Martin Shkreli repeatedly lied to investors, prosecutor says in closing arguments
In closing arguments, Alixandra Smith told the jury that Shkreli told investors he was managing $40 million when there were only a few hundred dollars in his firm’s brokerage account. (July 27, 2017)
A prosecutor at the securities fraud trial of Martin Shkreli said the former pharmaceutical CEO scammed investors in a pair of failed hedge funds.
Prosecutor Alixandra Smith told a jury in closing arguments Thursday that Shkreli repeatedly lied to investors about how much money was in one of the funds as it was going under.
She said he assured investors that he was managing $40 million at a time when there were only a few hundred dollars in his firm’s brokerage account.
The defense is to give its closing argument later in the day.
Before his 2015 arrest in this case, Shkreli, 34, was best known for raising the price of a life-saving drug by 5,000% and targeting his critics with online rants so nasty that they got him kicked off Twitter for harassment.
Federal authorities have focused on his MSMB Capital hedge fund, accusing him of lying to investors by boasting about too-good-to-be-true returns when he had lost more than $7 million on a 2011 trade and let the fund dwindle to about $2 million in assets. He is also charged with starting a new drug company, Retrophin, and looting it for $11 million to pay his investors back.
Shkreli has denied wrongdoing, complaining to reporters last month that prosecutors “blame me for everything. They blame me for capitalism.” The comments prompted the judge to order him to shut up about the case in and around the courthouse.
Although not part of the case, the scandal over drug-price inflation has hung over the trial and burdened Shkreli with a likability deficit. He did not testify in the case. But that hasn’t stopped him from using the Internet to vent after spending long days sitting at the defense table.
In one of a flurry of recent Facebook posts, he wrote: “This was a bogus case from day one.”
He also has taken aim at news coverage of the trial, a la President Trump, writing: “More trash from the NYTimes. Is there an intelligent writer-editor pair at this company? Who would read this ‘news’?”
Even prosecutors aren’t off limits: Earlier this month, he called them “the cowardly government” and griped about their trial tactics. “This is not North Korea,” he wrote.
Although they didn’t hear from him in court and are under orders to avoid anything about him in the cyber realm, jurors in recent days have gotten a taste of Shkreli’s disdain for investors and his mercurial demeanor.
Government evidence introduced Tuesday included emails in which Shkreli snapped at a lawyer charged separately with conspiring with him in a scheme to hide hedge fund client losses and pay them back, against their wishes, with stock in his new company Retrophin.
“I am really starting to think you are inept,” Shkreli told the lawyer in one email. When the lawyer asked for guidance on how to divvy up shares, he replied, “Take from anyone. I don’t care. Do the math.”
In other testimony, a former business partner described how Shkreli sent his wife a threatening letter.
“Your husband has stolen $1.6 million from me,” it read. “I hope to see you and your four children homeless. I will do whatever I can to assure this.”
The defense has countered by trying to draw attention to the fact that the investors who claim they were victims of fraud ultimately made big profits.
For example, Darren Blanton, a Dallas-based investment firm founder, testified that Shkreli stalled for three years when he tried to redeem his $1.3-million investment.
But Blanton got $2.6 million — $200,000 in cash and the balance from shares of Retrophin he sold, and in addition still holds shares worth $3 million.
Richard Kocher, a New Jersey construction company owner who invested $200,000 with Shkreli in 2012, made an estimated $350,000 the same way. A third witness, Schuyler Marshall, doubled his initial $200,000 investment.
Retrophin CEO Stephen Aselage testified that even though he had misgivings about Shkreli, he considered the man a “brilliant intellect” and a “visionary.”
Some managers at the drug company “described him as the Pied Piper,” Aselage said. “He tells a story, sings a song and everyone wants to follow him.”
