A federal judge on Friday sentenced Martin Shkreli, the notorious former hedge fund manager, to seven years in prison for defrauding his investors of $10 million.
In imposing the sentence, U.S. District Judge Kiyo Matsumoto roughly split the difference between the 15 years prosecutors asked for and the up to 18 months sought by Shkreli’s defense team. Shkreli, 34, who delivered a tearful speech to Matsumoto apologizing for his conduct and pleading for leniency, did not react to the sentence.
A complicated picture of Shkreli emerged from the trial, said Matsumoto, who said the case had given her a case of insomnia. “It is more than clear that Mr. Shkreli is a gifted individual with a passion for science,” she said. But his crimes are serious and it is important to send a message that such fraud should be not tolerated, she said. “White collar offenders like Mr. Shkreli use their intelligence and acumen to elude detection,” she said.
Shkreli, best known for raising the price of an AIDS drug by 5,000 percent when he was chief executive of Turing Pharmaceuticals, was convicted last August of defrauding the investors in his hedge funds, MSMB Capital and MSMB Healthcare. Shkreli lied to obtain investors’ money and then didn’t tell them when he made a bad stock bet that led to massive losses, prosecutors argued. Instead, they said, he raised more money to pay off other investors, or took money and stock from Retrophin, a drug company he founded.
“For years, Shkreli told lie after lie in order to steal his investors’ money, manipulate the stock market and enrich himself,” said U.S. attorney Richard Donoghue. “He will now pay the price for repeatedly violating the trust placed in him by his investors, his employees and the public.”
In pleading for a short sentence, Shkreli’s defense attorney, Benjamin Brafman, portrayed Shkreli as a misunderstood genius suffering from depression and anxiety conditions. Shkreli had not defrauded vulnerable people or spent their money on luxury homes or cars, he said. Instead, his victims were rich, sophisticated investors, who ultimately made a healthy profit, he said.
“I am disappointed,” Brafman said outside the Brooklyn courthouse. “I think it is hard to claim victory when someone like Martin Shkreli is going to jail. . . . But Martin’s fine and he will be fine.”
Usually boisterous and defiant, Shkreli spent most of the three-hour hearing, dressed in a dark prison uniform and black glasses, staring down into his lap. When he finally had a chance to address the judge, he cried as he explained that “poor judgment led me here. . . . The only person to blame for me being here is me.”
“I am not the same person I was during the MSMB era,” he said referring to his now dissolved hedge funds. “I apologize to all of the investors. I am terribly sorry I lost your trust.” At one point during his statement, Shkreli was handed a box of Kleenex.
Shkreli described the six months he has already spent in Metropolitan Detention Center in Brooklyn as “heartbreaking.” Shkreli said he has counseled fellow inmates and taught classes on finance and mathematics. Shkreli’s attorney, Brafman, repeatedly noted that the detention center was not a low-security camp and that Shkreli was surrounded by violent inmates and subject to lock downs. “It is one thing to read about violence. It’s one thing to see it,” Brafman said.
“This is an interesting man with great potential,” said Brafman, who told the judge he had his “begging voice” on. But, he acknowledged, it is not difficult to understand people’s frustration’s with Shkreli. “There are times when I want to hold him and hug him,” he said. “And there are times when I want to punch him in the face.”
“He is a good person, judge, not a perfect person.”
(c) 2018, The Washington Post · Renae Merle