Martin Shkreli sentenced to seven years in prison for securities fraud and defrauding investors

Clark Mindock
New York
Friday 09 March 2018 20:09 GMT
Martin Shkreli has been sentenced to seven years in prison

A judge has sentenced former drug company executive Martin Shkreli, who was vilified for vastly increasing the price of a lifesaving drug, to seven years in prison over an unrelated conviction on securities fraud charges.

Shkreli, who become known as the “Pharma Bro” because of his image of a cocky young investor with an abrasive manner, was also ordered to pay $75,000 (£54,150) on top of a previous $7.36m (£5.31m) forfeiture order – which had included a one-of-a-kind Wu-Tang Clan album that Shkreli boasted of buying for $2m (£1.44m). In calling for a more lenient sentence, Shkreli’s own lawyer had even admitted he wanted to “punch him in the face” at times.

Shkreli was found guilty in August of lying to investors in two failed hedge funds and cheating them out of millions. During the sentencing hearing, the 34-year-old broke down in tears, pleading for a light sentence from the judge, apologising to investors and swearing that he had learned his lesson. He did not show any emotion as the sentence was passed down.

“I’m not the same person I was. I know right from wrong. I know what it means to tell the truth and what it means to lie,” he told the court before hearing his punishment, saying he bears sole responsibility for what he did. “I am terribly sorry I lost your trust. You deserve far better.”

“There is no conspiracy to take down Martin Shkreli. I took down Martin Shkreli with my disgraceful and shameful actions,” he said.

The seven-year sentence is lighter than the 15 years that Assistant US Attorney Jacquelyn Kasulis had sought, but far in excess of the 12 to 18 months his lawyer Benjamin Brafman had asked for.

Mr Brafman, noting that he was old enough to be Shkreli’€s father, said his client had not always been easy to work with. “There are times when I want to hug him and hold him and comfort him and there are times when I want to punch him in the face,” he said. However, he said that his outspoken views should not be held against him.

“It’s like the kids today who hit send before they really understand what they texted,” Mr Brafman said.

Rejecting that notion, Ms Kasulis said that Shkreli has “no respect whatsoever” for the law, or the court proceedings, and that his history of disrespect should be considered in his sentencing. The intense media scrutiny over the drug that has led to Shkreli being dubbed “the most hated man in America” is not why he deserved to go to prison, she said, his actions are.

“I also want to make clear that Mr Shkreli is not a child,” she said. “Mr Shkreli is about to turn 35 years old, he’s a man. He’s not a teenager who just needs some mentoring. He is a man who needs to take responsibility for his actions.”

US District Judge Kiyo Matsumoto promised that the media circus Shkreli had managed to create for himself was not being considered in her deliberations.

“Whatever adverse media attention he has brought upon himself with his online presence is ... not before me,” she said.

Judge Matsumoto said before imposing her sentence that she believed Shkreli was genuinely remorseful and that the letters written by family, friends and acquaintances had helped her understand him more fully.

“Although he has been convicted of fraud, serious crimes and he acted for pecuniary gain, he’s also a personally generous, giving and kind individual,” she said.

Nonetheless, the judge said, the sentence must be severe enough to make clear “that fraud and manipulation are serious offences that will incur correspondingly serious penalties”.

Shkreli became notorious in America after he raised the price of the life saving drug Daraprim by 5,000 per cent overnight, leading to outrage from infectious disease doctors and advocates. The drug is used to treat toxoplasmosis, a parasitic infection that can be fatal to people with the Aids virus or other immune system disorders.

While Shkreli would later claim that people without insurance would get the pill for just $1 each – he had raised the price from $13.50 a pill to $750 a pill. Before sentencing him, Judge Matsumoto said that it was up to Congress to fix the issue of the drug price hike.

Before his arrest in December of 2015, Shkreli was also known for co-founding several hedge funds, including Elea Capital, MSMB Capital Management, and MSMB Healthcare. He was the CEO of the biotechnology firm Retrophin as well, and the founder and CEO of Turing Pharmaceuticals, which acquired the rights for Daraprim, allowing Shkreli to boost prices.

During Shkreli’s trial last year, Mr Brafman argued that none of his investors had actually lost money from what the FBI had described as a Ponzi-like scheme, and that some of them had even turned a profit, and therefore none of his actions could actually be considered to be a crime.

The prosecution, meanwhile, said that he was “engaged in multiple schemes to ensnare investors through a web of lies and deceit”.

While Shkreli broke down in tears on Firday during his sentencing hearing, he showed little of that remorse or even self-awareness during the nearly two years following his arrest in December 2015 before his conviction late last year.

That included frequently degrading the prosecutors in New Yorks’ Eastern District with insults like calling them “junior varsity” compared to those in the Southern District just across the East River. Those comments, made during streams on his Facebook account, led prosecutors to request a gagging order on the case, leading to Ms Matsumoto telling him that he could no longer speak to reporters in the courthouse or immediately outside of it.

He also infuriated members of Congress at a Capitol Hill hearing on drug prices in early 2016, when he repeatedly cited his Fifth Amendment right against self-incrimination. Afterward, he tweeted that the members of Congress were “imbeciles”.

Shkreli also stirred controversy by offering up $5,000 (£3600) on Facebook to anybody who could provide him with a strand of former Democratic presidential candidate Hillary Clinton, leading the judge to revoke his bail in September, saying that he had solicited an assault by posting the offer.

Mr Brafman, told reporters after the hearing that he was “disappointed” by the sentence. “I thought the sentence should have been less than seven years,” he said. “But Martin’€s fine and will be fine and obviously it could have been a lot worse.”

Shkreli has so far been held at the Brooklyn Detention Center, a maximum security facility. It is not yet clear where he will serve the rest of his time.

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