‘Pharma Bro’ convicted in hedge funds scheme
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.