Martin Shkreli Is Found Guilty of Fraud
Mr. Shkreli was convicted of securities fraud in connection with his hedge fund MSMB Capital; of securities fraud in connection with another hedge fund he ran, MSMB Healthcare;
and of conspiracy to commit securities fraud, related to a scheme in which he tried to secretly control a huge portion of shares of Retrophin, a drug company he started.
The defense asked why Mr. Shkreli, if he wanted to commit fraud, did not commit fraud: He ultimately
paid back his investors with shares of Retrophin, which became valuable, along with cash.
Martin Shkreli, accused of defrauding his hedge fund investors
and a pharmaceutical company, was convicted on three of eight counts on Friday, after a five-week trial in the Federal District Court in Brooklyn.
He lost everything in MSMB Capital after a bad trade in February 2011, and hid
that fact, sending investors statements for more than a year and a half showing strong returns — even though the fund did not trade after that month, and had no assets.
Victims, usually the most sympathetic witnesses in a trial, were undercut here by the defense as rich
and out of touch; when the prosecution tried to limit the victims it would call to testify, the defense urged it to call more.
A sentencing date was not set; Judge Matsumoto said she would wait for submissions
from both sides on how much money was lost, as the sentencing depends on that.
The conviction, even as a mixed verdict, was a major defeat for the divisive Mr. Shkreli, who said before the trial
that he was “so innocent” that the judge, jury and prosecutors would apologize to him afterward.