Martin Shkreli, a former pharmaceutical executive, was sentenced to seven years in prison for attempting to defraud investors out of millions of dollars today. Shkreli had been facing twenty-five years under federal guidelines for his crimes; prosecutors had asked for fifteen.
Shkreli was convicted last year of defrauding investors in the hedge fund he ran, MSMB Capital, by manipulating stock shares of Retrophin, one of the drug companies he owned. Shkreli had argued that none of his investors ultimately lost money. Prosecutors argued differently however, alleging Shkreli’s actions caused from between $9 million and $20 million in losses.
Shkreli bragged to potential investors that he was handling up to $40 million worth of assets in his funds when his actual accounts barely totaled $1,000. In a Ponzi-style scheme, he would take money from new investors and pass them off to older investors as profits, or as a cashing-out to dissatisfied investors who wanted their money back.
In tears, Shkreli begged the judge for leniency. His attorneys had asked Brooklyn Federal Judge Kiyo Matsumoto to confine his prison sentence to twelve to eighteen months.
“This is my fault, I am not the victim here… Please give me a chance to show what I’m capable of,” he said adding, “I’m here because of the gross, stupid, negligent mistakes I made at MSMB. This would be a good time to apologize to all the investors of MSMB… I’m terribly sorry I lost your trust. You deserve better.”
Shkreli, upon being convicted of the charges last year live-streamed on YouTube that he believed that there was “a good chance [there would be] no jail sentence at all,” and if he were sentenced to imprisonment, it would be at a minimum-security prison. He called it “club fed,” and said he would spend his time playing tennis and video games there. “Big Rolls” would be his prison name, he said.
Shkreli has instead been serving his sentence at the Brooklyn Metropolitan Correctional Center with reputed mob members, individuals who allegedly tried to join ISIS and a former Mexican prosecutor accused of international drug smuggling.
Matsumoto also ordered the seizure of over $7 million of Shkreli’s assets, including a sole-existing copy of a rap album which Shkreli bought at auction for $2 million and claimed never to have listened to.
Shkreli became infamous in 2015 when one of his companies, Turing Pharmaceuticals bought the drug Daraprim from Impax Laboratories for $55 million, then promptly raised the price of the drug from $13.50 to $750 a tablet. Daraprim prevents infections in people with low or weak immune systems, such as cancer and AIDS patients. Individuals who rely on the drug faced medical bills that increased from hundreds of dollars a year to hundreds of thousands of dollars a year.
Shkreli notably defended the move as a necessary part of reorganizing the business around the drug and refused to lower the price. “This drug was doing $5 million in revenue,” he said in an interview. “And I don’t think you can find a drug company on this planet that can make money on $5 million in revenue. Most costs are much higher than that.”
“If there was a company that was selling an Aston Martin at the price of a bicycle, and we buy that company and we ask to charge Toyota prices, I don’t think that that should be a crime,” he added.
A much less expensive alternative to Daraprim came on the market within months of the outrage surrounding Shkreli’s move. It was produced by Imprimis Pharmaceuticals of San Diego, CA, and cost $99 for a 100-count bottle, or roughly $1 per tablet.