Quirky Genius Allegedly Well-Versed in Fraud
Quirky genius, Martin Shkreli, should be convicted by jurors of defrauding investors in his hedge funds and stealing from his company to repay them, according to Assistant U.S. Attorney Alixandra Smith in a five-hour closing argument Thursday in Brooklyn federal court. “Only you can see the whole picture,” she said to them.
34-year-old Shkreli is known for raising the price of Daraprim, an anti-infection drug, to $750 a pill during his tenure as Chief Executive of Turing Pharmaceuticals. It was only $13.50 in 2015. The fraud and conspiracy charges that have been brought against him relate to this stint, which enabled him to acquire the name “pharma bro,” as well as his management of Retrophin Inc., and hedge funds MSMB Healthcare and MSMB Capital over the span of five years, from 2009 to 2014.
Shkreli’s attorney, Benjamin Brafman, portrayed his client has a socially awkward, geeky type who never intended to commit his crimes. Brafman claimed Shkreli was exploited for his genius, adding, “Martin travels to the beat of his own drum.”
Brafman also said the charges against Shkreli are “rich people B.S” and closed with, “I feel like a life guard on a beach. It is my worst fear to not be able to rescue someone. There is Martin floating in his own little world, I could swim out and save him in two minutes unless a current takes him away. I need your help to try and save Martin.” The defense team did not call any witnesses during the case.
Smith took a very different stance. She walked the jury through multiple incidents of fraud for which she claimed Shkreli was solely responsible beginning in 2009 when the “genius” began attempting to draw in investors for MSMB Capital. He did so by telling them the hedge fund had an external auditor and managed assets worth tens of millions of dollars, which simply wasn’t the case, according to Smith.
Smith also said Shkreli lost all of the investors’ money two years later, but tried to cover the loss with false performance reports, the “most significant lies in this case.” MSMB Healthcare was then used as a vehicle to fund Retrophin in 2011, which Shkreli claimed was a hedge fund with diverse assets. Eventually, the genius refunded investors with shares and cash from Retrophin, while utilizing false settlement and consulting agreements.
“This was just a sham,” she said of one consulting agreement. “It was a way to pull money out of Retrophin, a public company, to pay back debts that were owed by the defendant.” The arrangements were not approved by Retrophin’s board and cost the company more than $10 million. “Retrophin was not responsible for the lies that were told to [investors],” Smith said. “He made a choice to steal that money…and to use it pay back the investors he defrauded.”
Smith let the jury know the defendant even lied about attending Columbia University. As she ran through the list of Shkreli’s alleged misdeeds, he did little more than sit nearby smirking, the courtroom packed with reporters and spectators.
Smith continued, “Depending on which investors he is talking to, he changes the story. The defendant was making these misrepresentations because he knew by saying these things he would get people to give him money.” Genius or not, Smith says, the gig is up.
“If Martin Shkreli wanted to defraud these people, why did he sleep in his office for two years in a sleeping bag to make Retrophin a success?” Brafman asked the jury. “Maybe he screwed up, maybe he made mistakes, but Martin Shkreli was always truthful to the mission of making Retrophin a success.” Because of this, Brafman said, “If Martin Shkreli actually believes what he says is true then I say it rises to a defense of good faith.”