Best known for hiking the price of an old drug to $750 a tablet from $13.50, the hedge fund manager continues to portray himself as a brash genius while prosecutors prepare to paint a different picture.
Martin Shkreli, former hedge-fund manager, “pharma bro” and self-styled bad boy, sat in federal court for a hearing last Monday before his fraud trial that begins this week.
Like most defendants, he sat mostly still; like most defendants, he stayed quiet, declining to speak to reporters as he left.
Then he went home, turned on his web camera and live-streamed himself on the computer for almost two and a half hours. He played League of Legends; he filled in Excel models on pharmaceutical stocks and bonds; he patted his cat; he drank Coca-Colas; he checked Twitter. He voice chatted while live chatting in another window while playing online chess. The only sign of his federal case was a window that could be seen briefly, showing a PowerPoint titled “Witness Guide” and a slide on a former boss of his.
Education: Attended Hunter College High School in New York but left before senior year; earned high-school diploma during a Wall Street internship. Took classes at Baruch College but didn’t graduate.
First company: Started hedge fund in his early 20s.
Source: The New York Times
This is how a self-promoter goes to trial.
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In January 2015, learning that federal prosecutors had opened an investigation, Shkreli volunteered to meet with prosecutors and FBI agents — without a lawyer. After agents arrested him in December 2015, he continued to talk, making “additional one-off statements,” according to a prosecution filing, even as agents and prosecutors recorded his every word. The next day, at home, he live-streamed for almost five hours. “Sorry I couldn’t livestream yesterday. Had a lot going on,” he told viewers.
In his business life, Shkreli, who has run several hedge funds and pharmaceutical companies, is perhaps best known for increasing the price on the drug Daraprim, which treats a parasitic infection, to $750 a tablet from $13.50, when he was founder and chief executive of Turing Pharmaceuticals in 2015.
His trial, in U.S. District Court in Brooklyn, is on eight counts of securities and wire fraud. The charges stem from two hedge funds he founded and ran between 2009 and 2012, MSMB Capital Management and MSMB Healthcare, and from Retrophin, a biopharmaceutical company he founded in 2011.
The indictment contends that Shkreli lied to investors and potential investors about the funds’ performance, about how much money investors had put into the funds, and about how much he withdrew from the funds for himself.
Investors began to get suspicious after he told them, in September 2012, that he was winding down both funds and that they could redeem their stakes for cash or for shares in Retrophin, according to the indictment. But Shkreli didn’t give cash to those who had requested it.
According to the indictment, he then arranged to pay the MSMB investors through Retrophin. He created settlements between MSMB investors and Retrophin without board approval, and made up sham consulting agreements with MSMB investors so that Retrophin routed them money.
Asked for a comment, a lawyer for Shkreli, Benjamin Brafman, said, “Because of the many complicated issues in this trial, I am intent on doing all of my commenting in the courtroom, not in the press.”
Shkreli is a curious mix of blue-collar-boy-made-good and attention seeker — particularly when that attention is negative.
Vilified by the public and politicians for the Daraprim price increase, Shkreli responded by buying another drug that treated a rare disease and announcing he would raise the price on that one, too.
Called before Congress last year to testify at a hearing on drug prices — after his indictment, when some public sympathy might have helped — Shkreli invoked the Fifth Amendment, smirked through the hearing, and afterward tweeted “Hard to accept that these imbeciles represent the people in our government.”
He harassed a journalist on Twitter until he was banned from the site. Derisively called the “pharma bro” on social media, Shkreli now uses PharmaBroMS as his handle in the online game League of Legends.
At last Monday’s hearing, Shkreli’s lawyers outlined a few lines of defense.
They may portray Shkreli as a “boy genius,” as his lawyer, Brafman, put it, who never meant to defraud his investors. In fact, Brafman said, Shkreli never did defraud them, as the investors ultimately got their money back.
If Shkreli testifies, the lawyer said, he will discuss why he worked on these companies, how hard he worked on them, and whether he intended to defraud or was trying to make good on money he lost trading.
A prosecutor, Jacquelyn Kasulis, argued that investors getting money back was not a legitimate defense. Fraud, she said, can mean depriving investors of a right to control their assets.
“There is law here, there are rules, they apply to Mr. Shkreli,” she said.
The trial is expected to last six weeks. And Shkreli sounds confident about it.
“I’m so innocent, the jury, judge and the prosecution are gonna give me an apology,” he said in a recent livestream. (Several of his livestreams, available earlier this month, had been taken down by the middle of last week.)
The cost of defending himself, though, has already affected one of his bragging rights: how rich he is.
Shkreli told federal authorities he was worth $70 million after he was arrested, prosecutor Alixandra Smith said at Monday’s hearing.
But in asking for a reduction in Shkreli’s $5 million bail, Brafman, his lawyer, said that his client had no bank accounts, and no valuable assets other than his share in Turing, worth $30 million to $50 million. And Shkreli is restricted from selling that because of how his stake in the private company is structured, Brafman said.
Smith argued against a bail reduction, pointing to recent articles and statements from Shkreli about his free spending. Those included paying $40,000 to an attendee at a Princeton lecture Shkreli gave who solved a geometry proof; buying domain names related to journalists who had written about him; offering $100,000 for information leading to the murderer of the Democratic National Committee staff member Seth Rich; buying an Enigma coding machine of the sort used by Nazi Germany in World War II; and buying the sole copy of a Lil Wayne album. (He had already bought, before his arrest, the only copy of a Wu-Tang Clan album for millions of dollars.)
“He has a Picasso,” Smith noted.
Judge Kiyo A. Matsumoto has yet to rule on the bail matter. And Brafman characterized some of his client’s words as “preposterous promises.”
“They are still part of this effort, if you will, for him to remain a person in his own right, traveling to the beat of his very unique drummer,” which will become evident during the trial, Brafman said.