‘Pharma bro’ Shkreli convicted of fraud in U.S. court, assails ‘witch hunt’

Former drug company executive Martin Shkreli arrives at U.S. District Court for the fifth day of jury deliberations in his securities fraud trial in the Brooklyn borough of New York City
Former drug company executive Martin Shkreli arrives at U.S. District Court for the fifth day of jury deliberations in his securities fraud trial in the Brooklyn borough of New York City, U.S., August 4, 2017. REUTERS/Carlo Allegri

August 4, 2017

By Brendan Pierson

NEW YORK (Reuters) – A U.S. jury convicted Martin Shkreli, the brash former drug company and hedge fund executive, on Friday of defrauding investors in hedge funds he ran years before he gained fame for jacking up the price of a drug.

Jurors in U.S. District Court in Brooklyn found Shkreli guilty of two counts of securities fraud and one count of conspiracy. But they acquitted him of five conspiracy counts, including conspiracy to steal from his old drug company, Retrophin Inc <RTRX.O>.

Securities fraud carries a maximum sentence of 20 years in prison, though defendants in such cases rarely receive the maximum sentence.

Federal prosecutors had accused the 34-year-old New Yorker of lying to investors in the funds and looting Retrophin to pay them back.

Immediately after the verdict, Shkreli appeared somewhat shaken. But when he emerged from the courthouse later to talk to reporters, he was happy and confident.

He portrayed the verdict, which came on the fifth day of deliberations after a monthlong trial, as a victory.

“This was a witch hunt of epic proportions, and maybe they found one or two broomsticks, but at the end of the day, we’ve been acquitted of the most important charges,” he told reporters.

Acting U.S. Attorney Bridget Rohde, whose office prosecuted the case, praised the jury’s decision.

“Justice was served,” she said after the verdict.

Before going on trial, Shkreli had been best known for raising the price of anti-infection drug Daraprim by 5,000 percent in 2015 as chief executive of Turing Pharmaceuticals.

That increase sparked outrage from U.S. lawmakers and patients – and earned Shkreli the nickname “Pharma bro.”

Shkreli emphasized the jury’s finding that he did not conspire to steal from Retrophin.

“Count seven was the government’s attempt to theorize that I robbed Peter to pay Paul, and the jury has spoken conclusively that Retrophin was not defrauded in this case,” Shkreli told reporters.

Shkreli’s attorney, Benjamin Brafman, citing his client’s acquittal on the Retrophin charge, said Shkreli might avoid prison time or at least receive a “much, much lower” sentence than that contemplated by the government.

Prosecutors said that, starting around 2009, Shkreli lied to investors in his hedge funds, MSMB Capital and MSMB Healthcare, concealing trading losses behind fake account statements.

Prosecutors said Shkreli eventually paid investors back with stock or cash from Retrophin by having them sign settlement or consulting agreements with the company. Those agreements were the basis for prosecutors’ claim that Shkreli conspired to steal from Retrophin.

During his closing arguments, Brafman urged jurors to see his client not as a fraudster but as an eccentric genius determined to find cures for rare diseases.

Brafman said that Shkreli’s statements to investors were made in good faith. He also emphasized that none of Shkreli’s investors lost money, a rarity in a securities fraud case.

John Zach, a former federal prosecutor who is now a defense lawyer at the law firm of Boies Schiller Flexner, said the fact that investors did not lose money could help Shkreli get a lighter sentence.

Christopher LaVigne, a former federal prosecutor who is now a defense lawyer at the law firm of Shearman & Sterling, said it was notable that prosecutors secured a conviction without investor losses, and said it could encourage more such cases in the future.

“A case like this, I think it emboldens them,” he said.

(Reporting By Brendan Pierson in New York; Additional reporting by Jonathan Stempel; Editing by Jonathan Oatis and Noeleen Walder)

  • scrumsey

    If he is guilty of a crime, fine. He should serve the time.

    If this trial would not have happened unless they were mad at him for his positions/statements on drug pricing, then it WAS a watch hunt.

  • Paul N Texas

    Once again the rich boy will get a sentence of someone who steals a CD from Walmart.

  • Javanne

    Shkreli deserves no more mercy than he showed people in desperate need of Daraprim. Twenty years doesn’t seem like enough, but it should at least be what he gets.

  • ken

    hes nothing but a smart ass punk

  • louigi

    Arrogant pos.

  • claymore cluepile

    he’s no hero but he’s not so bad…..pretty typical wall street type, probably better than half the wolves out there who are too smart to make a rookie mistake and overplay their cards

  • Localdude

    Hey! He should run for the democrat nomination in 2020! …..here is his first campaign slogan – ‘Because its all somebody else’s fault’…..he should get the nomination of the democrats right out the gate – unless Hillary and her ‘henchpeople’ steal it from him like they did Bernie…lol…

  • The epitome of a psychopath.

  • Prince Paskudnyak

    Pharma Bro. What do you do with people like that?

    We really don’t have a system of reform to correct constitutional dishonesty coupled with grave mental and emotional disorder.

    Perhaps we need psychiatric prisons.

  • jeff

    sentencing is predicated upon “loss”. Since the investors had no loss… the sentence that this guy will face will be minimal. I figure 0 to 6 months of confinement… 3 years of supervised release following release.

    • Harry

      The victims are the patients and Insurance company’s that he robbed blind, just because he could.

  • kevin

    A lot of witches around these days..

    • FreedomFighter

      No princess. Just you gay trolls making asses of yourselves.

      • kevin

        Like Trump, he too was a victim of a witch hunt. Your just an idiot. You should just go sit in the bath tub and open a vein or something, do us all a favor.

        • FreedomFighter

          It’s “you’re” princess. You’re an idiot. A moron of utmost proportions. You are so stupid you couldn’t pour water out of a boot with instructions primed on the heel. You are a spineless little worm deserving nothing but the profoundest contempt. You were born trash and nothing has changed princess. Now get back in your safe space and STFU you idiot.

          • kevin

            Wow, feel better snowflake?

          • FreedomFighter

            You are the snowflake princess. Your spin fails your dumb ass again my pet moron.

          • Jesse

            haha. I love seeing retards like kevin fall on their own swords.

          • FreedomFighter

            They do it all the time.

          • Paul N Texas

            Read; “instructions primed on the heel”. Not much of an intelligent argument from either of you. Just insults.

          • FreedomFighter

            Beat it moron.

        • Localdude

          yes, very astute Kevin there is. Lets now start with Hillary (and her broom) Debbie Wasserman Shultz and their theft of the nomination from Bernie Sanders. We will be glad to hold the conservatives accountable – we just did and pushed them all into the MUD and nominated – then elected – Trump. Please clean up your ‘progressive’ house…it is full of witches! Its totally buzzkilling the USA. Clean Up Your House.

          • kevin

            Right now, It’s a house full of republicans who can’t seem to govern. Dems are working on cleaning up their act and getting ready for a big swing in 2018. Speaker Pelosi will get something done.

          • FreedomFighter

            LOLOLOLOLOL!!!!!! You are really dreaming now my pet imbecile!!

          • Localdude

            well, you have a point, but only to the extent of how you define ‘govern’. Because NOT reading the bill is how Obama and Pelosi got this mess running. Along with a sold out big Pharma RINO club. Yep, we will see Kevin because ya really don’t want to see how people ‘govern’ when politicians cant do it any longer, amigo. It’ll get ‘governed’. See Venezuela presently for examples, then see past political failures of corrupt parties, whatever they say they believe in, it doesn’t end well, it does however get ‘governed’.

          • kevin

            I agree with you. It’s pretty scary to think revolution in the streets might be a reality in America. The ACA was problem riddled but it was supposed to be improved along the way, instead it was met with stubborn political games. It because a “holy grail” to campaign on instead of being something to be improved on. Now here we are and it looks like there might be some cooperation between parties to actually improve things for Americans. Cross your fingers and hope for the best.

          • Localdude

            Ok. Reasonable enough. fyi, I don’t believe we are there yet, but a real good financial collapse, a corrupt democratic system (both parties) and the radicals suddenly get more power. Dishonesty is our real enemy. You just cant sign a bill before you read it, all sorts of bad crap will follow.

          • FreedomFighter

            It sure would be scary for you libtard morons because you know you will all die because of your own stupidity when the revolution starts. You dumb ass snowflake.

  • mickey2829

    20 years. he won`t be smiling by the time he gets out.