Shkreli Ordered to Forfeit More Than $7.3M for Securities Fraud
Former pharmaceutical executive Martin Shkreli, convicted last year of two counts of securities fraud and a related conspiracy charge and awaiting sentencing, has been ordered to forfeit more than $7.3 million in assets.
March 05, 2018 at 02:09 PM
4 minute read
Former pharmaceutical executive Martin Shkreli, convicted last year of two counts of securities fraud and a related conspiracy charge and awaiting sentencing, has been ordered to forfeit more than $7.36 million in assets.
The total amount includes the one-of-a-kind Wu-Tang Clan album “Once Upon a Time in Shaolin,” which Shkreli said he bought for $2 million; an unreleased Lil Wayne album that he purchased for an undisclosed amount and a Pablo Picasso painting.
The forfeiture also includes $5 million from Shkreli's brokerage account.
Shkreli was convicted of defrauding investors in MSMB Capital and MSMB Healthcare, two hedge funds he founded, and eventually paying them back with assets from Retrophin Inc., a pharmaceutical company that he also founded.
Shkreli was acquitted of five additional counts. In December, former Katten Muchin Rosenman partner Evan Greebel, Shkreli's co-defendant and former counsel, was convicted of conspiracy to commit wire fraud and conspiracy to commit securities fraud for his role in the scheme.
In an order issued on Monday granting the government's motion for forfeiture, U.S. District Judge Kiyo Matsumoto of the Eastern District of New York said the proceeds from Shkreli's criminal conduct were either dissipated, transferred to investors in Retrophin and the hedge fund or kept by Shkreli himself.
Shkreli repeatedly misled the investors about how well the funds were performing, the judge said, and used $1.1 million of the funds that MSMB invested in Retrophin for personal reasons. Matsumoto also rejected Shkreli's argument that he should not have to forfeit his assets because of the substantial amount of money he owes to New York state, the IRS and his accountants and attorneys.
Matsumoto ruled last week that Shkreli's offenses, which prosecutors have described as an elaborate Ponzi scheme, caused more than $10 million in losses to the investors.
Shkreli has been in jail since September and is scheduled to be sentenced on Friday. He faces a maximum sentence of up to 20 years in prison.
Assistant U.S. Attorneys Alixandra Smith, Jacquelyn Kasulis and Girish Srinivasan of the Eastern District are prosecuting the case. The Eastern District U.S. Attorney's Office declined to comment.
Benjamin Brafman of Brafman & Associates, who represents Shkreli, declined to comment on the judge's order. The forfeiture order is stayed until the resolution of an appeal of the order, if Shkreli chooses to bring one.
Shkreli's defense team, which also includes Brafman & Associates attorneys Marc Agnifilo, Andrea Zellan, Jacob Kaplan and Teny Geragos, filed a sentencing memo last week arguing that Shkreli should receive a 12- to 18-month prison sentence with 2,000 hours of community service and mandated therapy.
Shkreli's attorneys note that their client has no prior criminal history and that his offenses are not violent crimes.
They also reiterated a theme they tried to establish during Shkreli's high-profile, five-week trial: that Shkreli is a misunderstood genius who suffers from an occasional judgment lapse, that he never intended to defraud his investors and that he worked tirelessly to pay the investors back for their losses.
“There is not a shred of credible evidence in this case, nor did the jury find, that Martin was motivated by greed or by causing financial injury to his investors in connection with the three counts of conviction for securities fraud,” Shkreli's sentencing memo states.
Shkreli, 34, became well known in 2015 when he increased the price of a anti-parasitic drug that can be lifesaving for people who suffer from HIV and AIDS from $13.50 to $750 per pill and, though his case was unrelated to drug prices, some potential jurors cited their anger over the increase as a reason why they didn't think they could be impartial.
From there, Shkreli kept himself in the spotlight with antics such as the purchase of the Wu-Tang Clan album and trolling Hillary Clinton on Twitter.
On Sept. 13, Matsumoto revoked Shkreli's bail after he posted a $5,000 “bounty” for a lock of Clinton's hair on his Facebook page, which had more than 90,000 followers at the time. The judge said that the fact that Shkreli posted the bounty without clarifying that he meant it as a joke until hours later showed that he was a public safety risk, and Shkreli has been incarcerated ever since.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllProsecutors Ask Judge to Question Charlie Javice Lawyer Over Alleged Conflict
Trending Stories
- 1'Didn't Notice Patient Wasn't Breathing': $13.7M Verdict Against Anesthesiologists
- 2'Astronomical' Interest Rates: $1B Settlement to Resolve Allegations of 'Predatory' Lending Cancels $534M in Small-Business Debts
- 3Senator Plans to Reintroduce Bill to Split 9th Circuit
- 4Law Firms Converge to Defend HIPAA Regulation
- 5Judge Denies Retrial Bid by Ex-U.S. Sen. Menendez Over Evidentiary Error
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250