'Pharma bro' Martin Shkreli found guilty of 3 of 8 charges, including securities fraud

Martin Shkreli

Prosecutors said a mountain of evidence at trial showed Shkreli deceived hedge-fund investors for years.

A federal jury Friday found notorious "Pharma bro" Martin Shkreli guilty of three counts of securities fraud — but acquitted him of five other criminal counts related to hedge funds investors and a drug company he founded.

The split verdict in Shkreli's trial came at about 2:37 p.m. on the fifth day of jury deliberations, after a more-than-month-long trial in Brooklyn, New York, federal court.

At that trial, prosecutors claimed Shkreli had defrauded multiple investors in his two hedge funds out of millions of dollars , only to repay them with stock and cash that he looted from a the biotech company he created, Retrophin .

While the seven-woman, five-man jury clearly accepted some of the prosecution's evidence, it rejected other parts of their argument.

The mixed decision perplexed many in the courtroom, including the 34-year-old Shkreli, who first drew widespread public scorn in 2015 for raising the price of a lifesaving drug by more than 5,000 percent.

He looked over quizzically at one of this lawyers, Marc Agnifilo, each of the three times that Judge Kiyo Matsumoto interrupted a set of "not guilty" announcements she was reading off of the jury's verdict sheet with a "guilty" one.

A juror who was quoted anonymously by the New York Times, said "In some of the counts at least we couldn't find that he intentionally stole from them and the reasoning was to hurt them."

Matsumoto did not set a sentencing date. That will happen after prosecutors and defense lawyers argue how much, if any, money Shkreli should be ordered to forfeit, and after defense lawyers ask her to overturn the guilty verdicts.

Shkreli, who remains free on $5 million bail, faces a maximum sentence of 20 years in prison.

But he is sure to receive a far-less-severe punishment than that, given his lack of a criminal record, and other factors.

"I think we are delighted in many ways," said Shkreli said outside of the courthouse.

"This was a witch hunt of epic proportions and maybe they found one or two broomsticks but at the end of the day we've been acquitted of the most important charges in this case."

He almost immediately afterward used his new Twitter account, @samthemanTP, to comment on the outcome of the case, and also started a livestream on YouTube from his apartment.

Shkreli's lead lawyer, Benjamin Brafman, told a group of journalists, "I hope tomorrow's reports inform the public that Martin Shkreli went to trial and despite being Martin Shkreli he won more than he lost."

But acting United States Attorney Bridget Rohde, whose office prosecuted Shkreli, said, "We're gratified as we stand here today at the jury's verdict."

"Justice has been served," said Rohde, whose prosecution team next plans to try Shkreli's co-defendant and former business lawyer Evan Greebel this fall.

Brafman said the amount of money Shkreli could be made to surrender would have been much higher if he had been found guilty of ripping off Retrophin, to repay swindled hedge-fund investors.

But Shkreli was acquitted of that charge, conspiracy to commit wire fraud, which Brafman referred to as "the money count."

Brafman said that because the jury found that any loss suffered by Retrophin was either low, or non-existent, as the defense claims, the sentence recommended for Shkreli will be light.

"I think we would love to have a complete sweep but five out of eight counts, not guilty, is in our view a very good verdict especially since count seven, the main count that impacts on the loss in this case, that was the most important count in the case from our perspective," Brafman said.

"And for Martin to be found not guilty of that count is a very, very good result as far as we are concerned," Brafman said.

He noted that Matsumoto will have "enormous discretion" in sentencing Shkreli, who has no criminal history.

Brafman also said, "I think this verdict is a reasonably good verdict under the circumstances ... we are 90 percent pleased."

The charges against Shkreli were unrelated to his decision, while CEO of Turing Pharmaceuticals, to raise the price of the drug Daraprim from $13.50 per pill to $750 per pill in 2015.

The price increase came as he was being investigated for the case that led to his trial.

Prosecutors said a mountain of testimony and evidence at that trial showed that Shkreli duped multiple investors into putting millions of dollars into two hedge funds he ran, MSMB Capital and MSMB Healthcare, by falsely claiming to have an excellent record of running such funds , and by falsely stating his investment strategy had a low level of risk.

After getting their money, prosecutor said, Shkreli quickly lost much of it, and also used some of it to capitalize his infant company Retrophin even as he continued sending out financial statements to investors claiming positive returns.

And when investors asked for their money to be redeemed to them in cash, Shkreli brushed them off for months or more, inventing excuses and suggesting alternative ways to pay them back, according to the prosecution's case.

Two of the securities fraud counts for which Shkreli was convicted related to those hedge funds.

Prosecutors said that he then improperly used Retrophin stock and cash from the young firm to pay off the the funds' investors.

While Shkreli was acquitted of on Retrophin-related count, he was convicted of conspiracy to commit securities fraud in connection with Retrophin.

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