‘Pharma Bro’ con­victed in hedge funds scheme

Austin American-Statesman - - BUSINESS - By Tom Hays and Larry Neumeister

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 the Brook­lyn court­house af­ter­ward, called his prose­cu­tion “a witch hunt of epic pro­por­tions” but con­ceded that maybe the gov­ern­ment had found “one or two broom­sticks.”

Asked about his client’s so­cial-me­dia an­tics, at­tor­ney Ben Braf­man said 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.

Within an hour of leav­ing the court, Shkreli was at home live-stream­ing on YouTube and call­ing the split ver­dict a vic­tory, de­spite his con­vic­tion on two of the most se­ri­ous counts. Pros­e­cu­tors had a dif­fer­ent take.

“There’s one state­ment that’s most im­por­tant and that’s the jury’s state­ment: guilty on those counts,” said Act­ing U.S. At­tor­ney Brid­get Ro­hde.

Pros­e­cu­tors had ac­cused Shkreli of re­peat­edly mis­lead­ing in­vestors about what he was do­ing with their money. Mostly, he was blow­ing their money 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 claim­ing he had $40 mil­lion in one of his funds at a time 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,” added an­other prose­cu­tor, Jac­que­lyn Ka­sulis.

But the case was tricky for the gov­ern­ment be­cause in­vestors who tes­ti­fied said 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.

“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 a “snake” and an­other “the face of cor­po­rate greed.”

Shkreli didn’t tes­tify. But rather than lay low like his lawyers wanted, he got into the act by us­ing Face­book to bash pros­e­cu­tors and news or­ga­ni­za­tions cov­er­ing his case. The judge or­dered Shkreli to keep his mouth shut in and around the court­room af­ter an­other rant to new re­porters cov­er­ing the trial. No sen­tenc­ing date was set. Af­ter agree­ing to con­tinue Shkreli’s $5 mil­lion bail, the judge told him: “I wish you well, Mr. Shkreli. See you soon.”


For­mer phar­ma­ceu­ti­cal ex­ec­u­tive Martin Shkreli (cen­ter) lis­tens as his at­tor­ney, Ben Braf­man (right), speaks af­ter a jury con­victed Shkreli on fed­eral charges he de­ceived in­vestors in failed hedge funds.

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