Martin Shkreli, aka “Pharma Bro,” may be best known for his unapologetic price gouging for the HIV drug Daraprim. The legal system had no claim on him for that, but he was recently found guilty of securities fraud. He was convicted of running a Ponzi-like scheme in which he looted millions of dollars from one of his biopharmaceutical companies in order to distract investors he was defrauding through two hedge funds.
Accused along with Shkreli was his lawyer. The U.S. Attorney in Brooklyn, New York, claims that the attorney aided Shkreli in the fraud, using his legal skills to ensure things appeared legitimate.
Describing the lawyer as Shkreli’s “right hand man,” an assistant U.S. attorney walked a federal jury through the details of the scheme in opening remarks on Friday. Those details included settlement and consulting agreements used to pay off certain investors — “fancy legal documents, full of legal terms” were used to further the fraud, the prosecutor argued. He also said the lawyer had betrayed the trust of the biopharmaceutical company’s board of directors.
In its opening argument, the defense painted the lawyer as just one more victim of Shkreli’s misdeeds. Shkreli is a proven liar, the defense argued, and the lawyer is simply not guilty.
Far from participating in a scheme to defraud investors, the defense said, the lawyer had no real relationship with Shkreli. Like the wealthy and sophisticated investors, the lawyer was duped.
In the short time the lawyer had worked with Shkreli, the defense said, “no investors were defrauded.” Moreover, prosecutors misrepresented some of Shkreli’s behavior as the lawyer’s in a hasty rush to judgment.
“[He] is as different from Martin Shkreli as anybody could be,” a defense attorney said.
The defense intends to counter the prosecution’s argument that the lawyer “shoulda, coulda, woulda” done things differently with “wall after wall after wall of evidence of innocence.”
One interesting aspect of the case is whether any information protected by attorney-client privilege will be admitted into evidence. The prosecution will almost certainly argue that a great deal of otherwise privileged information should be admitted because it provides evidence of an ongoing crime. That is one situation in which such information could lose its privilege.
On the other hand, the lawyer is legally to be considered innocent until proven guilty, and Shkreli does not automatically lose his right to the attorney-client privilege simply because he was convicted.
The trial will continue next week and may last up to five weeks.
Shkreli is scheduled to be sentenced in January and faces up to 20 years in prison. Because he has been ruled a potential danger to the community, he is being held in government custody.