Martin Shkreli is known for a number of things. Jacking up the cost of a life-saving drug for AIDS patients by 5,000 percent. Grinning his way through a House hearing as he pleaded the Fifth. Spending millions to buy the only copy of a Wu-Tang album and then being in no hurry to listen to it. Badgering a journalist on Twitter until his account was suspended.
But today, jury selection begins in federal court as 34-year-old Shkreli goes on trial for something else entirely: securities fraud charges. Prosecutors say he was swindling investors in his hedge fund well before he became "the most hated man in America."
Federal agents arrested Shkreli in December 2015, and the SEC charged him with committing "a series of frauds" between October 2009 and March 2014.
Before he made headlines as the CEO of Turing Pharmaceuticals, Shkreli founded a pharmaceutical company, Retrophin, and a pair of hedge funds, MSMB Capital Management and MSMB Healthcare. Prosecutors say he committed a series of frauds while managing the funds between October 2009 and March 2014.
The SEC's complaint alleges "widespread fraudulent conduct" by Shkreli — a series of misrepresentations and omissions, and of taking money from one fund to cover claims against the other. According to the complaint, he also issued stock and made cash payments from Retrophin (disguised as payments for consulting services) to disgruntled investors in the hedge funds who were threatening to sue.
Prosecutors say Shkreli misled investors about the size and performance of MSMB Capital Management, claiming that its returns were "+35.77% since inception" — when the fund had actually lost 18 percent. In another instance, he claimed the fund had $35 million in assets, when in fact it had less than $1,000 in assets.
He also allegedly lied to MSMB's executing broker about the fund's ability to settle a short sale, resulting in more than $7 million in losses for the broker who had to cover the short position.
He faces eight counts of securities fraud and conspiracy to commit securities and wire fraud. Five counts each carry maximum sentences of 20 years in prison; the other three are a maximum of five years each.
His defense team has argued no harm, no foul. "Everybody got paid back in this case," his lawyer said, according to The Associated Press. "Whatever else he did wrong, he ultimately made them whole." But a prosecutor said that depriving people control of their assets is also fraud, reports the Times.
The defense may call Shkreli to the stand, in which case he might well describe his working-class Brooklyn upbringing, as a child to immigrants from Albania and Croatia.
Shkreli seems to follow standard legal advice to stay keep mum while he's in a courtroom — but not elsewhere. Last Monday, he sat quietly at his hearing in federal court — and then went home and livestreamed his activities for 2 1/2 hours, The New York Times reports. Although his Twitter account was suspended in January for his persistent trolling, he posts frequently on Facebook and you can watch a four-hour livestream of him from Thursday.
Shkreli's chatter may cost him. His lawyer has argued he "doesn't have any cash," and that his bail should be reduced to $2 million from $5 million, CNBC reports. His ownership stake in Turing Pharmaceuticals, which hiked the price of the drug Daraprim, is worth $30 million to $50 million, but his lawyer says he can't sell it without shareholder approval. (Shkreli resigned as CEO the day after his arrest.)
But prosecutors, Reuters reports, have pointed to recently touted expenditures: a World War II-era code-breaking machine, the only copy of a Lil Wayne album and a Picasso. He also offered $40,000 for a math proof and $100,000 for tips on the killing of DNC staffer Seth Rich.
If Shkreli is dreading his day in court, he isn't showing it. "I'm excited," he told the AP last week. "I can't wait."
Shkreli's trial is expected to last four to six weeks, according to the AP. And the boy genius-turned-"pharma bro" told The New Yorker he doesn't expect to serve time.
"I think they'll return a not-guilty verdict in two hours," he said. "There are going to be jurors who will be fans of mine. I walk down the streets of New York and people shake my hand. They say, 'I want to be just like you.' "
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