Martin Shkreli, the former pharmaceutical executive whose haughty justification for raising drug prices led him to become known as "pharma bro," was found guilty of securities fraud and conspiracy to commit securities fraud at a federal court in Brooklyn on Friday.
Shkreli faced three counts of conspiracy to commit securities fraud, three counts of conspiracy to commit wire fraud and two counts of securities fraud.
A Brooklyn jury deliberated for five days before finding him guilty on two counts of securities fraud in connection with hedge fund MSMB Capital and MSMB Healthcare and one count of conspiracy to commit securities fraud in connection with pharmaceutical company Retrophin. All three companies were founded by Shkreli.
The 34-year-old former biotech CEO and hedge fund manager was accused of defrauding investors by repeatedly lying about the performance of funds he controlled, and raiding his company’s own assets to provide “returns” to investors.
Prosecutors told the jury during closing arguments that Shkreli built his companies by telling "lies upon lies," and called him a "con man."
Shkreli shot to fame in 2015 for his brazen 5,000 percent price hike of Daraprim, a life-saving anti-parasite drug used to fight weakened immune systems in people with malaria or AIDS, or those who have undergone chemotherapy.
But the drug price hike wasn't what led to his more than three-weeks-long criminal trial.
Shkreli "lied to investors to get their money into the funds and then lied to them so they wouldn't take it out," said U.S. Attorney Alixandra Smith in her closing arguments last Thursday. "All of the information [investors] got... was from the defendant, and it was false," Smith told the jury.
The prosecution alleged that Shkreli had boasted to potential investors that he was handling up to $40 million worth of funds — while his brokerage accounts in fact barely totaled $1,000. His Ponzi-style scheme involved recycling money from new investors and passing it off to other investors in the guise of profits, or giving it to dissatisfied investors who had asked for their money back, prosecutors said.
The defense argued that no one was actually victimized because Shkreli used his "genius" to ensure profits for his investors. "Who lost anything? Nobody," defense attorney Ben Brafman said in his closing argument.
Shkreli's notoriety over drug pricing was promoted by his insistence that he wasn't doing anything wrong. “This isn’t the greedy drug company trying to gouge patients, it is us trying to stay in business,” Shkreli explained at the time, shrugging off widespread media coverage that asked, "Is this the most hated man in America?"
For hip-hop fans in particular, he then cemented that moniker by purchasing the one and only copy of Wu-Tang Clan’s “Once Upon a Time in Shaolin” album, which he then claimed he never listened to.
Following the backlash over Daraprim, Shkreli agreed to lower the price of the drug — then reversed course. He later said he would have raised the price even higher if he could have, tweeting “lol” when Senator Hillary Clinton and others asked him to “defend the indefensible.”
Shkreli declined to take the witness stand during his fraud trial, preferring instead to quote Jay Z lyrics, muse on Facebook, and rant to reporters that the federal prosecutors trying his case were “junior varsity.”
U.S. District Judge Kiyo Matsumoto eventually slapped a gag order on him, in order to avoid a mistrial through influencing jury members.
Lawyers on both sides were twice admonished by Matsumoto for getting snarky with each other.
"It's like two little children arguing," the judge snapped last week.
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