A federal jury on Friday convicted former Turing Pharmaceuticals CEO Martin Shkreli on three counts of securities fraud related to two hedge funds he managed and a pharmaceutical company he founded.
How your hospital board can become the first line of defense against fraud
Shkreli became widely known after Turing raised the price of the decades-old drug Daraprim—which is used to treat malaria and AIDS and is considered the standard of care for treating toxoplasmosis, a life-threatening parasitic infection—by 5,000 percent. The convictions are not related to the price hike.
Case details
According to the Los Angeles Times, prosecutors accused Shkreli of defrauding investors by exaggerating both his credentials and funds. Prosecutors charged Shkreli with:
- Conspiracy to commit securities fraud related to MSMB Capital, a hedge fund Shkreli had run;
- Conspiracy to commit wire fraud related to MSMB Capital;
- Conspiracy to commit securities fraud related to MSMB Healthcare, a separate hedge fund Shkreli had run;
- Conspiracy to commit wire fraud related to MSMB Healthcare;
- Conspiracy to commit securities fraud related to Retrophin, a pharmaceutical company Shkreli had founded;
- Conspiracy to commit wire fraud related to Retrophin by using company funds to pay MSMB investors;
- Securities fraud related to MSMB Capital; and
- Securities fraud related to MSMB Healthcare.
Jury rules Shkreli is guilty of fraud
A jury in the Federal District Court of Brooklyn convicted Shkreli of three charges:
- Conspiracy to commit securities fraud related to Retrophin;
- Securities fraud related to MSMB Capital; and
- Securities fraud related to MSMB Healthcare.
The jury acquitted Shkreli of the five other charges.
According to the New York Times, Shkreli faces a maximum of 20 years in prison for each of the securities fraud charges on which he was convicted, and a maximum of five years in prison for the conspiracy charge. A sentencing date has not yet been set.
Reaction
Bridget Rohde, the acting U.S. attorney for the Eastern District of New York, said "Justice has been served," but added, "Our work is not done: Shkreli remains to be sentenced, and there's a co-defendant in the case."
Benjamin Brafman, Shkreli's lawyer, characterized the verdict as a partial victory, because Shkreli had been acquitted of some of the charges. Brafman said the defense might ask the judge to not sentence Shkreli to prison time.
Shkreli said, "We are delighted in many ways with this verdict" (Clifford/Moynihan, New York Times, 8/4; Demick/Hansen, Los Angeles Times, 8/4; AP/Modern Healthcare, 8/4; Davis O'Brien, Wall Street Journal, 8/4).
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