‘Pharma Bro’ Shkreli found guilty of fraud
Martin Shkreli, the eccentric former pharmaceutical CEO notorious for a pricegouging scandal and for his snide “Pharma Bro” persona on social media, is convicted on federal charges he deceived investors in a pair of failed hedge funds.
NEW YORK — Martin Shkreli, accused of defrauding his hedge fund investors and a pharmaceutical company, was convicted on three of eight counts on Friday, after a five-week trial in U.S. District Court in Brooklyn, N.Y.
Shkreli was convicted of securities fraud in connection with his hedge fund MSMB Capital; of securities fraud in connection with another hedge fund he ran, MSMB Healthcare; and of conspiracy to commit securities fraud, related to a scheme in which he tried to secretly control a huge portion of shares of Retrophin, a drug company he started.
He faces up to 20 years on each of the first two counts, and up to five years on the final count.
The conviction, even as a mixed verdict, was a major defeat for the divisive Shkreli, who said
before the trial that he was “so innocent” that the judge, jury and prosecutors would apologize to him afterward.
Shkreli, 34, was acquitted of the count that potentially carried the most weight for sentencing: count seven, which charged him with defrauding Retrophin by creating sham consulting agreements and unauthorized settlement agreements. That charge was associated with the biggest financial loss, which judges take into account when deciding on sentences in fraud cases.
Bridget Rohde, the acting U.S. attorney for the Eastern District of New York, the federal prosecutors’ office in Brooklyn, said she was “gratified” with the verdict. “Our work is not done: Shkreli remains to be sentenced, and there’s a co-defendant in the case,” she said, referring to Evan Greebel, Shkreli’s onetime lawyer, who is scheduled to be tried in the fall.
The jury, which was outwardly quiet during its fiveday deliberation — it sent only one substantive note — was never deadlocked, said one juror, who spoke after the verdict on condition of anonymity because he did not want his name immediately associated with the case.
He described the deliberation method as methodical and logical and said the jurors had focused on whether Shkreli had intended to harm investors who gave him money.
“In some of the counts at least we couldn’t find that he intentionally stole from them and the reasoning was to hurt them,” the juror said.
As Judge Kiyo Matsumoto read the verdict, Shkreli, wearing a black polo shirt and khakis, stood with his arms crossed.
He showed outward relief when Matsumoto said he was found not guilty on count seven, mouthing “Yes” and patting his lawyer Benjamin Brafman on the back. When she said he was guilty of count eight, the Retrophin securities-fraud conspiracy, he hung his head. After the verdict was read, he gathered in a circle with his lawyers, looking a little shaken, then pulled on a hoodie. By the time he got outside court, where he gave his statements, he was smiling and speaking smoothly.
A sentencing date was not set.
Shkreli became widely known after raising the price of a drug called Daraprim to $750 a pill from $13.50 overnight.
He courted controversy, defending the price increase, then bragging that he had bought the sole copy of a Wu-Tang Clan album for a reported $1 million.
The case against him, however, has nothing to do with the Daraprim pricing, and the federal investigation into Shkreli’s hedge fund and Retrophin work began well before the other controversies.
The verdict was a partial win for federal prosecutors in the Eastern District of New York, who had pursued the case for more than four years and have been trying to build up their business unit to compete with their colleagues in Manhattan.