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Judge to Martin Shkreli: Keep your mouth shut

Martin Shkreli is best known for raising the price of a drug used by HIV patients 5,000 percent, but he is on trial for what prosecutors say was a five-year campaign to defraud investors. (Peter Foley/Bloomberg News)

NEW YORK — A U.S. district judge on Wednesday chastised Martin Shkreli, the boisterous former hedge-fund manager and pharmaceutical-industry executive, for speaking to the media during the early days of his trial for securities fraud.

“All your client has to do is stop talking in the courthouse and around the perimeter of the courthouse,” a visibly frustrated U.S. District Judge Kiyo Matsumoto said.

Shkreli has struggled to abide by his defense attorneys’ advice to keep quiet since being charged in late 2015 with misleading investors in two of his hedge funds and the biopharmaceutical company Retrophin, all of which he founded. He has taken to YouTube to live-stream his thoughts and was kicked off Twitter earlier this year for harassing a journalist.

But for prosecutors and Matsumoto, the breaking point appears to have been a surprise visit Shkreli, 34, made last week to an overflow room in the courthouse filled with reporters. During the visit, Shkreli criticized the prosecution team from the Eastern District of New York in Brooklyn, mocking them as the “junior varsity” to the federal prosecutors in Manhattan. “I think the world blames me for almost everything,” he said before being called out of the room by his attorney.

Shkreli’s attorney, Benjamin Brafman, said he was alerted by a U.S. marshal that Shkreli was in the room and “ran” across the courthouse to pull him out.

“I was shocked by these comments and statements…. Any juror could have heard them,” said Matsumoto.

Prosecutors asked that either Shkreli be ordered to keep quiet or the jury be semi-sequestered so they could not hear chatter in the hallways about the trial or comments made by Shkreli.  “Mr. Shkreli’s behavior appears to be escalating,” said Jacquelyn M. Kasulis, chief of the business and securities fraud section for the Eastern District U.S. Attorney’s Office. “It is of paramount importance that we have to avoid a circus-like atmosphere.”

Shkreli’s comments could taint the jury especially if they were to overhear reporters discussing the case in the hallways or as they entered or left the courthouse, she said. “We are very, very concerned that we will find ourselves in a position that we cannot un-ring the bell,” Kasulis said.

Kasulis pointed to comments Shkreli made to reporters last week indicating that he had never considered a plea deal to resolve his case. In fact, Shkreli’s defense team initiated plea negotiations several times, she said.  “Many of Mr. Shkreli’s statements are inaccurate,” Kasulis said.

Brafman said he was “outraged and dismayed ” by Kasulis’s statements regarding plea negotiations. Brafman said he was ethically bound to raise the issue of a plea deal with prosecutors but that Shkreli repeatedly refused to consider it. “He said ‘I would never plead guilty to something I didn’t do. We’re going to trial,'” Brafman said.

Brafman also rejected the need for a gag order and said that his client was being “baited,” particularly by a reporter who peppers him with questions when he leaves the courtroom. Maneuvering the 100 yards between the courthouse steps and the car sometimes requires Shkreli to deal with a scrum of 40 to 50 members of the press, a stressful situation for someone with anxiety such as Shkreli, Brafman said.

Matsumoto ordered Shkreli to no longer speak to reporters about the case either in the courtroom or on the street outside. “This isn’t going to help Mr. Shkreli in the end. He is risking exposure in the media” that could harm him, Matsumoto said.

Brafman agreed. “It will not happen again,” he said. A member of the defense team will now be with Shkreli at all times. “He apologizes to the court.”

Shkreli is best known for raising the price of a drug used by HIV patients 5,000 percent, but he is on trial for what prosecutors say was a five-year campaign to defraud investors. Shkreli told investors that he had a successful track record as a hedge-fund manager and sent them false performance reports and backdated documents to cover up his losses, prosecutors allege.

Shkreli’s defense team has said he is not guilty and this his investors made money in the end.

The trial is slated to take six weeks. Shkreli faces up to 20 years in prison if convicted

Read more about Martin Shkreli: 

‘He was born this way’: Martin Shkreli’s attorney offers defense as securities-fraud trial opens

Shkreli trial hits speed bump: Finding jurors who don’t already dislike him

Martin Shkreli’s trial shows just how angry people are about drug prices