NEW YORK (Reuters) - A U.S. jury convicted Martin Shkreli, the brash former drug company and hedge fund executive, on Friday of defrauding investors in hedge funds he ran years before he gained fame for jacking up the price of a drug.

Jurors in U.S. District Court in Brooklyn found Shkreli guilty of two counts of securities fraud and one count of conspiracy. But they acquitted him of five conspiracy counts, including conspiracy to steal from his old drug company, Retrophin Inc (RTRX.O).

Securities fraud carries a maximum sentence of 20 years in prison, though defendants in such cases rarely receive the maximum sentence.

Federal prosecutors had accused the 34-year-old New Yorker of lying to investors in the funds and looting Retrophin to pay them back.

Immediately after the verdict, Shkreli appeared somewhat shaken. But when he emerged from the courthouse later to talk to reporters, he was happy and confident.

He portrayed the verdict, which came on the fifth day of deliberations after a monthlong trial, as a victory.

“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,” he told reporters.

Acting U.S. Attorney Bridget Rohde, whose office prosecuted the case, praised the jury’s decision.

“Justice was served,” she said after the verdict.

Former drug company executive Martin Shkreli exits U.S. District Court after being convicted of securities fraud, in the Brooklyn borough of New York City, U.S., August 4, 2017. REUTERS/Carlo Allegri

Before going on trial, Shkreli had been best known for raising the price of anti-infection drug Daraprim by 5,000 percent in 2015 as chief executive of Turing Pharmaceuticals.

That increase sparked outrage from U.S. lawmakers and patients - and earned Shkreli the nickname “Pharma bro.”

Shkreli emphasized the jury’s finding that he did not conspire to steal from Retrophin.

“Count seven was the government’s attempt to theorize that I robbed Peter to pay Paul, and the jury has spoken conclusively that Retrophin was not defrauded in this case,” Shkreli told reporters.

Shkreli’s attorney, Benjamin Brafman, citing his client’s acquittal on the Retrophin charge, said Shkreli might avoid prison time or at least receive a “much, much lower” sentence than that contemplated by the government.

Prosecutors said that, starting around 2009, Shkreli lied to investors in his hedge funds, MSMB Capital and MSMB Healthcare, concealing trading losses behind fake account statements.

Prosecutors said Shkreli eventually paid investors back with stock or cash from Retrophin by having them sign settlement or consulting agreements with the company. Those agreements were the basis for prosecutors’ claim that Shkreli conspired to steal from Retrophin.

During his closing arguments, Brafman urged jurors to see his client not as a fraudster but as an eccentric genius determined to find cures for rare diseases.

Brafman said that Shkreli’s statements to investors were made in good faith. He also emphasized that none of Shkreli’s investors lost money, a rarity in a securities fraud case.

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John Zach, a former federal prosecutor who is now a defense lawyer at the law firm of Boies Schiller Flexner, said the fact that investors did not lose money could help Shkreli get a lighter sentence.

Christopher LaVigne, a former federal prosecutor who is now a defense lawyer at the law firm of Shearman & Sterling, said it was notable that prosecutors secured a conviction without investor losses, and said it could encourage more such cases in the future.

“A case like this, I think it emboldens them,” he said.</s>Martin Shkreli was convicted of securities fraud and conspiracy Friday.

The verdict came on the fifth day of deliberations in Brooklyn federal court. Shkreli was convicted of two counts of securities fraud and a single count of conspiracy to commit securities fraud. He was acquitted of five other criminal charges.

Federal prosecutors said Shkreli mismanaged money at the investment funds Elea Capital, MSMB Capital and MSMB Healthcare, as well as while he was CEO of Retrophin, a pharmaceutical company he founded in 2011.

They argued that he lied to investors at MSMB Capital and MSMB Healthcare about how well the funds were doing, and that he used money from Retrophin as a piggy bank to pay off MSMB investors, and to cover personal loans and other debts.

Shkreli drew national scorn two years ago when, as the CEO of Turing Pharmaceuticals, he unapologetically raised the price of an AIDS drug from $13.50 per pill to $750. That episode is unrelated to the fraud case.</s>NEW YORK — Former drug company executive Martin Shkreli was convicted of fraud by jurors in a U.S. court in Brooklyn on Friday, after a highly publicized, monthlong trial.

Federal prosecutors had accused the 34-year-old of defrauding investors in his hedge funds and stealing from his old drug company, Retrophin Inc, to pay them back.

Shkreli was convicted on two counts of securities fraud and one count of conspiracy. He was found not guilty on five other counts.</s>A federal jury in Brooklyn, N.Y., has convicted former pharmaceutical executive and "pharma-bro" Martin Shkreli of securities fraud.

He was found guilty Friday on three counts — two counts of securities fraud and one count of conspiracy to commit securities fraud — out of a total of eight counts. Shkreli is best known for increasing the price of a life-saving drug for AIDS patients by 5,000 percent, from $13.50 to $750 per pill, when he was head of Turing Pharmaceuticals.

Shkreli has not yet been sentenced.

As NPR's Laurel Wamsley has written about the case:



"Before he made headlines as the CEO of Turing Pharmaceuticals, Shkreli founded a pharmaceutical company, Retrophin, and a pair of hedge funds, MSMB Capital Management and MSMB Healthcare. Prosecutors say he committed a series of frauds while managing the funds between October 2009 and March 2014. "The SEC's complaint alleges 'widespread fraudulent conduct' by Shkreli — a series of misrepresentations and omissions, and of taking money from one fund to cover claims against the other. According to the complaint, he also issued stock and made cash payments from Retrophin (disguised as payments for consulting services) to disgruntled investors in the hedge funds who were threatening to sue. "Prosecutors say Shkreli misled investors about the size and performance of MSMB Capital Management, claiming that its returns were '+35.77% since inception' — when the fund had actually lost 18 percent. In another instance, he claimed the fund had $35 million in assets, when in fact it had less than $1,000 in assets."</s>A federal jury in Brooklyn, N.Y., has convicted former pharmaceutical executive and "pharma bro" Martin Shkreli of securities fraud.

He was found guilty Friday on three counts — two counts of securities fraud and one count of conspiracy to commit securities fraud — out of a total of eight counts. Shkreli is best known for increasing the price of a life-saving drug for people with AIDS by 5,000 percent, from $13.50 to $750 per pill, when he was head of Turing Pharmaceuticals.

Shkreli has not been sentenced and faces up to 20 years in prison, as WSHU's Charles Lane tells our Newscast unit. Still, he declared victory when he was acquitted of what he termed the most "important charges."

"After the verdict was read, Shkreli and his lawyer said they were pleased and anticipated a light sentencing with minimal fines and no jail time," Lane reported. "During the trial, Shkreli openly mocked prosecutors and ultimately never took the stand in his defense."

As NPR's Laurel Wamsley has written about the case:



"Before he made headlines as the CEO of Turing Pharmaceuticals, Shkreli founded a pharmaceutical company, Retrophin, and a pair of hedge funds, MSMB Capital Management and MSMB Healthcare. Prosecutors say he committed a series of frauds while managing the funds between October 2009 and March 2014. "The SEC's complaint alleges 'widespread fraudulent conduct' by Shkreli — a series of misrepresentations and omissions, and of taking money from one fund to cover claims against the other. According to the complaint, he also issued stock and made cash payments from Retrophin (disguised as payments for consulting services) to disgruntled investors in the hedge funds who were threatening to sue. "Prosecutors say Shkreli misled investors about the size and performance of MSMB Capital Management, claiming that its returns were '+35.77% since inception' — when the fund had actually lost 18 percent. In another instance, he claimed the fund had $35 million in assets, when in fact it had less than $1,000 in assets."



Shkreli attorney Ben Brafman told reporters after the verdict that he believed the conspiracy to commit wire fraud — which Shrekli was acquitted of — was the heart of the case. "It was the claim that Martin robbed money from his own company to pay back people, and that theory was soundly rejected."

He added that Shkreli's image issues have posed a challenge to the case:



"Martin is a brilliant young man, but sometimes people skills don't translate well. So we will have some good discussions, but at the end of the day, you know Martin, I think, has more than held his own in this case and despite the issues that travel with Martin, I think we're standing here smiling even though it wasn't a clean sweep that we would have preferred."



As Brafman appeared to question Shkreli's "people skills," The Associated Press reported that the former executive "smiled and cocked his head quizzically in mock confusion."

During his time in the limelight, Shkreli has appeared to embrace the role of villain. For example, as NPR's Camila Domonoske reported, he purchased the sole copy of the Wu-Tang Clan's double album — then said he would never listen to it.</s>Martin Shkreli, who gained national notoriety two years ago for jacking up the price of an AIDS drug, was convicted of securities fraud Friday for mismanaging two investment funds.

A jury in Brooklyn deliberated almost five days before returning guilty verdicts against Shkreli, 34, on two counts of securities fraud and a single count of conspiracy. He was acquitted on five other counts of conspiracy.

The most serious count, securities fraud, carries a maximum prison term of 20 years.

Outside court, Shkreli called his prosecution “a witch hunt of epic proportions,” and he focused on the acquittals. “Maybe they found one or two broomsticks,” he said.

His lawyer, Benjamin Brafman, raised the prospect of an appeal. He said the verdict would give the court “enormous discretion” on sentencing. No sentencing date was set.

Federal prosecutors accused Shkreli of cheating investors out of more than $11 million between 2009 and 2014 in what amounted to a Ponzi scheme.

They said he mismanaged money at the investment funds Elea Capital, MSMB Capital and MSMB Healthcare, as well as while he was CEO of Retrophin, a pharmaceutical company he founded in 2011.

Prosecutors argued that he lied to investors at MSMB Capital and MSMB Healthcare about how well the funds were doing, and that he used money from Retrophin as a piggy bank to pay off MSMB investors, and to cover personal loans and other debts.

Brafman framed his client as an oddball genius who ultimately made his investors richer. He said that Shkreli never intended to defraud anyone, and called him an “honest kid.”

Shkreli drew national scorn two years ago when, as the CEO of Turing Pharmaceuticals, he unapologetically raised the price of an AIDS drug from $13.50 per pill to $750. That episode is unrelated to the fraud case.

The Daily Beast named him the “most hated man in America.” He defended the price hike, claiming that his company needed to profit from the drug. He also said that everyone who needs it would be able to afford the drug, Daraprim.

After his indictment, Shkreli used Twitter and Periscope to livestream himself playing videogames in his pajamas and chronicle trips around New York to about 200,000 followers.

In January of this year, he was kicked off Twitter and Periscope after making unwanted advances toward a magazine editor. He kept up his use of social media throughout the trial, posting videos on Facebook despite efforts by prosecutors and his own lawyer to keep him quiet.

“My case is a silly witch hunt perpetrated by self-serving prosecutors,” he said on Facebook at one point. “Thankfully my amazing attorney sent them back to junior varsity where they belong. Drain the swamp. Drain the sewer that is the DOJ. MAGA.”</s>NEW YORK — Martin Shkreli, who gained national notoriety two years ago for jacking up the price of an AIDS drug, was convicted of securities fraud Friday for mismanaging two investment funds.

A jury in Brooklyn deliberated almost five days before returning guilty verdicts against Shkreli, 34, on two counts of securities fraud and a single count of conspiracy. He was acquitted on five other charges.

Outside court, Shkreli called his prosecution “a witch hunt of epic proportions,” and he focused on the acquittals. “Maybe they found one or two broomsticks.” His lawyer, Benjamin Brafman, raised the prospect of an appeal.

Federal prosecutors accused Shkreli of cheating investors out of more than $11 million between 2009 and 2014 in what amounted to a Ponzi scheme.

They said he mismanaged money at the investment funds Elea Capital, MSMB Capital and MSMB Healthcare, as well as while he was CEO of Retrophin, a pharmaceutical company he founded in 2011.

Prosecutors argued that he lied to investors at MSMB Capital and MSMB Healthcare about how well the funds were doing, and that he used money from Retrophin as a piggy bank to pay off MSMB investors, and to cover personal loans and other debts.

His lawyer, Benjamin Brafman, framed his client as an oddball genius who ultimately made his investors richer. He said that Shkreli never intended to defraud anyone, and called him an “honest kid.”

Shkreli drew national scorn two years ago when, as the CEO of Turing Pharmaceuticals, he unapologetically raised the price of an AIDS drug from $13.50 per pill to $750. That episode is unrelated to the fraud case.

In January, he was kicked off Twitter after making unwanted advances toward a magazine editor. He kept up his use of social media throughout the trial, posting videos on Facebook despite efforts by prosecutors and his own lawyer to keep him quiet.</s>Former drug company executive Martin Shkreli is surrounded by news cameras as he exits U.S. District Court following the second day of jury deliberations in his securities fraud trial in the Brooklyn borough of New York City Thomson Reuters Martin Shkreli, the former pharmaceutical CEO most known for a price-gouging scandal, was convicted Friday on two counts of securities fraud and one count of conspiracy to commit securities fraud.

He was found not guilty on five other counts in the case — three counts of conspiracy to commit wire fraud and two counts of conspiracy to commit securities fraud.

He faces as much as to 20 years in prison.

Shkreli said during a press conference following the jury's announcement that he was "delighted by the verdict" since he was found not guilty of a key charge regarding a former company, Retrophin.

"This was a witch hunt of epic proportions," Shkreli said. "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 and I'm delighted to report that."

Still, even the mixed verdict was a blow for Shkreli, who said before the trial that he was "so innocent" that the jury and prosecutors would have to apologize to him after the case was resolved.

Shkreli made headlines in September 2015 after he raised the price of Daraprim, a drug used to treat a parasitic infection, by 5,000%. The charges for this trial weren't related to that price hike; they stemmed from events earlier in his career while he managed hedge funds.

In court, his lawyer argued that his notoriety shouldn't influence the case.

"You may not like Martin Shkreli," Shkreli's lawyer Ben Brafman said in the case's opening statement. "And you may have reasons to hate Martin Shkreli, but that is not a basis on which to convict."

Prosecutors on the other hand, had claimed that starting in 2009, Shkreli lost money in two of the hedge funds he ran, hid that from his investors, and instead paid them back with money he obtained from Retrophin.</s>Martin Shkreli, who gained national notoriety two years ago for jacking up the price of a drug used by AIDS patients, was convicted of securities fraud Friday for mismanaging two investment funds.

A jury in Brooklyn deliberated almost five days before returning guilty verdicts against Shkreli, 34, on two counts of securities fraud and a single count of conspiracy. He was acquitted on five other counts of conspiracy.

The most serious count, securities fraud, carries a maximum prison term of 20 years.

When the first guilty verdict was delivered, Shkreli looked to his right with a surprised smirk. Outside, he called his prosecution "a witch hunt of epic proportions," and he focused on the acquittals. "Maybe they found one or two broomsticks," he said.

Barely an hour after the verdict, he was livestreaming on YouTube from his apartment, holding a beer and predicting that the sentence would be "close to nil." He said that if he does go to prison, it will probably be a "Club Fed" where he will "play basketball and tennis and Xbox" for a couple of months.

Shkreli's lawyer, Benjamin Brafman, raised the prospect of an appeal and said the verdict would give the court "enormous discretion" on sentencing. No sentencing date was set.

Federal prosecutors accused Shkreli of cheating investors out of more than $11 million between 2009 and 2014 in what amounted to a Ponzi scheme.

They said he mismanaged money at the investment funds Elea Capital, MSMB Capital and MSMB Healthcare, as well as while he was CEO of Retrophin (RTRX), a pharmaceutical company he founded in 2011.

Prosecutors argued that he lied to investors at MSMB Capital and MSMB Healthcare about how well the funds were doing, and that he used money from Retrophin as a piggy bank to pay off MSMB investors, and to cover personal loans and other debts.

"Shkreli misled investors in his self-indulgent scheme," FBI Assistant Director-in-Charge William Sweeney said in a statement after the verdict. "Today's conviction shows that those who corrupt the market will ultimately be brought to justice."

Brafman framed his client as an oddball genius who ultimately made his investors richer. He said that Shkreli never intended to defraud anyone, and called him an "honest kid."

Shkreli drew national scorn two years ago when, as the CEO of Turing Pharmaceuticals, he unapologetically raised the price of a lifesaving drug used by some AIDS patients from $13.50 per pill to $750. That episode is unrelated to the fraud case.

The Daily Beast named him the "most hated man in America." He defended the price hike, claiming that his company needed to profit from the drug. He also said that everyone who needs it would be able to afford the drug, Daraprim.

After his indictment, Shkreli used Twitter and Periscope to livestream himself playing video games in his pajamas and chronicle trips around New York to about 200,000 followers.

In January of this year, he was kicked off Twitter and Periscope after making unwanted advances toward a magazine editor. He kept up his use of social media throughout the trial, posting videos on Facebook despite efforts by prosecutors and his own lawyer to keep him quiet.

"My case is a silly witch hunt perpetrated by self-serving prosecutors," he said on Facebook at one point. "Thankfully my amazing attorney sent them back to junior varsity where they belong. Drain the swamp. Drain the sewer that is the DOJ. MAGA."</s>Martin Shkreli, the eccentric former pharmaceutical CEO notorious for a price-gouging scandal and for his snide “Pharma Bro” persona on social media, was convicted Friday on federal charges he deceived investors in a pair of failed hedge funds.

NEW YORK — Martin Shkreli, the eccentric former pharmaceutical CEO notorious for a price-gouging scandal and for his snide “Pharma Bro” persona on social media, was convicted Friday on federal charges he deceived investors in a pair of failed hedge funds.

A Brooklyn jury deliberated five days before finding Shkreli guilty on three of eight counts. He had been charged with securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud.

Prosecutors had accused Shkreli of repeatedly misleading investors about what he was doing with their money. Mostly, he was blowing it with horrible stock picks, forcing him to cook up a scheme to recover millions in losses, they said.

Shkreli, 34, told “lies upon lies,” including claiming he had $40 million in one of his funds at a time when it only had about $300 in the bank, Assistant U.S. Attorney Alixandra Smith said in closing arguments. The trial “has exposed Martin Shkreli for who he really is — a con man who stole millions,” added another prosecutor, Jacquelyn Kasulis.

But the case was tricky for the government because investors, some wealthy financiers from Texas, testified at the trial conceded that Shkreli’s scheme actually succeeded in making them richer, in some cases doubling or even tripling their money on his company’s stock when it went public. The defense portrayed them as spoiled “rich people” who were the ones doing the manipulating.

“Who lost anything? Nobody,” defense attorney Ben Brafman said in his closing argument. Some investors had to admit on the witness stand that partnering with Shkreli was “the greatest investment I’ve ever made,” he added.

For the boyish-looking Shkreli, one of the biggest problems was not part of the case – his purchase in 2014 of rights to a life-saving drug that he promptly raised the price from $13.50 to $750 per pill. Several potential jurors were kept off the panel after expressing distain for the defendant, with one calling him a “snake” and another “the face of corporate greed.”

The defendant also came into the trial with a reputation for trolling his critics on social media to a degree that got him kicked off Twitter and for live-streaming himself giving math lessons or doing nothing more than petting his cat, named Trashy. Among his other antics: boasting about buying a one-of-a-kind Wu-Tang Clan album for $2 million.

During about a month of testimony, Shkreli appeared engaged at times, grinning when his lawyer described him as a misunderstood misfit. Other times he looked bored, staring into space and playing with his hair.

Shkreli, who comes from an Albanian family in Brooklyn, was arrested in 2015 on charges he looted another drug company he founded, Retrophin, of $11 million in stock and cash to pay back the hedge fund investors. Investors took the witness stand to accuse Shkreli of keeping them in the dark as his scheme unfolded.

“I don’t think it mattered to him — it was just what he thought he could get away with,” said Richard Kocher, a New Jersey construction company owner who invested $200,000 with Shkreli in 2012. “It was insulting.”

Shkreli’s lawyer agreed his client could be annoying, saying, “In terms of people skills, he’s impossible,” and referring to him as a “nerd” and a “mad scientist.” But he said his hedge fund investors knew what they were getting.

“They found him strange. They found him weird. And they gave him money. Why? Because they recognized genius,” Brafman said, adding that they had signed agreements that his client wasn’t liable if they lost their money.

Jurors also heard odd vignettes befitting the quirky defendant: how Shkreli slept on the floor of his office in a sleeping bag for two years; how a drug company board member and former American Express executive wrote an email saying he’d meet with Shkreli “only if I can touch your soft skin”; how Shkreli wrote a letter to the wife of an employee threatening to make the family homeless if the man didn’t settle a debt.

Shkreli didn’t testify. But rather than lay low like his lawyers wanted, he got into the act by using Facebook to bash prosecutors and news organizations covering his case. In one recent post, he wrote, “My case is a silly witch hunt perpetrated by self-serving prosecutors. … Drain the swamp. Drain the sewer that is the (Department of Justice.)”

The judge ordered Shkreli to keep his mouth shut in and around the courtroom after another rant to new reporters covering the trial.

Prosecutors “blame me for everything,” he said. “They blame me for capitalism.”
Former pharmaceutical company executive Martin Shkreli is convicted of three counts of securities fraud in a federal court in Brooklyn, New York.