A ‘terribly sorry’ Shkreli gets 7-year term for fraud
Shkreli, the pharmaceutical industry’s enfant terrible, was sentenced Friday to seven years in prison, putting an end to a saga that captivated and sometimes enraged Washington, Wall Street and the tabloids.
The brash 34-year-old — who gained notoriety for jacking up the price of a lifesaving anti-infection drug 5,000% — was convicted in August of lying to investors in his hedge funds and manipulating shares in Retrophin Inc., a biotech company he founded. Prosecutors sought a sentence of at least 15 years for the securities fraud. Shkreli, who once proclaimed, “You can’t quell the Shkrel,” asked for as little as a year.
“This case is not about Mr. Shkreli’s self-cultivated public persona,” U.S. DisMartin trict Judge Kiyo Matsumoto said Friday before handing down the sentence in Brooklyn, N.Y. His actions were “extremely serious,” Matsumoto said, recounting how he boasted once of threatening an investor and his family.
Shkreli told the court he was embarrassed and ashamed, saying he got innocent people mixed up in his conduct. “This is my
fault,” he said. Addressing his investors, he choked back tears and said, “I am terribly sorry I lost your trust. You deserved far better.
“There is no conspiracy to take down Martin Shkreli,” he said. “I took down Martin Shkreli with my shameful and disgraceful actions.”
Shkreli’s downfall marks an ignominious end to what was once a promising career at the intersection of finance and pharma. The child of working-class immigrants from Albania and Croatia, Shkreli landed his first job as a 17-year-old college intern for Jim Cramer, the hedge fund manager and host of CNBC’s “Mad Money.” He was soon recommending that investors short biotech shares, becoming so good at it that he found himself under the scrutiny of the Securities and Exchange Commission at 19. The agency found nothing amiss.
He opened his first hedge fund at 23, then launched Retrophin five years later. In 2015, Shkreli infamously hiked — by 5,000% — the price of Daraprim, a life-saving drug for people with compromised immune systems. He has repeatedly maintained that his primary concern was company profit and investor returns. But detractors accused him of making the drug unaffordable to patients, many of them with HIV, while at the same time gouging insurance companies.
Less than a year later, the U.S. indicted him, accusing Shkreli of running his funds like Ponzi schemes. The evidence showed that Shkreli lied to investors over six years by hiding the collapse of one fund and the near-failure of a second and by claiming to manage more than $125 million, when the real figure was closer to $1.1 million. He also was convicted of a separate scheme to secretly control Retrophin shares, but was cleared of stealing company assets.
The Brooklyn prosecutors, whom Shkreli derided as “the junior varsity,” argued that Shkreli deserved a long prison term because he had told investors a “staggering number of lies,” making more than $40 million and using client money to keep his schemes afloat. Shkreli also illegally funneled client funds into Retrophin and used their money to pay personal debts, according to the U.S.
While the case against Shkreli didn’t involve the drama over soaring drug prices, during Friday’s sentencing hearing, Matsumoto read some letters from people commenting on Shkreli’s fate. She noted one written by a doctor who said he had “lost a patient to septic shock” because of the unavailablity of Daraprim. She added, though, that she didn’t consider Shkreli’s actions regarding the drug in sentencing, saying that it’s up to Congress to fix the problem of patient access to drugs.
The defense sought a lighter sentence, arguing that Shkreli made money for his investors and should be given the chance to quickly resume research into cures for childhood illnesses. Shkreli pledged to be honest if Matsumoto cut him a break. In a letter to the judge, he said he had learned his lesson, blaming his crimes on “demons” that haunted him: “I was a fool. I should have known better.”
Matsumoto revoked Shkreli’s bail in September, sending him to a Brooklyn jailhouse, where he has been since. She decided that he posed a danger to the community: Less than a month after his conviction, he offered in a Facebook post to give $5,000 to anyone who would “grab a hair” — including the follicle — from former Secretary of State Hillary Clinton during her book tour.
A prison consultant said in a memo submitted to the judge last month that the offer suggested Shkreli shouldn’t be allowed to serve his term in a minimum-security facility.
The judge also has ordered Shkreli to surrender $7.4 million in profits he made from his crimes. She also said any of his assets — including a Picasso, $5 million in a personal trading account, a one-of-a-kind WuTang Clan album and shares in a drug company he once ran — could be used to meet the forfeiture if he doesn’t have enough available cash.