Shkreli became the target of public scorn when he was the C.E.O. of Turing Pharmaceuticals, a company he founded. Turing acquired a drug called Daraprim, which treats a rare but potentially deadly parasitic infection often suffered by H.I.V./AIDS patients, and then raised the price from $13.50 to seven hundred and fifty dollars per pill. In the politically charged environment of 2015, he proved an irresistible target of outrage. Presidential candidates excoriated him, and members of Congress chastised him at a public hearing. All the while, Shkreli refused to play the role of the contrite capitalist. “I think it should be as high as possible,” he told me, of the price of Daraprim and other rare-disease drugs, when we met a few months ago. “These are people doing God’s work. How could you ever want the company making the cure for your dying kid to not be flush with cash? I meet moms all the time who say, ‘I want you to be the richest man in the world.’ ”
The controversy surrounding drug-price increases isn’t the reason Shkreli is on trial. At the time of the Daraprim scandal, Shkreli was already under federal investigation for entirely different reasons. In late 2015, he was arrested and charged with misappropriating assets from Retrophin, a publicly traded drug company that he was running, and using those assets to conceal investor losses in separate entities, his hedge funds, MSMB Capital L.P. and MSMB Healthcare L.P. Announcing the charges, the former U.S. Attorney for the Eastern District of New York, Robert Capers, said, “Shkreli essentially ran his companies like a Ponzi scheme.” Brafman’s defense seems to be that Shkreli’s investors ultimately ended up making money on their investments, and this should excuse whatever lines he crossed in the process. (In the government’s view, those lines included misleading his investors and taking assets from Retrophin that didn’t belong to him.) During the trial, which continues this week, prosecutors have put one MSMB Capital investor after another on the stand to testify that Shkreli told them things that weren’t true: exaggerating the size of his fund and the returns it was generating, and, eventually, going to extremes to conceal the fact that it had lost most of its value.
According to the testimony of some of his investors, Shkreli finally told them that he was shutting MSMB down and offered them shares in Retrophin, the drug company he was running that had no relationship with MSMB, rather than cash to redeem their shares. Dr. Lindsay Rosenwald, one of those investors, testified that “my choice was the cash”; he never got the cash, though. Instead, Rosenwald said, he and Shkreli reached a settlement in which Rosenwald received eighty thousand shares of Retrophin. In a pattern mirrored by other investors, Rosenwald testified that he came out ahead, financially, in the end, and was able to sell the Retrophin shares for between four hundred thousand and six hundred thousand dollars, a huge increase over his initial hundred-thousand-dollar investment.
This outcome appears to be at the heart of Brafman’s spirited defense of his client, and during cross-examination, he has asked every investor whether they made money or not; many of them have acknowledged that they did. Legally speaking, the argument is absurd; fraud is never justified just because nobody lost money in the end. But whatever the law, if just one juror decides to fixate on the fact that no one was hurt financially, Shkreli could go free. If that unlikely scenario were to occur, it would be a major embarrassment for the government, which is already under intense criticism for its inability, or unwillingness, to prosecute high-level financial crime, let alone the easier-pickings type that the Shkreli case represents. (For more on this, see Jesse Eisinger’s new book, “The Chickenshit Club.”)
Shkreli behaved bizarrely during the early days of the trial, at one point bursting into the overflow courtroom where reporters were watching the proceedings on closed-circuit TV. He insulted the prosecutors, calling them “the junior varsity,” and complained that he was being blamed for all the ills of capitalism. In the evenings, he’s been live-broadcasting himself on Facebook. It appeared as if he was intentionally trying to sabotage his trial, and since then, the judge has forbidden him from talking to the press in the environs of the courthouse. Now the thirty-four-year-old Shkreli can be seen sitting quietly at the defense table, as pale and thin as a boy, as his former investors testify against him.
When I spoke to him a few months back, Shkreli seemed to be in denial about the legal peril he faced—if convicted, his potential sentence is estimated to be up to twenty years. He was anxious about his prospects, but he also expressed unwavering optimism that he would be acquitted. He told the story of his parents, immigrants from Albania and Croatia who lived in a rent-controlled apartment in Brooklyn and toiled in low-wage jobs. He talked about how hard they worked just to pay their bills and give their children the opportunity to become successful, and how, in light of all he had achieved professionally, he was the pride of his family. “America’s the land of opportunity,” Shkreli told me. “You know, part of being American is that brash, money-making thing.” He went on, “I think people sign up for a Lotto when they come to America. They say, ‘I’m from a shitbird country and I’ll come here, and my dream is that one of us becomes rich, and one of us gets to stick it to the man. One of us is gonna kill it in this country.’ ”
Author: Sheelah Kolhatkar