Evan Greebel and Martin Shkreli
Evan Greebel and Martin Shkreli (Courtesy photo, Diego M. Radzinschi)

A joint trial of ex-pharmaceutical executive Martin Shkreli and Evan Greebel, his co-defendant in a fraud case and his former lawyer, would present a “serious risk” that Shkreli would not receive a fair trial, a federal judge ruled on Wednesday.

Shkreli, the founder and former CEO of Turing Pharmaceuticals, and Greebel, a former partner with Katten Muchin Rosenman, are accused of working together in a scheme to defraud investors in Retrophin Inc. to pay off investors in two hedge funds that Shkreli also founded, MSMB Capital Management and MSMB Healthcare.

The two defendants, each arrested and charged in 2015, moved to sever their trials, arguing that their defenses would be “mutually antagonistic” and force them to clash with each other while defending themselves against government lawyers.

Shkreli, a controversial executive who achieved notoriety by increasing the price of a drug commonly used by HIV and AIDS sufferers from $13.50 to $700 per pill, says he plans to present an advice of counsel defense at trial and that Greebel’s attorneys would paint him as a “mythical boogeyman.”

Greebel, who was a partner with Arnold & Porter Kaye Scholer during his arrest, plans to argue that Shkreli used he and other Katten lawyers as patsies in fraudulent schemes.

Prosecutors, however, accused the two of playing up the acrimony between them to support their severance motion.

Eastern District Judge Kiyo Matsumoto granted the severance, acknowledging that doing so is rare and that the U.S. Supreme Court has expressed a strong preference for joint trials of defendants who are indicted together.

But her decision was not based on the adverse defenses, she said.

Matsumoto said that, if the defendants are tried together, a jury could find that Greebel was “grossly negligent or incompetent” in providing Shkreli with legal advice, for example, or that Greebel misunderstood the information he received from Shkreli.

“Although the defenses may be somewhat antagonistic, the defenses do not rise to the point that requires the jury to disbelieve the defense of one of the defendants if it accepts the defense of the other,” Matsumoto said.

The judge also waved off Greebel’s argument that he would suffer spillover prejudice if he were tried alongside Shkreli.

But Matsumoto expressed concerns with Shkreli’s ability to receive a fair trial, noting Greebel’s stated intent that his defense team will act as a “second prosecutor” to Shkreli. She also pointed out that the defense attorneys have said they intend to raise frequent objections during the trial, which she said will lead to a “litany of sidebar debates” and increase the trial’s length.

Matsumoto also said the cascade of objections will likely confuse the jury in “what is already a complex case” and may lead jurors to decide the case based on the defendants’ accusations against each other, rather than on the evidence.

In a situation where “judicial economy is butting up against a defendant’s right to a fair trial,” Matsumoto said, “judicial economy must give way to fairness.”

“Shkreli will be substantially prejudiced by having to wage a defense on two fronts, in a single trial, before the jury,” Matsumoto said. “The jury’s ability to make a reliable judgment maybe affected by the compounded effect of hearing the government’s case in chief twice, once from the government and then again from Greebel.”

Shkreli and Greebel are charged with conspiracy to commit securities fraud and conspiracy to commit wire fraud. Shkreli also faces two additional counts of conspiracy to commit securities fraud, two additional counts of conspiracy to commit wire fraud and two counts of securities fraud.

Shkreli, who is set to go to trial on June 26, is represented by Benjamin Brafman, Marc Agnifilo, Jacob Kaplan and Andrea Zellan of Brafman & Associates.

In a statement, Shkreli’s lawyers said severance was the only way their client could receive a fair trial.

“While severance is very rarely granted, we believe that Judge Matsumoto did exactly what the law required in this very unique prosecution, where Mr. Shkreli was to be tried together with the lawyer whose advice he relied on during the period charged in the indictment,” the statement reads.

Greebel is represented by Gibson, Dunn & Crutcher partners Reed Brodsky and Winston Chan and of counsel Lisa Rubin. Brodsky declined to comment.

Assistant U.S. attorneys Alixandra Smith, Jacquelyn Kasulis and Girish Srinivasan of the Eastern District are handling the prosecution. The office declined to comment.

Copyright New York Law Journal. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

A joint trial of ex-pharmaceutical executive Martin Shkreli and Evan Greebel, his co-defendant in a fraud case and his former lawyer, would present a “serious risk” that Shkreli would not receive a fair trial, a federal judge ruled on Wednesday.

Shkreli, the founder and former CEO of Turing Pharmaceuticals, and Greebel, a former partner with Katten Muchin Rosenman , are accused of working together in a scheme to defraud investors in Retrophin Inc. to pay off investors in two hedge funds that Shkreli also founded, MSMB Capital Management and MSMB Healthcare.

The two defendants, each arrested and charged in 2015, moved to sever their trials, arguing that their defenses would be “mutually antagonistic” and force them to clash with each other while defending themselves against government lawyers.

Shkreli, a controversial executive who achieved notoriety by increasing the price of a drug commonly used by HIV and AIDS sufferers from $13.50 to $700 per pill, says he plans to present an advice of counsel defense at trial and that Greebel’s attorneys would paint him as a “mythical boogeyman.”

Greebel, who was a partner with Arnold & Porter Kaye Scholer during his arrest, plans to argue that Shkreli used he and other Katten lawyers as patsies in fraudulent schemes.

Prosecutors, however, accused the two of playing up the acrimony between them to support their severance motion.

Eastern District Judge Kiyo Matsumoto granted the severance, acknowledging that doing so is rare and that the U.S. Supreme Court has expressed a strong preference for joint trials of defendants who are indicted together.

But her decision was not based on the adverse defenses, she said.

Matsumoto said that, if the defendants are tried together, a jury could find that Greebel was “grossly negligent or incompetent” in providing Shkreli with legal advice, for example, or that Greebel misunderstood the information he received from Shkreli.

“Although the defenses may be somewhat antagonistic, the defenses do not rise to the point that requires the jury to disbelieve the defense of one of the defendants if it accepts the defense of the other,” Matsumoto said.

The judge also waved off Greebel’s argument that he would suffer spillover prejudice if he were tried alongside Shkreli.

But Matsumoto expressed concerns with Shkreli’s ability to receive a fair trial, noting Greebel’s stated intent that his defense team will act as a “second prosecutor” to Shkreli. She also pointed out that the defense attorneys have said they intend to raise frequent objections during the trial, which she said will lead to a “litany of sidebar debates” and increase the trial’s length.

Matsumoto also said the cascade of objections will likely confuse the jury in “what is already a complex case” and may lead jurors to decide the case based on the defendants’ accusations against each other, rather than on the evidence.

In a situation where “judicial economy is butting up against a defendant’s right to a fair trial,” Matsumoto said, “judicial economy must give way to fairness.”

“Shkreli will be substantially prejudiced by having to wage a defense on two fronts, in a single trial, before the jury,” Matsumoto said. “The jury’s ability to make a reliable judgment maybe affected by the compounded effect of hearing the government’s case in chief twice, once from the government and then again from Greebel.”

Shkreli and Greebel are charged with conspiracy to commit securities fraud and conspiracy to commit wire fraud. Shkreli also faces two additional counts of conspiracy to commit securities fraud, two additional counts of conspiracy to commit wire fraud and two counts of securities fraud.

Shkreli, who is set to go to trial on June 26, is represented by Benjamin Brafman, Marc Agnifilo, Jacob Kaplan and Andrea Zellan of Brafman & Associates.

In a statement, Shkreli’s lawyers said severance was the only way their client could receive a fair trial.

“While severance is very rarely granted, we believe that Judge Matsumoto did exactly what the law required in this very unique prosecution, where Mr. Shkreli was to be tried together with the lawyer whose advice he relied on during the period charged in the indictment,” the statement reads.

Greebel is represented by Gibson, Dunn & Crutcher partners Reed Brodsky and Winston Chan and of counsel Lisa Rubin. Brodsky declined to comment.

Assistant U.S. attorneys Alixandra Smith, Jacquelyn Kasulis and Girish Srinivasan of the Eastern District are handling the prosecution. The office declined to comment.

Copyright New York Law Journal. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.