Martin Shkreli, the hedge fund manager turned pharmaceutical entrepreneur once dubbed “the most hated man in America”, has been found guilty on three of eight federal charges that he deceived investors in a pair of failed hedge funds.
The jury of seven women and five men reached their verdict on the fifth day of deliberations after a month-long federal fraud trial. Shkreli, nicknamed “Pharma Bro” for his willfully provocative behaviour, faced up to 20 years behind bars on the charges of securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud.
Shkreli, 34, was convicted of two counts of securities fraud relating to charges that he lied to investors while sweet-talking them into pumping more capital into his failing hedge funds, and one count of conspiracy. But he was cleared of defrauding Retrophin, his former biotech company, which he was accused of illegally raiding for assets to reimburse skeptical investors who wanted their money back.
Speaking outside federal court in Brooklyn on Friday afternoon, Shkreli said: “When you have the entire federal government on you … it’s a scary thing, it’s daunting to have that weight on your shoulders, and standing up to them and telling them I don’t think you have your facts right. We fought back and we feel like we won.”
He claimed to have been cleared on “the most important charges”
US district judge Kiyo Matsumoto allowed Shkreli to remain free on $5m bail and a date for sentencing has not been set.
“I wish you well, Mr Shkreli, see you soon,” she said. The judge had ordered Shkreli to stop talking to the press during the trial. She also told opposing lawyers they were arguing “like children.”
His lawyer Benjamin Brafman said that he would argue strongly on appeal that his client did not deserve a custodial sentence.
“I think we are smiling, even though it was not the clean sweep we would have preferred,” Brafman said of the non-guilty verdicts on a majority of the charges. “I think some of these counts are hanging by a thread and my hope is that at the end of the appellate process there is no prison time for Martin.”
Prosecutors had told the jury that Shkreli told “lies upon lies”, from where he went to university to the health of his business. He had boasted he had $40m in hedge funds that only had about $300 in the bank, assistant US attorney Alixandra Smith said in closing arguments.
Prior to the trial, Shkreli boasted he would be acquitted entirely because he was “so innocent” and jurors would apologize to him. Shkreli also faces a heap of civil lawsuits.
Shkreli achieved notoriety in 2015 after the 34-year-old increased the price of a life-saving drug, Daraprim, used by people with Aids and others suffering from toxoplasmosis, by 5,000% overnight, shortly after his pharmaceutical startup bought the commercial rights to it.
The move led to BBC calling him America’s most hated man. Even Donald Trump weighed in, calling Shkreli a “spoiled brat” and his business practices “disgusting”.
Seeming to revel in his notoriety, Shkreli doubled down, telling the Guardian: “There are very few people who care about toxoplasmosis more than me.” He reinforced his notoriety with a troll-like internet presence, especially towards female journalists and celebrities.
But the drug pricing scandal is not the reason Shkreli was on trial. He was arrested in December 2015 in an early-morning raid and led away in handcuffs, accused of lying to investors after making poor bets on the stock market via his hedge funds and then illegally paying people back in cash and stock from pharmaceutical businesses he had created. According to prosecutors, he was running a form of pyramid, or Ponzi, scheme.
Shkreli’s provocative posturing was on full display during his four weeks of testimony in July, 2017, at his trial in federal court in Brooklyn, New York.
He was barred from Twitter after harassing a female reporter but appears to have come back with several aliases. The latest, @SamTheManTP, appeared irritated with delay in the verdict, tweeting: “Cmon gimme dat verdict”, and “Yeah I’m innocent stupid.” On Thursday, @SamTheManTP tweeted: “Trump has been flawless since election. Not one mistake made, pretty amazing. #flawless”
At the trial, Brafman, who successfully defended former International Monetary Fund boss Dominique Strauss-Kahn in a sexual assault case, claimed Shkreli merely made some honest mistakes and was doing business with the best of intentions. His client was “a genius” who reimbursed his investors and made many of them very rich.
Presenting Shkreli’s defense in court, Brafman tried to humanize his client. While attending Hunter College High in New York – a school for intellectually gifted children – his client was bullied and was known for being nerdy and extremely socially awkward, and had a tendency to be manipulated, said Brafman.
One trial witness last month, Schuyler Marshall, a Dallas-based real estate company chairman who invested in one of Shkreli’s later hedge funds, said that Shkreli reminded him of the film character Rain Man, the autistic savant played by Dustin Hoffman, who has extraordinary mathematical powers but difficulty relating to others.
Under cross-examination, Marshall said that he was not claiming Shkreli was autistic, but that: “The reference here was that this was just an intensely focused, bright guy who knew his stuff.”
Jurors also heard that a former employee, Caroline Stewart, chatting online with a co-worker in 2011, said Shkreli was mentally unstable and a scam artist, who kept deceiving her over money he owed her and was lying repeatedly to investors, employees and investigators.
“I’m done trusting Martin, I can’t believe a word that comes out of his mouth,” the court heard she wrote of Shkreli.
“What do you say to a guy who shoots off at the mouth and has no intention of delivering? He’s a scam artist. I can’t deal with somebody who lies all the time.”
Shkreli’s self-image as a genius investor has also taken a beating at the trial. The two other hedge funds and a pharmaceutical company called Retrophin he created all spiraled towards collapse. After making risky bets of the markets Shkreli risked ruin and, in December 2012, was down to his last $1,415, according to the New York Times.
In a burst of frenetic communications with investors, employees and advisers, he managed to raise fresh capital for Retrophin and save it from the brink. He was later ousted from Retrophin. Now a public company, it has since achieved financial success, and some of his earlier investors who were being given the runaround by Shkreli made huge profits because he gave them Retrophin stock.
Prosecutors argued Shkreli illegally used Retrophin assets to pay back the investors from his busted hedge funds.
After leaving Retrophin, he started another biotech company, Turing Pharmaceuticals, and it was this firm that bought the rights to the drug Daraprim in August 2015, hiking the price and making headlines in September 2015.
He was later forced out of that company, too.
While always having plenty to say online, Shkreli refused to testify at a congressional hearing on drug pricing in 2016, deploying little more than his smirk.