Martin Shkreli should face at least 15 years in prison for defrauding investors in two hedge funds he operated and for scheming to hide his control of a drug company he founded, prosecutors said.
Shkreli’s “inability to acknowledge that his actions constituted crimes, coupled with his other disdain for the criminal justice system (which has only escalated since his conviction), demonstrate that Shkreli is likely to commit similar crimes in the future,” prosecutors wrote in a sentencing brief.
Shkreli will learn his fate in three days, when he appears for sentencing in federal court in Brooklyn, New York. The U.S. request stands in stark contrast to the one from Shkreli, whose lawyers said last week that the 34-year-old hedge-fund-manager-turned-biotech-founder should serve as little as one year in prison. They argued that he made a “significant profit” for his investors rather than line his own pockets.
A federal jury convicted Shkreli in August of two counts of securities fraud for lying about the performance of two hedge funds he ran and a separate plot to secretly control shares of Retrophin Inc., a company he founded after closing down the funds. He was cleared of charges that he looted Retrophin.
Prosecutors blasted Shkreli in their court filing on Tuesday, saying the evidence at the trial showed that he used investor funds to satisfy unrelated obligations. He spent more than $10 million in cash and shares from Retrophin to repay investors in his funds and used almost $1 million to pay a personal debt to Merrill Lynch, they said.
‘Continuing Crimes’
Prosecutors said the only reason investors didn’t suffer monetary losses was because he pursued his frauds long enough "to successfully manipulate the price and trading volume of Retrophin shares," so that they had some value, Assistant U.S. Attorneys Jacquelyn Kasulis and Alix Smith wrote.
"That is, the investors were not repaid due to Shkreli’s personal generosity but were ultimately remunerated due to Shkrei’s continuing crimes," they said. "Shkreli should not get to reap the benefit at sentencing of arguing that his victims were repaid."
Last week, U.S. District Judge Kiyo Matsumoto said Shkreli’s crimes cost his investors more than $10.4 million. The ruling could affect the length of his prison term. On Monday, the judge also ruled that Shkreli should forfeit almost $7.4 million in ill-gotten gains.
The judge said that Shkreli’s assets -- a Picasso, $5 million in cash in a personal trading account, a one-of-a-kind special edition album by the Wu-Tang Clan, an unreleased Lil Wayne album and shares in Vyera Pharmaceuticals, formerly Turing Pharmaceuticals -- could be used to meet the forfeiture if there’s not enough available cash.
Benjamin Brafman, a lawyer for Shkreli, declined to comment on the U.S. request. In a letter to Matsumoto, Shkreli previously said he was a “fool” who “should have known better,” and pledged to be honest if he gets a break on his sentence.