NEW YORK — The bizarre case of a former hedge fund manager turned Internet punchline sped to a close Thursday with Martin Shkreli’s defense attorney telling a Brooklyn jury that the complaints of his wealthy investors are “rich people B.S.”
During the more than four-week trial, prosecutors have portrayed Shkreli as a liar who tricked investors into forking over millions and then lied again to hide his massive losses.
Shkreli told “lies upon lies,” Assistant U.S. attorney Alixandra E. Smith told a jury in closing statements that lasted more than four hours. He lied about the size of his hedge funds, whether his funds had an auditor and how they were performing. He lied about attending Columbia University, Smith said.
Smith meticulously recounted lies prosecutors say Shkreli told to investors to persuade them to give him money, including that his hedge fund was worth millions when it was actually broke. “Depending on which investors he is talking to, he changes the story,” she said. “The defendant was making these misrepresentation because he knew by saying these things he would get people to give him money.”
While Smith repeatedly called him a liar, Shkreli, 34, sat a few feet away smirking and swiveling in his chair. His father, who has attended every day of the trial, sat in the front row close by. The courtroom was packed with spectators, who spilled into an overflow room.
Shkreli — who has been nicknamed “Pharma Bro” on social media — became infamous for raising the price of a vital drug used by AIDS patients by 5,000 percent and then publicly lamenting that he didn’t raise it more.
But that is not why he is on trial. Shkreli is charged with defrauding investors at two hedge funds that he founded, MSMB Capital and MSMB Healthcare. When one of the funds collapsed, rather than tell investors, Shkreli raised more money and then used the cash to start a pharmaceutical company called Retrophin, according to prosecutors. He also used investors’ money to pay off personal debts. When the hedge fund investors began to ask for their money, Shkreli paid them back using Retrophin money and stock.
The arrangements were not approved by Retrophin’s board of directors and cost the company more than $10 million, according to prosecutors.
“Retrophin was not responsible for the lies that were told to” Shkreli’s hedge fund investors, Smith said. “He made a choice to steal that money … and to use it pay back the investors he defrauded.”
Shkreli’s defense team has sought to rebut the accusations with a simple argument: His investors were not victims but wealthy people whom Shkreli made even richer. Despite troubles with his hedge funds, Shkreli’s investors walked away with a profit, defense attorneys said.
“If Martin Shkreli wanted to defraud these people, why did he sleep in his office for two years in a sleeping bag to make Retrophin a success?” Brafman asked. “Maybe he screwed up, maybe he made mistakes,” the attorney said, but “Martin Shkreli was always truthful to the mission of making Retrophin a success.”
Shkreli sat at rapt attention as Brafman paced in front of the jury and called him a genius who may have been aggravating but not intended to defraud investors. “He is not charged with aggravation, it is not a crime to aggravate someone,” he said.
If Shkreli defrauded his investors, why did they continue to say positive things about him? Brafman asked. Why didn’t Retrophin require them to return the money Shkreli gave them? “This is rich people B.S., ladies and gentleman,” he said repeatedly.
Shkreli’s fate will soon be in the hands of the jury — five men and seven women — who have sat through more than four weeks of testimony that veered between technical explanations of how hedge funds work to riveting stories of Shkreli’s interactions with investors and employees, including one he threatened to drive into homelessness. He told one investor that he wanted to be like Steve Cohen, the billionaire hedge fund investor. One of Shkreli’s investors, a gay man, testified that the former hedge fund manager sometimes made him feel “uncomfortable” by saying he might try to have sex with a male co-worker.
The testimony has painted Shkreli as a sometimes socially awkward man who nonetheless convinced dozens of wealthy investors to fork over millions of dollars. Prosecutors say that is because he is a con man, while his defense says investors were betting on Shkreli’s genius.
The jury should take into consideration that Shkreli was not only described as brilliant, but also strange by investors, Brafman said. The defense is not asserting an “insanity defense” but jurors should take into consideration that several investors described him as “not completely normal,” he said. One said Shkreli reminded him of the Dustin Hoffman character in the movie “Rain Man,” Brafman said.
“Martin travels to the beat of his own drum,” he said. “If Martin Shkreli actually believes what he says is true then I say it rises to a defense of good faith.”
The case has captured the public’s attention as much for the charges Shkreli faces as his outsized personality. Even after being charged with eight counts of securities and wire fraud, Shkreli appeared to relish in the media attention, taunting reporters on Twitter and smirking his way through a congressional hearing about rising drug prices.
Shkreli’s antics continued throughout the trial. One day he casually strolled into a room full of reporters and mocked prosecutors as the “junior varsity” and then lamented that “the world blames me for almost everything.” That incident drew a rebuke from U.S. District Judge Kiyo Matsumoto, who ordered him to stop talking to the media in the courthouse or outside on the street.
An hour after Matsumoto dismissed the jury for the day, the ever-loquacious Shkreli weighed in on Facebook. “My case is a silly witch hunt perpetrated by self-serving prosecutors. Thankfully my amazing attorney sent them back to junior varsity where they belong,” Shkreli said. “Drain the swamp. Drain the sewer that is the DOJ. MAGA.”
Closing arguments are scheduled to continue Friday. The jury could start considering the case Friday afternoon.