Friday what sentence awaits him for three counts of securities fraud and conspiracy.

In a December email from Brooklyn’s Metropolitan Detention Center, Shkreli showed characteristic aplomb about his August convictions, saying the government’s win was “as close to a loss as a loss gets.”

The charges against Shkreli, who turns 35 on March 17, described a Ponzi-like scheme where Shkreli looted revenue from his drug company Retrophin to compensate investors in his failing hedge funds — MSMB Healthcare and MSMB Capital.

In a sentencing memorandum for Shkreli last month, defense attorney Benjamin Brafman used character references written by Shkreli’s friends and family to paint his client as a complex and altruistic, if impulsive and social media-obsessed savant.

One of those references was by childhood friend Franky Guttman, a comedy editor who worked Fox’s “The Last Man on Earth” and the documentary “Free Money.”

Maintaining that Shkreli’s criminal acts were driven by good intentions, Brafman noted that Shkreli, unlike most securities fraudsters, had not spent the money on lavish toys or vacations for himself.

“The evidence showed that Martin wanted to achieve success by impressing these impressive people, not by inadvertently losing their money through ill-fated investments and certainly not by stealing from them,” Brafman wrote.

Prosecutors have painted a more sinister view, however, of Shkreli’s activities.

“There can also be no question that Shkreli received a significant reputational benefit from his crimes, as he was able to hold himself out for years as a successful hedge fund manager and pharmaceutical wunderkind to potential investors, adoring fans on social media and industry figures whose respect Shkreli craved,” a memo filed March 6 states.

Clocking in at 68 pages, the government’s memo asks U.S. District Judge Kiyo Matsumoto to assign a sentence of no less than 15 years, a downward departure from guidelines recommendations of 27 to 34 years.

Framing the defendant as a manipulative liar with a “shifting persona,” the government said Shkreli “compounded the lies with a pattern of corrupt behavior designed to cover up those lies.”

The memo also attacks Shkreli’s character, from the months leading up to his arrest to his bizarre, cocky behavior at trial last summer.

Shkreli is widely reviled hiking the price of the lifesaving AIDS drug Daraprim from $13.50 to $750 a tablet. He appeared to show no remorse for the move afterward, smirking through a congressional hearing and calling Congress members “imbeciles” afterward.

Emphasizing this lack of remorse, the government noted how Shkreli replied in an email from jail to an acquaintance who suggested he apologize “for being a dick.”

“Being a dick to who?” Shkreli responded, as quoted in the memo. “I don’t think the giraffe apologizes for his long neck. it’s what makes me, me.”

Brafman’s sentencing memo offers an explanation for this brash personality, noting that Shkreli’s “extraordinary intellect” and different social abilities made it hard for him to relate to or communicate with others during his youth.

Shkreli’s parents are also Albanian immigrants, which Brafman said further complicated his client’s early life.

The government’s memo, by contrast, mentions Shkreli’s online harassment of Teen Vogue columnist Lauren Duca in 2018 after she publicly declined to accompany him to President Trump’s inauguration.

His treatment of Duca got him banned from Twitter, and the government also mentioned Shkreli’s threats against Hillary Clinton. In the crunch before last year’s presidential election, Judge Matsumoto revoked Shkreli’s bond because he urged his more than 70,000 Facebook followers to collect locks of Hillary Clinton’s hair for a $5,000 per-strand bounty.

Matsumoto ruled on Feb. 26 that the loss amount from Shkreli’s crimes was $10.4 million, and she ordered $7.36 million in forfeitures on Monday.

Among these forfeited assets are a one-of-a-kind Wu-Tang Clan album, a Lil Wayne album and a Picasso painting.

The memo from defense attorney Brafman meanwhile asked for a sentence not to exceed 18 months in prison, plus therapy and community service.

“We all hope [Shkreli] will move beyond the realm of social-media distraction and devote his full effort to being a man of significance and moral strength,” the memo states.

Arguing that the Shkreli’s investors made money on his scheme, the memo devotes sections and subsections to “The True Nature of Martin Shkreli,” “Shkreli’s Early Years” and “Martin’s Remorse.”

“How is it that someone who made millions of dollars for his investors, albeit causing these millionaires ‘frustration’ along the way, would become the target of a federal prosecution and end up before a sentencing court?” Brafman’s memo states.

Just after Christmas, Retrophin’s outside counsel, Evan Greebel, was also found guilty of two counts of conspiracy. Greebel awaits sentencing amid allegations of juror misconduct.

Categories / Criminal, Securities, Trials

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