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

A federal prosecutor in the securities fraud case against pharmaceutical executive Martin Shkreli and his ex-counsel Evan Greebel accused the defendants on April 7 of strategically “ramping up” the animosity between them in an effort to sever their cases.

But attorneys for Shkreli and Greebel fired back that the bad blood is real, with Shkreli’s defense lawyer, Benjamin Brafman, calling Assistant U.S. Attorney Alixandra Smith’s portrayal of the effort “specious.”

The exchange came near the conclusion of a two-and-a-half-hour hearing before Eastern District Judge Kiyo Matsumoto in which defense attorneys argued in support of motions to sever their clients, saying that their defenses are mutually antagonistic and, if they are tried together, that would force them to defend their respective clients on two fronts.

Shkreli, who first achieved wide recognition in 2015 when he increased the price of a medication commonly used by HIV and AIDS sufferers from $13.50 per pill to more than $700, is accused of running an $11 million Ponzi scheme to pay back investors in MSMB Capital Management, a hedge fund he founded. He faces eight counts.

Greebel, who worked for Katten Muchin Rosenman at the time of the alleged fraud, faces two counts in relation to the scheme. He served as outside counsel to Retrophin, a biopharmaceutical firm that Shkreli co-founded, and is accused of distributing sham consulting agreements as part of a scheme to pay back MSMB investors.

In addition to the much-criticized price hike of the medication, Daraprim, the controversial executive dubbed the “Pharma Bro” has made headlines with antics such as taking to Twitter to call members of Congress “imbeciles” after he testified before a U.S. House of Representatives committee and publicly stating his belief that Hillary Clinton suffers from Parkinson’s disease.

Attorneys for both defendants also argued that trying their clients together may actually take longer than holding separate trials because they would need to present additional evidence.

Greebel argues that he fell victim to Shkreli’s deceptions and that Shkreli used him and other Katten attorneys as pawns in fraudulent schemes.

“We would be duty-bound to destroy Mr. Shkreli’s credibility,” said Reed Brodsky, a partner at Gibson, Dunn & Crutcher who represents Greebel. He also said that, if the defendants are tried together, he would need to submit additional evidence in the case that is not currently in the government’s possession.

Shkreli plans to present an advice of counsel defense at trial and has emphasized that Greebel and Katten received almost $10 million from him in legal fees. He also says that Greebel’s attorneys will try to paint the executive as a “mythical bogeyman.”

“If we have a trial together, I have to show that Mr. Greebel is a fraudster,” Brafman said at oral arguments.

But Matsumoto expressed doubt that Shkreli’s out-of-court statements will impact the proceedings before her, saying that his conduct in the courtroom has been appropriate so far.

“I don’t even see how that’s going to be relevant,” the judge said.

The oral arguments also concerned the government’s motion for an evidentiary hearing on Shkreli’s advice of counsel defense, with prosecutors arguing that he has not submitted evidence that he consulted counsel before taking actions related to his alleged fraud.

Shkreli and Greebel were both in attendance to the oral arguments and seated at the same table in the courtroom well, separated by three attorneys.

Greebel wore a suit and was mostly expressionless during the hearing. But Shkreli, dressed in a black, short-sleeved polo shirt and khakis, was relatively animated, flashing grins at his defense team throughout the proceedings and wincing and rolling his eyes in response to statements by the other parties’ attorneys, such as when Brodsky gestured at Shkreli and called him a “conniving guy.”

In addition to Brodsky, Gibson Dunn attorneys Winston Chan and Lisa Rubin appeared for Greebel.

Assistant U.S. Attorneys Jacquelyn Kasulis, David Kessler, Winston Paes and Girish Karthik Srinivasan also appeared for the government.

Marc Agnifilo and Andrea Zellan of Brafman & Associates also appeared for Shkreli.