For­mer exec guilty of fraud

Shkreli tied to se­cu­ri­ties con

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - TOM HAYS AND LARRY NEUMEISTER

NEW YORK — Martin Shkreli, the for­mer phar­ma­ceu­ti­cal CEO no­to­ri­ous for a price-goug­ing scan­dal and for his “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 on which they would be work­ing.

“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 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 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 Shkreli, one of the big­gest prob­lems was not part of the case — pur­chas­ing as chief ex­ec­u­tive of Tur­ing Phar­ma­ceu­ti­cals the rights to a life­sav­ing drug and promptly rais­ing 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.”

The de­fen­dant also en­tered the trial with a rep­u­ta­tion for trolling his crit­ics on so­cial me­dia to a de­gree that got him kicked off Twit­ter and for live-stream­ing him­self giv­ing math lessons or do­ing noth­ing more than pet­ting his cat, named Trashy. Among his other an­tics: boast­ing about buy­ing a one-of-a-kind Wu-Tang Clan al­bum for $2 mil­lion.

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 wit­ness 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.

Shkreli’s lawyer agreed his client could be an­noy­ing but 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.

Ju­rors also heard odd vi­gnettes be­fit­ting the quirky de­fen­dant: how Shkreli slept on the floor of his of­fice in a sleep­ing bag for two years; how a drug com­pany board mem­ber and for­mer Amer­i­can Ex­press ex­ec­u­tive wrote an email say­ing he would meet with Shkreli “only if I can touch your soft skin”; how Shkreli wrote a let­ter to the wife of an em­ployee threat­en­ing to make the fam­ily home­less if the man didn’t set­tle a debt.

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. In one re­cent post, he wrote, “My case is a silly witch hunt per­pe­trated by self-serv­ing pros­e­cu­tors. … Drain the swamp. Drain the sewer that is the (Depart­ment of Jus­tice).”

The judge or­dered Shkreli to keep his mouth shut in and around the court­room af­ter an­other rant to new re­porters cov­er­ing the trial.

Pros­e­cu­tors “blame me for ev­ery­thing,” he said. “They blame me for cap­i­tal­ism.”

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.”


Martin Shkreli ar­rives Fri­day at fed­eral court in New York with his at­tor­neys. Shkreli called his prose­cu­tion “a witch hunt of epic pro­por­tions” but said the gov­ern­ment pos­si­bly had found “one or two broom­sticks.”

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