Former hedge fund manager Martin Shkreli, [center], was convicted on two counts of security fraud and conspiracy to commit security fraud.
Former hedge fund manager Martin Shkreli, [center], was convicted on two counts of security fraud in connection to hedge funds and a count of conspiracy to commit security fraud, Friday.
A New York jury sitting in Brooklyn Federal Court, after clarifying the concept “fraudulent intent” from Judge Kiyo Matsumoto, came back after their 5-deliberation with a verdict finding Shkreli guilty of conning his hedge fund investors out of their money and then looting his pharmaceutical company to repay the fleeced investors.
He was convicted on two counts of security fraud in connection to hedge funds and a count of conspiracy to commit security fraud. He was cleared of five other charges.
With its guilty verdict, the Brooklyn federal jury said it didn’t matter fraud victims made profits on the pharmaceutical stock they got when many just wanted their cash back. The Pharma Bro’s lawyers always made sure jurors heard about the windfalls during the month-long trial.
Shkreli, 34, now faces up to 20 years in prison, though any term would likely be much shorter. The jury deliberated for five days.
Early in the trial, Shkreli was dismissive of prosecutors who characterized as “junior varsity” when he showed up in a press room to disparage the trial. Presiding Judge Kiyo Matsumoto barred him from discussing the case in and around the courthouse,after that provocative incident.
Martin Shkreli [center], seen during the trial says he never meant to swindle anyone and acted in good faith and in any case his investors made money
Former pharmaceutical executive Martin Shkreli, aka ‘Pharma Bro’, outside the U.S. District Court in Brooklyn
Shkreli gained national notoriety in 2015 for something else entirely. He instigated a price hike that sent the price of a vital AIDS drug soaring more than 5000 percent overnight, after he gained control of the drug’s manufacturer. In characteristic manner he reacted derisively with open smugness to the public outrage.
Shkreli held himself out as a Wall Street wunderkind to his hedge fund investors, overblowing his schooling and skills, has now been convicted for something else entirely – his management of the hedge he founded called MSMB Capital, its related entities, and Retrophin, the company he founded to develop drugs for rare diseases.
Prosecutors say his self promotion spin didn’t match the facts.
The jury heard that self-styled maverick went deep in the red on a bad February 2011 market bet, but kept up appearances.
Records showed multi-million dollar differences between what investors were told they were making and what was actually in the bank.
In fall 2012, he announced he’d wind down his hedge funds to focus on Retrophin. He said investors could cash out their earnings, but the process dragged on. A number of investors ended with cash and stocks, which later ballooned in value.
Never contrite: Shkreli, [center] believes he did nothing wrong, even after the jury convicted him on security fraud
Shkreli paid back stiffed investors through Retrophin deals called settlement and consulting agreements. Steven Richardson, an early Shkreli investor and Retrophin chairman, said the board didn’t see the settlement agreements.
Shkreli talked of possible male hook-ups and Richardson, who is gay, wondered if he was just saying it to somehow ingratiate himself. He described the talk they had about just being friends.
Martin Shkreli arrives at the U.S. District Court for the Eastern District on the fifth and final day of Jury deliberations
The defense confronted Richardson, 63, with his emails discussing Shkreli’s “soft skin” and the Pharma Bro’s dip in a bubble bath. The comments related to Shkreli’s health, Richardson insisted.
When witnesses talked about Shkreli, they depicted a driven, brilliant young man who could impress and persuade – and also talk tough if angry or irritated, in one instance Shkreli scared the wife of an ex-employee when he vowed to make the woman and her family homeless.
At the end of the month-long trial summation was no less fierce. Prosecutors said Shkreli, was a calculating con artist who sweet-talked investors. He lied and played a shell game to prop up his failing funds and fledgling pharmaceutical company, they said.
Ben Brafman and the defense team told the jury their client is ‘a genius wrapped up in his own mind as he built up his pharmaceutical company’, who made good faith efforts to get his investors profits. And they definitely got profits in the end, his lawyers said.
“Who lost anything? Nobody,” defense attorney Brafman told jurors.
Former pharmaceutical executive Martin Shkreli addresses media flanked by his lawyer Ben Brafman [right], outside the U.S. District Court for the Eastern District.
During the trial, it came out that Shkreli’s lawyers and prosecutors had several discussions about a plea agreement up until around June. Shkreli was not interested in a plea deal, Brafman said.
White shoe lawyer Evan Greebel was also charged in the case, but he opted for a separate trial, beginning October.
Greebel fought hard for his own trial, for fear worried jurors would be biased by his link to Shkreli.