On Friday, a jury in Brooklyn federal court convicted Martin Shkreli, the notorious hedge fund bro who became famous in the past two years for jacking up the price of lifesaving drugs and hoarding a Wu-Tang album, among other outrageous behavior. He was found guilty of two counts of securities fraud and conspiracy to commit securities fraud, and not guilty of five other charges including wire fraud. Shkreli faces up to 20 years in prison.
After just over a month of proceedings and four-and-a-half days of deliberations, seven men and five women decided that the 34-year-old willfully misled his investors while running his hedge fund into the ground. They also agreed that he had illegally paid back some of those jilted investors with stock from a biotech company he started called Retrophin.
Much of the trial—which vacillated from the painfully boring to the delightfully weird—centered on Shkreli's emails. The government tried to show that he lost millions of dollars, strung investors along for more than a year, and then eventually landed on an unexpected windfall that allowed him to pay them back. Shkreli's attorneys didn't try to contest the fact that their client lied, instead trying to garner sympathy for a man who they painted as possibly autistic, a savant who never really hurt anyone with his ruse given that most of the investors testifying ended up making a profit.
"These prisons, by the way, are like dorms."
–Martin Shkreli in 2015
The defense's legal strategy was "pushing the envelope," Andrew Boutros, a former federal prosecutor who worked financial crime cases, told me.
Fraud is still a crime even if no harm results, Boutros, who now works at the University of Chicago Law School, explained. If someone lies on a mortgage application, for instance, they've committed a crime even if they pay back every cent of what they borrow. Shkreli's lawyers weren't really making a legal argument, but rather trying to convince a single juror that what went down was no big deal—or at least not worth condemning a guy accustomed to lunches of filet mignon and fine wine to hard time in federal prison.
At one point, it seemed like it might have worked. On the second day of deliberations, the jurors asked Judge Kiyo Matsumoto to clarify the terms "fraudulent intent" and "assets under management." Shkreli lawyer Benjamin Brafman flashed his client a big smile—presumably because it seemed like his closing arguments had made an impact.
When I spent time with Shkreli for a story not long after his initial arrest in 2015, he pretty much admitted to misleading clients; the correspondence federal prosecutors collected as evidence in 33 enormous binders told a similar story.
To not even try to disprove the fact that Shkreli committed fraud, though, was a hail mary on the part of the defense team. That's in keeping with Shkreli's penchant for insane risk—which, to be fair, is not exactly unheard of in his industry. The problem may have been that his reputation was simply beyond repair, even in the context of a trial where biased jurors should have been weeded out.
"Of course, the more sympathetic the defendant, the more effective the strategy," Boutros told me.
Finding people who could possibly feel sympathetic to Shkreli was an uphill battle from the beginning. He's been dubbed the "most hated man in America" for becoming the public face for a sleazy practice that's unfortunately sort-of common in the pharmaceutical industry: buying the rights to a lifesaving drug with no competitors and raising the price to the point of absurdity. (Somewhat ironically, that strategy had nothing to do with the crimes he committed.)
Shkreli doubled down on his unlikeability by purchasing the only existing copy of Once Upon a Time in Shaolin, a Wu Tang album the legendary rap group sold at auction, and not releasing it. He also put in time being creepy on Twitter, and managed to involve himself in the outer periphery of the alt-right. Public perception obviously affected the potential jury pool, with one woman being dismissed for saying that he looked like a "snake" and another man getting dismissed for claiming that Shkreli had "disrespected the Wu Tang Clan."
Sentencing has not yet been scheduled.
"These prisons, by the way, are like dorms," Shkreli told me in an interview when I profiled him last year. Chances are, he'll soon find out if that's true.
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