Businessman Martin Shkreli, once dubbed the “most hated man in America” for raising prices for critical drugs, was found guilty Friday of two counts of securities fraud and one of conspiracy in a federal court in Brooklyn.
The baby-faced and gutter-mouthed 34-year-old, often known as "Pharma Bro,” had been charged with eight counts of securities fraud and conspiracy to commit both securities and wire fraud. He was acquitted of five of the charges, including the most serious, which allowed Shkreli and his defense team to claim victory.
Prosecutors claimed that Shkreli ran what was effectively a Ponzi scheme, defrauding investors by exaggerating his own credentials – for example, claiming that he attended Columbia University. He used their money to capitalize a new drug company, Retrophin, which he then looted to pay them back, they alleged.
Shkreli was acquitted on the charges relating to Retrophin, but convicted of making fraudulent misrepresentations regarding two hedge funds he ran.
Dressed in a short-sleeved black polo shirt and khaki pants, Shkreli flashed his trademark grin as he and his attorneys held an impromptu news conference outside the courthouse.
“This was a witch hunt of epic proportions. Maybe they found a few broomsticks, but at the end of the day we’ve been acquitted of the most important parts of this case,’’ said Shkreli, who described himself as “in many ways delighted.”
Shkreli has contended from the outset that the government looked for charges against him because of the notoriety he gained in 2015 by hiking the price of the anti-parasite drug Daraprim by more than 5,000% while running another drug company, Turing Pharmaceuticals. Although the trial had nothing to do with the drug price controversy, lawyers had to question 300 potential jurors over three days before they were able to seat a panel.
Outside the courthouse, defense attorney Benjamin Brafman said that Shkreli’s difficult personality complicated the case.
"Martin is a brilliant young man but sometimes his people skills don't translate," said Brafman. He said he would press for a light sentence, and if Shkreli is not sent to prison, “You'll be reading about Martin curing rare diseases" in the future.
The charges carry up to a 20-year prison term.
During closing arguments, Assistant U.S. Attorney Jacquelyn Kasulis said the four-week trial had “exposed Shkreli for who he really is – a conman who stole millions of dollars.”
“It’s time… for Martin Shkreli to be held responsible for his choices, his choices to lie, deceive and steal,” she said.
Testimony revealed an eccentric workaholic who spent nights in his office in a sleeping bag and rarely brushed his teeth. One investor said Shkreli reminded him of the Dustin Hoffman character in “Rain Man.” Investors urged him to improve his personal hygiene and to get off of Twitter, where he ultimately ended up being banned for trolling a journalist.
Shkreli said there was never any merit to the charges related to Retrophin.
“They theorized that I robbed Peter to pay Paul and the jury has spoken conclusively about this,’’ he said. “My investors made three to five times their money.”
Shkreli also told reporters he would continue his own lawsuit against Retrophin, saying his role as CEO there was "terminated by some very bad actors," and that the company at the center of the securities fraud case would "be writing me a very large check in the future."
Throughout the jury deliberations, Shkreli appeared largely confident and carefree, reading books and sometimes taking to social media to comment on the case.
Shkreli’s case drew conflicted reactions in the business community.
“Just seeing Shkreli’s face gives many people the urge to punch him in the nose,’’ wrote a columnist for Crain’s New York Business, in an article later posted by Shkreli on his Facebook page. However, he added, “Upon scrutiny it is impossible to justify the Herculean, effort the U.S. attorney’s office expended in this investigation and prosecution. Here, the feds lost sight of the simple reality that there was no victim worth the resources wasted.”
Shkreli didn’t take the stand in his own defense, instead pressing his case on social media — which has been both his platform and his undoing.
At one point, U.S. District Court Judge Kiyo Matsumoto imposed a gag order on him, but he continued to post prolifically — using a pseudonym because he was banned from Twitter. He even joked that with his famously off-color vocabulary, he was planning his next job — as White House communications director to replace the recently ousted Anthony Scaramucci.
1:55 p.m.: The story was updated with comments from Shkreli and his lawyer, and additional background on the trial.
This story was originally published at 11:55 a.m.