The Brooklyn prosecutors who won a guity verdict against former pharmaceutical CEO Martin Shkreli over the summer are demanding the “Most Hated Man in America” forfeit $7.4 million in cash and assets as part of his punishment.
In order to do this, Bloomberg says Shkreli will likely need to surrender the $5 million bail he posted in late 2015, and the one-of-a-kind Wu Tang Clan album he purchased for more than $2 million shortly before his former company, Turing Pharmaceuticals, was exposed for hiking the price of Daraprim, a live-saving AIDS drug, by 5,000%.
Shkreli tried to sell the album on eBay back in September. He managed to secure a winning bid of more than $1 million, but was abruptly jailed before he could work out the details with the winning bidder. Prosecutors asked that Shkreli’s bail be revoked after he published messages about Hillary Clinton that prosecutors felt were threatening in nature. Shkreli maintained that they were satirical.
Shkreli was convicted in August on three counts of fraud related to a scheme where he tried to make investors in his two failed hedge funds whole by hiring them as “consultants” at Retrophin, the pharmaceutical company Shkreli founded before Turing.
In their filing, the prosecutors list assets they could possibly take. Among them are the Wu-Tang Clan album, a Picasso painting, an Enigma machine from World War II, and Shkreli’s remaining interest in Turing.
Long before his conviction, Shkreli’s purchase of the album sparked outrage among music fans. The former biotech CEO played short excerpts while live-streaming himself in his Manhattan apartment after President Donald Trump’s election and his conviction. These are the only known instances where the album was heard publicly. Furthermore, some Wu Tang associates have raised doubts about whether the album is a true Wu-Tang release.
"We will vigorously oppose the government motion," Shkreli’s lawyer, Benjamin Brafman, said in an email. "Our position is clear. None of the investors lost any money and Martin did not personally benefit from any of the counts of conviction. Accordingly, forfeiture of any assets is not an appropriate remedy."
“The most hated man in America” is going to prison over a joke.
Late Wednesday, Brooklyn Judge Kiyo Matsumoto ordered that former Turing Pharmaceuticals CEO Martin Shkreli’s bail be revoked after prosecutors claimed that a Facebook post published by Shkreli on Sept. 4 was tantamount to an invitation to assault on Hillary Clinton during her upcoming book tour. In a letter demanding a bail hearing, the former hedge fund manager was described as a “threat to the community.”
Matsumoto, who presided over Shkreli’s trial which resulted in convictions on three out of eight counts of wire and securities fraud, said she would not be swayed by the defense’s argument that the post was a harmless joke and that Shkreli didn’t intend to harm anybody. Instead, the Judge revoked Shkreli’s $5 million bail and ordered him directly remanded to jail pending his sentencing, according to the Daily News. No date has been set for his sentencing.
Shkreli told the judge, prosecutors and secret service agents who asked to interview him about the post that it was intended as satire. In the original post, Shkreli offered $5,000 for a strand of Hillary Clinton’s hair, claiming that he would have a DNA analysis done to confirm “that the Clinton Foundation is willing to KILL to protect its secrets.”
See the post in question below:
Since being unceremoniously thrust into the public eye in late 2015 when he was labeled “the most hated man in the world” after his company, Turing Pharmaceuticals, hiked the price of Daraprim, a drug that treats toxoplasmosis, by 5,000%, Shkreli has made a habit of publicly antagonizing lawmakers, prosecutors and judges. True to form, Shkreli took to Facebook to blast prosecutors immediately after the hearing.
Notably, Shkreli is being thrown in jail one day before the close of Shkreli’s auction of the only copy of the Wu-Tang Clan “Once Upon A Time In Shaolin” which he purchased for $2 million in 2015. Bidding has topped out at $1 million in recent days.
In their initial request, prosecutors tried to paint Shkreli as a serial harasser of women, citing his ban from Twitter earlier this year, allegedly for harassing Lauren Duca, a freelance writer who had authored an opinion essay that criticized President-elect Trump. The day before his verdict, Shkreli wrote in a Facebook post: "trial"s over tomorrow, b****. Then if I"m acquitted, I get to f*** Lauren Duca."
Shkreli edited the Facebook post after it was first reported in the media, clarifying that the post was meant as satire. Though he says he agrees with Democratic policies, Shkreli sided with President Donald Trump during the election after expressing a frustration with PC culture.
In his sentencing, Shkreli could face as much as 20 years in prison, and although a much shorter sentence - if any - had been expected, today"s latest snafu may have just cost Martin dearly.
Remember the terrorist bombing at the 1996 Olympics in Atlanta, Georgia? If you"ll recall (or follow the link and read), Richard Jewell, the security guard who discovered the backpack containing the bomb, heroically warned people away and prevented it from creating a larger tragedy than the two lives it claimed. His hero status was short-lived, however, as he became the prime suspect. With only an accusation, his name was gleefully dragged through the mud by every mainstream news outlet at the time until he was eventually cleared by the FBI. Though ultimately vindicated, Jewell"s life was just about ruined.
The US media is always casting heroes and villains in their contrived narratives, packaged and delivered for the consumption of the common American nitwit, many of whom swallow it whole and then follow the lead by piling on in social media forums, twittering and facebooking and generally being the good hapless dupes that they are. The latest Bad Guy of the week is Martin Shkreli, former CEO of Turing Pharmaceuticals. As anyone reading this probably already knows, Shkreli has been demonized for buying the rights to an outdated drug, Daraprim, that treats a rare condition called Toxoplasmosis and jacking the price up 5000%. On the face of it, it sounds absolutely awful. Martin was excoriated in the public sphere as the worst kind of greedy exploitative capitalist scumbag, accused of holding a captive audience virtually hostage and making them pay a hefty ransom if they wanted to live (Toxoplasmosis is fatal if left untreated). And Martin did his image no favors, happily donning the costume of the evil caricature that was custom-tailored for him by the American press, a nice bespoke suit of fine villainy.
However, as with every story, there"s much more nuance here than is fathomed by the short-attention-spanned and feeble-minded MSM lapdogs reporting it. Thanks to the internet--and in this case, Martin"s proclivity to make himself accessible to anyone in the world by way of a series of YouTube livestreams--we can actually get his side of the story. Let"s investigate.
Martin claims his company, Turing Pharmaceuticals, purchased Daraprim and jacked up its price in order to finance the development of a much more effective modern drug to treat Toxoplasmosis. The problems with Daraprim, as Martin explains, is that it"s very old (invented in the 1940s), it doesn"t work that well, and it"s toxic to bone marrow and can be as deadly to the patient as to the disease itself. There was no incentive to create a better drug because the disease was so rare, and there was already a cheap (if problematic) drug on the market to treat it, so it has mostly gone unnoticed in the pharmaceutical industry. Martin wants to replace Daraprim with a new drug that targets the enzyme that causes the disease without the bone marrow toxicity. To accomplish this, his plan is to raise the drug"s price from $13.50 to $750 per pill. At $750 per pill for an 84 pill course, the total cost is now $63,000 to cure the disease, which as Martin points is both rare and fatal. There are similar drugs on the marketplace (i.e. for other fatal ailments) that cost anywhere from $80,000-$130,000 per course, so Daraprim is still relatively cheap for a what is a life-saving medication. Martin explains that, while the price hike is indeed extreme, his company has made it easier for patients to get the drug by lowering the co-payment to "almost nothing", with the insurance companies picking up the tab and, furthermore, that Turing gives away 60% of their Daraprim to patients who can"t afford it, leaving the company with a 40% gross margin. He says that nets out overall to $25,000 in profits for Turing per treatment course, virtually all of which goes back into R&D for a Daraprim replacement.
So, as the plan goes, by buying Daraprim and ramping up the price, Turing Pharmaceuticals will be able to use the profits to invent a new, more effective drug, while in the meantime being compassionate to Toxoplasmosis sufferers by making sure they can still get Daraprim affordably. He claims no one is dying as a result of the price hike and emphasized those who need it can still get it. Martin"s full explanation is nicely encapsulated in the following video:
Prosecution called its first witness in the trial of former Turing Pharmaceutical CEO Martin Shkreli on Thursday. The witness, a former investor in one of Shkreli’s funds, alleged that Shkreli misled her about the fund’s performance, touting returns that were “too good to be true.”
The witness, Sarah Hassan, told jurors that she invested $300,000 with Shkreli in 2011 after being told he was “a rising star in the hedge fund world” who managed $40 million. She said she was thrilled when Shkreli reported she made nearly $60,000 that year alone, according to the Associated Press. However, she said those returns far overstated Shkreli’s performance; in fact, the fund lost money. A year later, Shkreli told her that he was using all the assets in the fund to start up Retrophin. When she tried to get her investment back, he stalled for months before forcing her into a settlement that included shares of Retrophin and $400,000 cash, she said.
Day 4 of #Shkreli trial underway. First witness, Sarah Hassan, 27-year-old daughter of Fred Hassan, just took the stand. Govt questioning
“To hear over a year later that the cash was gone, it was upsetting,” Sarah Hassan testified as the first witness at Shkreli’s securities fraud trial in federal court in Brooklyn. “I saw that as being my cash. It was just not right.”
"To be frank, I felt somewhat betrayed at this point," Hassan, 27, told jurors in Brooklyn, New York, federal court. "I was told I could get my cash from the fund months ago."
It’s unclear whether Hassan is the same government witness who was allegedly threatened by a member of Shkreli’s family, as Bloomberg reported last week.
The defense has countered that the federal government unnecessarily frightened three of the defense’s witnesses after FBI agents repeatedly tried to contact them. *** The Shkreli trial is just getting started, but already there have been more than a few interesting twists. The trial was supposed to begin Monday, but, thanks to Shkreli’s reputation as “the most hated man in America,” the jury selection process consumed two full days as the defense meticulously interviewed 250 potential jurors, with many claiming they would be unable to issue a fair judgment thanks to Shkreli’s reputation as the “pharma bro” who hiked the price of lifesaving AIDS drug Daraprim by 5,000%.
* * *
MedCity, a pharma blog that"s covering the trial, published a ranking of the top five excuses potential jurors used to get out of jury duty - one juror was excused for saying Shkreli "looks like a dick." Another said he couldn"t be impartial because Shkreli "disrespected the Wu Tang Clan."
“In my head, I said, ‘That’s a snake,’” one woman told attorneys, perhaps the most iconic comment to date.
“Honestly? Because he kind of looks like a dick,” another juror said more bluntly, explaining his bias to the judge. The individual was reportedly familiar with Shkreli’s ownership of the sole copy of the Wu-Tang Clan album “Once Upon a Time in Shaolin,” purchased through an online auction in 2015 for $2 million.
“He disrespected the Wu-Tang Clan, so…” On a related note, CNBC reported that on day three a potential juror also brought up the issue and the aftermath, in which Shkreli leaked the record.
“In this particular case, the only thing I’d be impartial about is what prison he goes to” — another gem from day three.
And finally; “I am,” from the man Judge Matsumoto asked directly “Are you concerned for your safety?”
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However, in a sign of hope for the embattled Shkreli – who is facing up to 20 years in prison if convicted - defense lawyer Benjamin Brafman has hit upon a novel defense strategy, according to the New York Times.
Brafman, a celebrity criminal defense lawyer known for representing Sean “P Diddy” Combs, Charles Kushner, and former Mafia boss Sammy the Bull Gravano, is claiming that much of the public’s hostility toward his client stems from Shkreli’s odd behavior, which he implied could be related to his client being mildly autistic - though it"s unclear if a doctor has diagnosed him as such.
They’re calling it: The “Born This Way” defense, after the 2011 Lady Gaga hit single celebrating LGBTQ youth:
“An odd duck. Perhaps Autistic. Weird. Maybe with Asperger’s. A guy who shuffled around his office in bunny slippers with a stethoscope around his neck because he felt comfortable that way. This is how Martin Shkreli was portrayed on Wednesday for his trial on fraud charges – by Benjamin Brafman, his own lawyer.
“Is he strange? Yes,” Mr. Brafman said of his client. But he added, “every single government witness will concur that Martin Shkreli, despite his flaws and his personality, is brilliant beyond words.”
Brafman also pushed back against the defense’s claims, arguing that none of Shkreli’s investors lost money. In fact, Brafman told the jury they made money thanks to Shkreli’s financial prowess.
Shkreli is being tried on eight counts of securities fraud and wire fraud related to his time running two hedge funds, MSMB Capital and MSMB Healthcare, and a pharmaceutical company he founded called Retrophin.
In particular, Shkreli has been accused of falsifying investor statements, backdating documents and misleading investors about his record as a fund manager. He also allegedly misstated how much money was in the funds, according to prosecutor G. Karthik Srinivasan, who, in his opening statement, accused Shkreli of being a “con man” who managed to convince his investors that he was “a Wall Street genius.”
Prosecutors alleged that the string of events that led to Shkreli’s arrest began with a bad trade at his first hedge fund, MSMB Capital. Shkreli lost millions of dollars on a trade that put the fund in the red.
Around the same time, Shkreli founded MSMB Healthcare, a second fund, and Retrophin, a pharmaceutical company. Shkreli allegedly told his investors they could have their money back in cash or Retrophin stock, and when a couple of investors threatened to sue, Shkreli hired them as consultants at Retrophin.
“Retrophin owed these investors nothing – the defendant owed these debts,” Srinivasan said.
As Brafman noted, since Shkreli"s departure, Retrophin has become enormously profitable - it"s now worth about $700 million, and, Brafman said, the board is still "raping" the company. Brafman also argued that the board"s treatment of Shkreli was unceasingly cruel, saying they mocked him and questioned his sexuality - all for being "different."
Investors may have made their money back, but Shkreli still committed fraud, the prosecution countered.
The trial is expected to last between four to six weeks.
