Lawyers making closing arguments in the securities fraud trial of ex-pharmaceutical executive Martin Shkreli on Thursday painted contrasting portraits of investors who were allegedly defrauded by the so-called “Pharma Bro.”
The lead prosecutor in the case, which is in its fifth week of trial, cast them as victims of lies fed to them by Shkreli to keep their money wrapped up in an elaborate Ponzi scheme, while the head of Shkreli’s defense team repeatedly emphasized that the investors ultimately made profits and dismissed the testimony of some as “rich people B.S.”
“No one in this case who invested with Martin Shkreli suffered any economic loss whatsoever,” said lead defense counsel Benjamin Brafman.
Shkreli is accused of defrauding investors in two hedge funds he founded, MSMB Capital Management and MSMB Healthcare, and using $11 million is assets held by Retrophin, which he also founded, to pay them back via sham consulting agreements and settlements with MSMB investors.
The alleged schemes occurred from 2009 to 2014.
Shkreli has pleaded not guilty to eight counts, which also include conspiracy to commit wire fraud and conspiracy to commit securities fraud.
If convicted, Shkreli faces up to 20 years in prison.
Shkreli allegedly conspired with his attorney, former Katten Muchin Rosenman partner Evan Greebel, to further the scheme and the defendants successfully petitioned to have separate trials.
Greebel, who is also charged with conspiracy to commit wire fraud and conspiracy to commit securities fraud, is expected to stand trial in October.
In the government’s summation, assistant U.S. attorney Alixandra Smith from the Eastern District portrayed Shkreli as a con man who lied to investors to put their money in the funds and taking measures to convince them their money was in the funds, such as sending them phony performance reports and lying about his background.
In one example, Shkreli, who actually graduated from Baruch College, told one investor that he attended Columbia University but dropped out before earning a degree—”just like Steve Jobs.”
In another, Smith said that Shkreli told investor David Geller, who invested $200,000 in one of Shkreli’s funds, that the investment was making a 30 percent return when in reality there was less than $80,000 in the fund.
“He lies on the front end to get them to put money in, lies on the back end to keep their money in,” Smith said.
But the investors made their money back, and then some, and throughout the trial Shkreli’s defense team has worked to undermine any sympathy jurors may have for investors.
For example, during cross-examination of Texas-based venture capitalist Darren Blanton—a self-styled cowboy who Brafman referred to in closing arguments as the “rich Texas guy”—attorneys asked about his “renegade” past and read a quote from a Dallas Morning News article that Blanton has used his gift of gab to “con” people.
In his summation, Brafman argued that his client used investors’ money to build Retrophin into a successful company, portraying him as a misunderstood genius who toiled away for two years and slept in his office “in a bag like a vagrant” to get the money to make investors whole.
“He didn’t fool them,” Brafman said. “He didn’t defraud them. His good faith is so real it jumps off the pages of the transcripts.”
Proceedings ended Thursday before Brafman concluded summation, which he is set to continue on Friday. In addition, federal prosecutors are expected to give a rebuttal to Brafman’s closing on Friday and Eastern District Judge Kiyo Matsumoto is expected to deliver jury instructions.
In addition to Smith, the prosecution team includes assistant U.S. attorneys Jacquelyn Kasulis and Girish Srinivasan.
Shkreli’s defense team also includes Brafman & Associates attorneys Marc Agnifilo, Jacob Kaplan and Andrea Zellan.
Shkreli became famous in 2015 when the price of Daraprim, a life-saving antiparasitic drug typically used by HIV and AIDS sufferers, was jacked up from $13.50 to $750 per pill.
From there he wove himself into the cultural zeitgeist through other antics such as trolling Hillary Clinton on Twitter and getting into a spat with members of the Wu-Tang Clan after he purchased—for $2 million—the sole copy of a record the group recently released.
While the reasons for Shkreli’s repute are unrelated to his securities case, they have cast a shadow over the case at times—notably at voir dire, when many potential jurors used sidebar conversations to vent their frustrations about Shkreli and the pharmaceutical industry more broadly.
The defense in his securities case rested on Wednesday without calling any witnesses and, despite his willingness to plead his case to the public via livestream or on social media accounts—as well as criticize journalists and prosecutors—Shkreli did not testify.
“This was a bogus case from day one,” Shkreli wrote on his Facebook page on July 19. “Also, financial reporters should take an accounting class.”
Also on Wednesday, Shkreli waived his right to a trial if his assets end up being subject to criminal forfeiture.
At a hearing in June, Brafman told Matsumoto that his client still holds a chunk of Turing Pharmaceuticals, for which he served as CEO until he was arrested in December 2015, worth between $30 million and $50 million.