Martin Shkreli responsible for $10.5m in securities scheme losses, judge rules
Decision could result in a harsher sentence for the ‘Pharma Bro’ CEO, who faces up to 20 years in prison
In a significant blow to the fortunes of the disgraced “Pharma Bro” Martin Shkreli, a judge ruled Monday that he was responsible for nearly $10.5m in losses in a securities fraud scheme.
The decision could result in a harsher sentence for the eccentric former pharmaceutical company CEO, who faces up to 20 years in prison.
Shkreli’s defense had hoped the 34-year-old would get little or even no prison time and had argued that investors in two failed hedge funds did not suffer actual losses because they were compensated with drug company stock that more than covered their initial investments.
But the US district judge Kiyo Matsumoto rejected their arguments in a written decision in federal court in Brooklyn, finding that Shkreli should be penalized for the losses because he made risky transactions with investors’ millions without their permission.
Matsumoto concluded that after dipping into investor money from one of the hedge funds to keep his drug company startup afloat, Shkreli “used some the funds to satisfy both personal and unrelated professional obligations”, including a $900,000 debt for a bad stock market trade, she wrote.
The ruling could allow for a 10-year or longer sentence – although Matsumoto is not bound by the guidelines on sentencing.
Shkreli is perhaps best known for boosting the price of a life-saving drug, Daraprim, by 5,000% and for his aggressive attacks on critics on social media, where he became known as “Pharma Bro”.
At a hearing last week, prosecutors asked the judge to order Shkreli to forfeit about $7.3m in assets, including a one-of-a-kind Wu-Tang Clan Once Upon a Time in Shaolin album that he has boasted he bought for $2m, as part of the punishment. The judge hasn’t ruled on that request but she rejected a bid by Shkreli’s lawyers to reverse his criminal conviction.
One of Shkreli’s attorneys, Ben Brafman, said in a statement that he was “disappointed by the ruling but still hopeful that the court will find it in her heart to impose a reasonably lenient sentence”.
Shkreli’s bail was revoked last year after he posted a veiled threat against Hillary Clinton on Twitter.
