“Pharma Bro” Martin Shkreli is scheduled to be sentenced on March 9 for convictions on two counts of securities fraud and one count of conspiracy. However, the 34-year-old appeared in court on Friday to ask the judge to toss out one of the securities fraud convictions.
Not only would the action make a potential 20-year federal prison sentence go away, but Shkreli would also be able to keep the $7.36 million in cash and assets that prosecutors demand he fork over to them in restitution. U.S. District Judge Kiyo Matsumoto said no.
Shkreli’s legal team argued that those who invested in the two hedge funds he operated actually turned a profit. USA TODAY reported that court documents filed by Shkreli’s attorneys cite zero losses incurred by the investors and zero profits earned by their client. Therefore, no fraud was committed. U.S. District Judge Kiyo Matsumoto rejected the argument and will reserve judgment on how much Shkreli will surrender in assets.
Federal prosecutors have asked Judge Matsumoto to order that Shkreli forfeit $5 million in cash, a Wu-Tang Clan album called Once Upon A Time In Shaolin reportedly valued at $2 million (or at least that is what Shkreli said he paid for it), a Picasso painting, his interest in a pharmaceutical company, and more. They have estimated the losses from Shkreli’s scheme to total somewhere between $9 million and $20 million.
Had Judge Matsumoto accepted the defense’s arguments, Shkreli could have faced as little as 16 months in federal prison. According to sentencing guidelines, a prison term of 300 months or more is possible.
In a bizarre turn of events, Shkreli’s $5 million bond was revoked the month after his summer conviction. He has spent the last five months in a federal jail for a Facebook post offering $5,000 to anyone who could get him a lock of Hillary Clinton’s hair. Shkreli’s mental stability has been called into question as a result.
The judge has also declined a release of Shkreli’s $5 million bond even though he is in federal custody and now poses no flight risk. CNBC reported that this action is a sign that those funds may be applied toward the amount Judge Matsumoto orders him to pay. Shkreli’s attorney Ben Brafman was disappointed in the judge’s decisions as his client did pay the investors their money back with cash and stock in Shkreli’s drug company Retrophin.
“All of these people made substantial money back at the end of the ordeal,” Brafman said.