When the notorious biotech exec Martin Shkreli was convicted on three counts of felony fraud last fall, he immediately boasted that he had skated clear of the worst charges, limiting him to no more than a light prison sentence at Club Fed that he would soon complete.
But with his sentencing looming on March 9, the judge in the case may be thinking something entirely different.
In a new ruling issued at the beginning of the week, Judge Kiyo Matsumoto decided that Shkreli’s actions resulted in losses of more than $10 million — and federal sentencing guidelines suggest that each of those millions could be punished with a year or more in prison.
In the lengthy decision, the judge reviewed Shkreli’s push for an acquittal on the three convictions he now faces sentencing on. And she knocked back each argument, agreeing with the jury’s determination that Shkreli — who aroused a storm of criticism by his decision to jack up the price of an old drug by more than 5,000% — had brazenly lied repeatedly to his investors about the performance of his investments with their money, and the amount of cash he had to work with.
The most important part was her assessment of the losses that could be attributed to each of the counts. Shkreli and his attorney Brafman argued that by handing over Retrophin shares to the investors in his funds, there was no loss.
The judge, again, decided otherwise.
For the purposes of sentencing, the court will apply a loss amount of $2,998,000 on Count Three, $3,402,450 on Count Six, and $4,000,000 on Count Eight.
Why $4 million for count 8?
The judge ruled that whatever the actual loss, Shkreli had “intended” to inflict financial damage on investors who bought Retrophin stock by scheming to inflate the price. That intention the judge determined could cost Shkreli dearly. From the ruling:
Mr. Shkreli argues that he did not “intend” any loss to the market (Def. Letter at 12). The court finds, based on the trial evidence, that Mr. Shkreli conspired with Mr. Greebel and others to manipulate the price and trading volume of Retrophin stock, and thereby attempted to cause the share-buying public to overpay for the stock. The court further finds that a reasonable measure of the loss Mr. Shkreli sought to inflict is the difference between the price that the unsuspecting investing public would have paid for Retrophin stock had the conspiracy been successful, and the value of the shares absent the fraud.
John Coffee, director of the Center on Corporate Governance at Columbia University Law School, told CNBC that the ruling exposed Shkreli to a sentence of a decade or more — depending on her willingness to go easy or hard on the 34-year-old.
Such a finding of loss could justify a 10-year sentence — or longer. But federal judges no longer have to follow the guidelines and they are only advisory. She has great discretion as to the sentence she imposes; she could recognize that he is a first offender and give him modest time. Or she could place more emphasis on the amount of the loss and his unrepentant attitude.
Given that the judge tossed Shkreli in federal jail after he posted a bounty of $5,000 for a strand of Hillary Clinton’s hair, has refused to return his $5 million bond money while they calculate possible damages and now calculates that the biotech exec was responsible for millions in losses, some observers might conclude that the previously unrepentant Shkreli may have the book thrown at him. All those streaming videos and caustic emails giving the finger to every one of his critics may haunt him for years.
Shkreli, though, is sounding a repentant note in a letter to the court, which his lawyer Benjamin Brafman cites in a lengthy appeal to the judge to go easy. “I caused this entire mess to happen,” Shkreli states at one point. Then he goes on to discuss how his 5 months in a federal prison has changed him.
Prison has been both the most frightening experience in my life but also an opportunity for me to see a side of the world seldom seen or discussed. I have tried my best to make a positive impact on many of the people I encounter here. If I have something to teach my fellow inmates, I implored them to listen and learn. I have comforted the forlorn and forgotten men facing long sentences, many are severely depressed, and sadly, suicidal. I try my best to set a good example for these individuals too, knowing my fame and achievements were something they might know of, and I try my best to explain that in order to have a chance to succeed, they had to make a serious commitment to lifelong education and move far away from poisonous surroundings and attitudes that lead to a temptation to cut corners and commit crimes.
Shkreli has never been known to publicly say anything like that, which is one reason why he’s facing a tough judge in a few days.
Image: Martin Shkreli leaves federal court in June, 2017. Shutterstock
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