‘Pharma Bro’ convicted of securities fraud
Martin Shkreli is found guilty on three out of eight counts of deceiving investors
NEW YORK— Martin Shkreli, the eccentric former pharmaceutical CEO notorious for a price-gouging scandal and for his snide “Pharma Bro” persona on social media, was convicted Friday on federal charges he deceived investors in a pair of failed hedge funds.
A Brooklyn jury deliberated five days before finding Shkreli guilty on three of eight counts. He had been charged with securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud.
Shkreli, upbeat and defiant outside court afterward, said he was “delighted to report” that he had been acquitted of what he called “the most important charges” in the case.
Asked about his client’s socialmedia antics, attorney Ben Brafman conceded it was something they would be working on.
“There is an image issue that Martin and I are going to be discussing in the next few days,” he said, adding that while Shkreli was a brilliant mind, sometimes his “people skills” need work. As he spoke, Shkreli smiled and cocked his head quizzically in mock confusion.
Brafman predicted that Shkreli would someday go on to develop cures to terrible diseases that afflict children.
Prosecutors had accused Shkreli of repeatedly misleading investors about what he was doing with their money. Mostly, he was blowing it with horrible stock picks, forcing him to cook up a scheme to recover millions in losses, they said.
Shkreli, 34, told “lies upon lies,” including claims that he had $40 million (U.S.) in one of his funds when it only had about $300 in the bank, Assistant U.S. Attorney Alixandra Smith said in closing arguments. The trial “has exposed Martin Shkreli for who he really is — a con man who stole millions,” said another prosecutor, Jacquelyn Kasulis.
But the case was tricky for the government because investors who testified conceded that Shkreli’s scheme actually succeeded in making them richer, in some cases doubling or even tripling their money on his company’s stock when it went public. The defence portrayed them as spoiled “rich people” who were the ones doing the manipulating.
“Who lost anything? Nobody,” Brafman said in his closing argument. Some investors had to admit on the witness stand that partnering with Shkreli was “the greatest investment I’ve ever made,” he added.
For the boyish-looking Shkreli, one of the biggest problems was not part of the case: his purchase in 2014 of rights to a life-saving drug that he promptly raised the price from $13.50 to $750 per pill. Several potential jurors were kept off the panel after expressing disdain for the defendant, with one calling him “the face of corporate greed.”
The defendant also came into the trial with a reputation for trolling his critics on social media to a degree that got him kicked off Twitter.
During about a month of testimony, Shkreli appeared engaged at times, grinning when his lawyer described him as a misunderstood misfit. Oth- er times he looked bored, staring into space and playing with his hair.
Shkreli, who comes from an Albanian family in Brooklyn, was arrested in 2015 on charges he looted another drug company he founded, Retrophin, of $11 million in stock and cash to pay back the hedge fund investors. Investors took the stand to accuse Shkreli of keeping them in the dark as his scheme unfolded.
“I don’t think it mattered to him — it was just what he thought he could get away with,” said Richard Kocher, a New Jersey construction company owner who invested $200,000 with Shkreli in 2012. “It was insulting.”
Shkreli’s lawyer agreed his client could be annoying, saying, “In terms of people skills, he’s impossible,” and referring to him as a “mad scientist.” But he said his hedge fund investors knew what they were getting.
“They found him strange. They found him weird. And they gave him money. Why? Because they recognized genius,” Brafman said, adding that they had signed agreements that his client wasn’t liable if they lost their money. No sentencing date was set. After agreeing to continue Shkreli’s $5 million bail, the judge said: “I wish you well, Mr. Shkreli. See you soon.”