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.
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