Shkreli prepares for trial: ‘I’m so innocent’
Martin Shkreli, former hedge fund manager, “pharma bro” and self-styled bad boy, sat in federal court for a hearing last week.
Like most defendants, he sat mostly still; like most defendants, he stayed quiet, declining to speak to reporters as he left.
Then he went home, turned on his webcam and livestreamed himself on the computer for almost 2½ hours. He played “League of Legends.” He filled in Excel models on pharmaceutical stocks and bonds. He drank Coca-Cola and checked Twitter. He voice chatted while live chatting in another window while playing online chess. The only sign that he would go on trial Monday was a window that could be seen briefly, a PowerPoint titled “Witness Guide” and a slide on a former boss.
This is how a self-promoter goes to trial.
In January 2015, learning that federal prosecutors had opened an investigation,
Shkreli volunteered to meet with prosecutors and FBI agents — without a lawyer. After agents arrested him in December 2015, he continued to talk, making “additional oneoff statements,” according to a prosecution filing, even as he was recorded. The next day, at home, he live-streamed for almost five hours. “Sorry I couldn’t live-stream yesterday. Had a lot going on,” he told viewers.
Shkreli, who has run several hedge funds and pharmaceutical companies, is perhaps best known for increasing the price on the drug Daraprim, which treats a parasitic infection, to $750 a tablet from $13.50, when he was CEO of Turing Pharmaceuticals in 2015.
His trial, in U.S. District Court in Brooklyn, is on eight counts of securities and wire fraud. The charges stem from two hedge funds he founded and ran between 2009 and 2012, MSMB Capital Management and MSMB Healthcare, and from Retrophin, a biopharmaceutical company he founded in 2011. Shkreli has denied the charges.
The indictment contends that Shkreli lied about the funds’ performance, about how much money investors had put into the funds, and about how much he withdrew from the funds for himself.
Investors began to get suspicious after he told them, in September 2012, that he was winding down both funds and that they could redeem their stakes for cash or for shares in Retrophin, according to the indictment. But Shkreli didn’t give cash to those who had requested it.
According to the indictment, he then arranged to pay the hedge fund investors through Retrophin. He created settlements without board approval, and made up sham consulting agreements with hedge fund investors so that Retrophin routed them money.
A lawyer for Shkreli, Benjamin Brafman, said, “Because of the many complicated issues in this trial, I am intent on doing all of my commenting in the courtroom, not in the press.”
Shkreli is a curious mix of blue-collar-boy-madegood and attention seeker — particularly when that attention is negative.
Born to Albanian parents in Brooklyn who worked as janitors, Shkreli, 34, attended the competitive public Hunter College High School in Manhattan, landed an internship at the hedge fund of the CNBC star Jim Cramer in high school, and went on to Baruch College, a City University of New York school.
While at Baruch, he continued working at Cramer’s company, and at night read patent filings and other drug-research documents, according to a filing by his lawyers. He started his first hedge fund in 2006, then MSMB Capital in 2009, followed by running pharmaceutical companies Retrophin, Turing and one other.
Vilified by the public and politicians for the Daraprim price increase, Shkreli responded by buying another drug that treated a rare disease and announcing he would raise the price on that one, too.
Called before Congress last year to testify at a hearing on drug prices — after his indictment, when some public sympathy might have helped — Shkreli invoked the Fifth Amendment, smirked through the hearing, and afterward tweeted “Hard to accept that these imbeciles represent the people in our government.”
He harassed a journalist on Twitter until he was banned from the site. Derisively called “pharma bro” on social media, Shkreli now uses PharmaBroMS as his handle in the “League of Legends.”
While neither his personality nor the pharmaceutical prices are on trial, Shkreli’s out-ofcourt exploits have already complicated his lawyers’ in-court arguments.
At the hearing last week, they indicated they would portray Shkreli as a “boy genius” who never meant to defraud his investors — who ultimately got their money back.
Prosecutor Jacquelyn Kasulis argued that investors getting money back was not a legitimate defense. Fraud, she said, can mean depriving investors of a right to control their assets.
“There is law here, there are rules, they apply to Mr. Shkreli,” she said.
The trial is expected to last six weeks.
“I’m so innocent, the jury, judge and the prosecution are gonna give me an apology,” Shkreli said in a recent live stream.
The cost of his defense, though, has already affected one of his bragging rights: how rich he is.
Shkreli told federal authorities he was worth $70 million after he was arrested, prosecutor Alixandra Smith said.
But in asking for a reduction in Shkreli’s $5 million bail, his lawyer said that his client had no bank accounts, and no valuable assets other than his share in Turing, worth $30 million to $50 million. And Shkreli is restricted from selling that because of how his stake in the private company is structured.
Smith argued against a bail reduction, pointing to recent articles and statements from Shkreli about his free spending. Those included paying $40,000 to a Princeton student who solved a geometry proof; buying domain names related to journalists who had written about him; offering $100,000 for information leading to the murderer of Democratic National Committee staff member Seth Rich; buying an Enigma coding machine of the sort used by Nazi Germany in World War II; and buying the sole copy of a Lil Wayne album. (He had already bought, before his arrest, the only copy of a WuTang Clan album for millions of dollars.)
“He has a Picasso,” Smith noted.
Judge Kiyo Matsumoto has yet to rule on the bail matter.
Derisively called “pharma bro,” Shkreli now uses PharmaBroMS as his handle in “League of Legends.”