Martin Shkreli (NLJ/Diego M. Radzinschi)
With his criminal defense trial just months away, former pharmaceutical executive Martin Shkreli is pressing Katten Muchin Rosenman to turn over volumes of documents that he contends will show he was only following his lawyers’ advice on the deals that led to his arrest in an alleged fraud scheme.
But Katten is refusing to produce certain records for now, claiming they could be privileged.
Eastern District Judge Kiyo Matsumoto, seeking to resolve the standoff, has ordered the parties and Katten to appear in court on Nov. 17 to address the subpoena.
Shkreli and former Katten partner Evan Greebel were indicted in December 2015 for allegedly using a series of settlement and sham consulting agreements that caused biopharmaceutical firm Retrophin and investors to lose $11 million. Prosecutors also say Shkreli defrauded investors in two hedge funds he founded, MSMB Capital Management and MSMB Healthcare Management.
Shkreli is scheduled to face trial in late June, while Greebel, if his case is severed, would be tried in October.
Shkreli was CEO of Retrophin until September 2014. Greebel was Retrophin’s outside counsel and a partner at Katten Muchin at the time of the alleged fraud. He joined Kaye Scholer in mid-2015 but resigned after the indictment.
Shkreli’s lawyers asked the court on Oct. 27 to force Katten to comply with a subpoena served on the firm in September. The subpoena demands a broad range of documents over more than four years, including retainer agreements, billing records, internal correspondence and telephone and Twitter messages. According to Shkreli, the records will show “that he acted in good faith and without criminal intent.”
In particular, the attorneys say the documents will show Shkreli’s former lawyers at Katten gave legal advice based on “complete and truthful information” that he provided related to the deals alleged in the indictment.
“Shkreli sought and received his lawyers’ legal advice and he followed it,” said his lawyers, Benjamin Brafman, senior counsel Marc Agnifilo and associate Andrea Zellan of Brafman & Associates.
The Katten documents may impact key trial arguments and strategy, such as how much Shkreli may blame his former attorneys at trial. Shkreli has “perhaps the most relevant reliance on counsel defense I’ve ever encountered,” Brafman told the judge earlier this year. Brafman also has said he may seek to sever the case from Greebel.
Shkreli’s attorneys said both he and Greebel believe the subpoena issue should be resolved before any motion for severance is filed. In response, Katten said in Friday court documents that because it was counsel to the hedge funds and Retrophin, a large portion of the documents are presumptively privileged.
Between 2011 and 2014, Katten represented many Retrophin and hedge fund entities and advised Shkreli in his role as executive at these companies, according to the firm. Katten amassed nearly 600,000 pages of material related to those representations, the firm said, but it argued that it is not in a position to determine who has authority to assert or waive privilege on all of them.
Also, many of the requested e-mails and documents already have been produced by Retrophin to the government, which then provided them to the defense, making production by Katten unnecessary, the firm said.
“Katten understands that Shkreli has sought to expedite production of these documents in order to evaluate a possible advice of counsel defense, increasing the complexity of the standing and privilege issues,” said the firm, represented by Katten partner Michael Verde and associate Elizabeth Langdale.
Katten said it has gathered all of its e-mails and records and stands ready to produce them, but first wants direction from the court.
Verde, in an interview with the Law Journal, said the firm doesn’t believe it is “adverse to any party.” He said the court will have to decide any competing interests. “We are prepared to hand over any and all documents as directed by the court,” he added.
Although Shkreli may seek to blame attorneys at Katten as part of a reliance of counsel defense, Verde said the firm “is not focused at all on how these documents will be used now or in the future.” Instead, he said it is focused on making sure the right parties get the documents to which they’re entitled.
Brafman maintained the documents are not privileged but, if they are found to be privileged in the future, “it is Mr. Shkreli’s privilege to waive.”
“We believe the Katten records are critical to the reliance of counsel defense that Shkreli intends to offer at trial as they will include among other documents detailed billing records that show Greebel offered advice to Shkreli on virtually every transaction and decision during the relevant time period.”
Shkreli faces eight criminal conspiracy and fraud counts and Greebel faces two conspiracy counts. They have both pleaded not guilty.
Greebel’s lawyer, Reed Brodsky, a partner at Gibson, Dunn & Crutcher, declined to comment.