Southern Brooklyn

Sheepshead Bay Brat Martin Shkreli Convicted Of Multimillion Dollar Securities Fraud

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Hedge fund manager Martin Shkreli posing with an Enigma machine, used by the Nazis to decode communications.
Hedge fund manager Martin Shkreli posing with an Enigma machine, used by the Nazis to decode communications. (Photo: Martin Shkreli / Facebook)

UPDATE: After a six week long trial, last Friday a federal jury in Brooklyn convicted Martin Shkreli of two counts of securities fraud and conspiracy to commit securities fraud. At sentencing he faces a maximum of 20 years for each fraud conviction and up to five years in prison on the conspiracy count. 

Sheepshead Bay has many hometown heroes to be proud of: Legendary football coach Vince Lombardi, namesake of the Super Bowl trophy, as well as Seinfeld co-creator and serial grouch Larry David and the host of NPR’s Fresh Air Terry Gross. But one of the neighborhood’s native sons, hedge fund manager Martin Shkreli, is not among them. He became the “most hated man in America” this year when he announced he had raised the price of a life-saving drug by 5,000 percent. Shkreli’s smug response to accusations of price-gouging didn’t help his popularity either.

On Thursday, Shkreli got his comeuppance when the Department of Justice announced he and his lawyer had been indicted in a multimillion dollar securities fraud. The charges are unrelated to Shkreli’s decision to jack up the price of Turing Pharmaceuticals’ drug Daraprim from $13.50 a pill to an eye-popping $750.

Instead, prosecutors allege that Shkreli and his lawyer Evan Greebel conspired to siphon off funds from biotech company Retrophin in order to pay off debts at Shkreli’s hedge fund MSMB Capital Management, according to the indictment unsealed by the DoJ Thursday afternoon.

“Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit,” United States Attorney Robert Capers said in a press release. “His plots were matched only by efforts to conceal the fraud, which led him to operate his companies, including a publicly traded company, as a Ponzi scheme, where he used the assets of the new entity to pay off debts from the old entity.”

Shkreli was arrested early Thursday [December 17, 2015] morning at his Manhattan apartment. Photos by the Daily News show a haggard-looking Shkreli wearing a grey hoodie being led out of his building in handcuffs by federal authorities.

According to the New York Times, Shkreli was raised in Sheepshead Bay by parents who immigrated from Croatia and Albania. He later attended Baruch College and during his studies landed a job as a clerk at the hedge fund Cramer, Berkowitz & Company (Co-founded by Jim Cramer, the zany host of CNBC’s “Mad Money”). The Times reports that Shkreli recommended the firm short a stock for biotechnology company. The idea made money for the firm, but prompted an investigation by regulators, which ultimately went nowhere.

Fast forward more than a decade later, the 32-year-old Shkreli’s schemes may send him to jail for a long time. If convicted, prosecutors say he faces a maximum sentence of 20 years in prison.

Investigators say that between 2009 and 2012 Shkreli conned investors by lying about the performance of his hedge fund. He also routed money from Retrophin, a company he controlled along with his lawyer Greebel, in order to “satisfy Shkreli’s personal and unrelated professional debts and obligations,” according to the indictment.

He also prevented investors from redeeming their money at MSMB Capital and is accused of misusing the hedge fund’s assets. The DoJ also said Shkreli ran a similar scheme at MSMB Healthcare, which he controlled from 2011 to 2012.

Shkreli’s downfall drew near universal applause in the media and from the public. The cocky investor has repeatedly sparred online with public officials and others who criticized his decision to jack up prices on Daraprim — used to treat Toxoplasmosis, a rare parasitic infection. He also flaunted his $2 million purchase of the Wu Tang Clan’s one-of-a-kind album, Once Upon a Time in Shaolin, and then told fans who asked him to leak the album that he hadn’t even listened to it, according to the Daily News.

Perhaps that Wu Tang album will keep him entertained behind bars? We’ll see.

Originally Published Dec 17, 2015 @ 14:31

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34 COMMENTS

  1. Rosalie are you sure that either you andor your family members do not have some type of criminal record or illegal activity or activities going on in your lifelives? It seems to me that this would be a fair question to ask of any Sheepshead Bay resident.

  2. amen…..most (pay attention to the word most “not all” but most) would do the same in his place….everything we have (most of which we dont even need or lived with ought for centuries) in the world today is result of human greed. All the negative comments are from jealous people who want that rich life but dont have the guts nor brain / skill to attempt what this man did.

    There are only a handful of self made fortunes, and even those, if one was to closely investigate will find some kind of wrongdoing. No-one is a saint and I give credit to him for reaching this level…honest or not.

    Life if all about experiences….no-one takes all the wealth with them to the other side, but I’m sure the experiences Shkreli has managed to undergo will last him a lifetime.

    Lets see how good his legal team will be and what loopholes they can find. Gd bless this wonderful country!!!!! Beautiful

  3. He is a criminal and mercilessly exploits people. How does that make this a wonderful country for allowing that?

  4. My aunt was the first child to roller skate on Avenue Z when it was paved for the first time. It was a memory she cherished, as you might well imagine.

    So your question is a strange one, Joe.

    My family hailed from Sheepshead Bay and remember Lundy’s when it was right on the water, before the new building, where my grandfather opened clams. No criminal activities in my family. The kids were too busy walking miles to school and studying; and when they grew up, they got humdrum jobs and raised families.

    Like most people.

  5. he is innocent until the allegations can be proven……your government and corporations exploit people as well and its allowed. 🙂

  6. Neither the government nor the corporations represent me. They represent the 1% who are really in charge and whatever they “…allow…” is in their interests, not mine. Only they will deny that their exploitation of people is immoral. We, the exploited, know better. The visceral hatred of Shkreli expressed in the responses to this article are ample proof of what most people think about what is “…allowed…”, and the immorality of it being allowed.
    The 1% and the corporations who give themselves the right to exploit via controlling the government cannot justify the exploitation.
    As for the court system, that too is rigged in their interests and in general, money buys a lot of justice for them. That doesn’t mean just has been served, only that it has been bought.

  7. LouHow9…..sadly you are part of the system, whether you like it or not, and the officials in place do represent you….in theory at least 🙂

    You may never admit this, but given the chance, you, like most people would have acted just like Shkreli.

  8. Shkreli has lost any sense of decency or humanity that he may have had. Under no circumstance and for no amount of money would I ever act like him.
    Officials in place who theoretically represent me but don’t do it in reality, don’t represent me.

  9. so this is the geedy schmuck who raised the price of the drug that barely cost anything to treat toxoplasmosis, which, you can look it up, can bring about all kinds of crap, to outrageous heights, who was villified, deservedly so, all over the country…? shames the neighborhood. making yourself wealthy is only admirable if you don’t actually make people really, really sick to do it.

  10. Now I know where you are coming from. Probably call those who disagree with you “haters”, too. You have said So Much in 2 little words.

  11. Well, if she was seven or eight years old, and she would have been about 89 now . . . . But then, who knows. Maybe she was younger. They lived on the corner of 21st or 23rd.

    Her younger sister remembered (before, alas, she lost her ability to remember) that there was a sort of gypsy camp down farther, and mothers forbade their children to walk near there.

    But even I remember that before the now-defunct Waldbaum’s on Ocean, just north of the Belt, was built, there was a big barn of a restaurant, with an open, unpaved parking area, called Tappan’s. Lots of old Greek waiters, all of whom my father called “Uncle.”

    Live long enough, and all you see in all corners of Brooklyn are ghosts . . . .

  12. Amer, being a patriot as you are, you are well aware that Mr. S is innocent until proven guilty, “in a court of law”. This does not mean that in the court of public opinion, he cannot be convicted and labeled a greedy, boneheaded, jughead. Thanks for your commentary.

  13. and this is exactly why America is beautiful…..would you like to be tried on the spot by an angry mob? we dont have court of public opinion and i hope they dont pick you or someone who is easily swayed for Shkrelis jury.

  14. you say that now…..$ and power spoiled and corrupted many before you

    they do represent you….you’re not living on a deserted island nor on the moon.

  15. sadeyes, you have no idea where i’m coming from…..feel free to disagree and I won’t attache a label on you dont worry

  16. So if the politicians raise your taxes and lower the taxes of the 1%, which is exactly what they have done for decades, they are representing you? Wake up and open your eyes.

  17. Let’s face it , the creep is a skank. He will hopefully he will rot in jail & maybe he might need those expensive drugs that he used to sell.

  18. Most of the exploitative pieces of biological waste we read about are saints next to Shkreli. He will get what the law allows as a penalty, but he deserves far worse. Deal with it.

  19. Not off topic- Just responding to this from you: “…$ and power spoiled and corrupted many before you
    they do represent you….you’re not living on a deserted island nor on the moon.”

  20. luckily I dont have to deal with it 🙂

    the man you despise so much but subconsciously wish you can be for at least one day will have a decent legal team i’m sure.

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