US court urged to throw out ‘Pharma Bro’ Martin Shkreli’s conviction for defrauding investors
- Shkreli gained notoriety after buying an anti-parasitic drug and raising its price by 5,000 per cent in 2015
A lawyer for former pharmaceutical executive Martin Shkreli urged a US federal appeal court on Friday to overturn Shkreli’s criminal conviction for defrauding investors in hedge funds he founded.
The lawyer, Mark Baker, argued that the jury that convicted Shkreli was given incorrect instructions about securities fraud. Baker faced a barrage of sceptical questions from a three-judge panel during a brief proceeding in the 2nd US Circuit Court of Appeals in Manhattan.
Shkreli, 36, gained notoriety as the “Pharma Bro” after founding Turing Pharmaceuticals, buying the anti-parasitic drug Daraprim and raising its price by 5,000 per cent, to US$750 per pill in 2015.
He was charged with securities fraud and conspiracy in December 2015, convicted by a federal jury in Brooklyn in August 2017 and sentenced to seven years in prison last year. He was also ordered to forfeit more than US$7 million.
His criminal case stemmed from two hedge funds and a drug company he had founded years before Turing. The jury found that he defrauded investors in the funds, MSMB Capital and MSMB Healthcare, by sending them fake account statements and concealing huge losses, and schemed to prop up the stock price of the drug company, Retrophin Inc.
The jury acquitted him of related wire fraud conspiracy charges, for which it received slightly different instructions. Baker argued on Friday that the split verdict showed the instructions had made the difference.
“The split verdict in this case speaks volumes as to the care the jury took,” he said.
Circuit Judge Joseph Bianco, however, said the jury instructions appeared necessary after Shkreli’s lawyer at trial suggested that Shkreli could not be guilty because he eventually paid his investors back.
Disgraced ‘Pharma Bro’ Martin Shkreli responsible for US$10.5m in securities fraud losses
Circuit Judge Debra Ann Livingston pressed Baker on that point: “A belief that ultimately no one will be harmed is not a defence to a securities fraud case, correct?”
Baker conceded that it was not.
Assistant US Attorney Alixandra Smith, arguing for the prosecution, said the different instructions for securities fraud and wire fraud reflected a difference in the laws on those crimes.
In a brief rebuttal, Baker said that even if Shkreli’s conviction stands, the fact that he eventually paid back investors should “wipe out” his obligation to forfeit cash.
The Brooklyn-born Shkreli, the son of Albanian immigrants, is expected to be released from prison in October 2023 if he fails to get his conviction tossed out.
