“Pharma Bro” Martin Shkreli has been convicted of fraud.
The verdict was handed down after five days of deliberation by jurors in a federal court in Brooklyn New York. Shkreli was found guilty in three of the eight charges held against him.
Shkreli seemed upbeat outside of the courthouse, telling reporters that he was "delighted to report" that he had been acquitted of the worst charges. He had been charged with a combination of securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud.
While the controversial former hedge fund manager is infamously known for hiking the price of Daraprim, a drug used to treat toxoplasmosis, from $13.50 per pill to $750.00 overnight, the trial was actually about events that took place much earlier.
In the early 2010s, Shkreli was managing two hedge funds: MSMB Capital and MSMB Healthcare. A bad trade in February of 2011 left both funds completely penniless, something that would have spelled the end of Shkreli’s Wall Street lifestyle.
Instead of declaring bankruptcy, Shkreli sent investors phony financial statements that made it look like the funds were generating good returns, when in fact the accounts were empty. He then created a new pharmaceutical company called Retrophin which eventually became successful enough that he was able to use funds from that company to repay the losses he’d made with MSMB.
The defense actually relied on the fact that Shkreli repaid his debts, arguing he could not have committed fraud if he generated the promised return on investment—which he did, doubling or sometimes tripling investors initial deposits. However, the prosecution proved in several cases that Shkreli had forged documents making it appear that MSMB had investments in Retrophin, misappropriating funds from one company to pay the other.
Ultimately, the fact that Shkreli paid his debts did not excuse the fact he took a highly illegal route to do it, with the prosecution presenting a mountain of evidence of Shkreli’s wrongdoings. “It’s time for Martin Shkreli to be held accountable,” said prosecutor Jacquelyn Kasulis during summation.
The judge did not set a sentencing date following the verdict, however, the three convictions could land Shkreli in jail for as long as 20 years.
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