> Prosecutors argued that Shkreli lied to investors in two hedge funds and the pharmaceutical company Retrophin, all of which he founded. Shkreli told investors he graduated from Columbia University, that his hedge fund was large and profitable, and that he had hired an auditor, they said. These were all lies, according to prosecutors.
"but he had a nice twitch stream" is just about the most absurd defense of someone involved in large scale corporate fraud I have witnessed in a long time
When the defense gets absurd, I go looking for the defender's agenda.
In this case, the original commenter wants to tar all centralized institutions as corrupt (congress, news, etc). His strategy is to paint Shrekli in the best possible light, to make him a martyr for the cause.
He even paints Shrekli as another Snowden:
> It exposes it. Not quite as monumental, but a Snowden moment. Remember, congress did squat about the price gouging, because that's what they get paid to do.
Interestingly, his fraud seems to fall into two categories. Lying about his fund's bonafides and status on one side, and working hard to make sure those same investors got what they were expecting by founding a company, making it successful and paying them out from the profits.
It sounds like he definitely lied to investors, but he apparently didn't intend to steal their money, and took pains to make sure he did not cost them money in the end. Apparently most investors in the fund that lost all it's money ended up close to tripling their investment after he worked to replace the lost money in the end.
That leaves me thinking that "up to 20 years" is a bit harsh given the facts. Hopefully the judge will take that into consideration and give him a more lenient sentence.
fraud wrongful or criminal deception intended to result in financial or personal gain
stealing take (another person's property) without permission or legal right and without intending to return it
No, Shkreli didn't intend to steal their money since they gave it to him. However, he did in fact deceive them as to what he did with said money. So he was convicted of fraud.
Yes, I wasn't calling for no sentence, or not guilty, just that the details do provide mitigating circumstances IMO, and that might merit a lenient sentence.
Also of note, in the NY Times article[1], they call out how his defense tried to mount a defense based on the financial profit or personal gain portion of the definition.
The defense asked why Mr. Shkreli, if he wanted to commit fraud, didn’t commit fraud: He ultimately paid back his investors with shares of Retrophin, which became valuable, along with cash. His lawyers also asked how Mr. Shkreli profited, painting him as a hardworking oddball who, rather than throwing in the towel after his funds imploded, vowed to get his investors’ money back. He paid them back late, they argued, but he paid them back.
Wire fraud (1343) is both inchoate and a specific intent crime. To be convicted, it doesn't matter if there was an actual loss, but must be shown that the defendant intended to defraud, that is that "[T]he purpose of the scheme 'must be to injure'" (US v Regent). This is also the 2nd Circuit, which has the most substantive case law on wire fraud in the US (Regent, Starr, McNally, D'Amato, Skilling, etc). I should add that Shkreli was not convicted on his wire fraud counts, which are among the most blunt overused weapons a prosecutor has. Almost no one survives a wire fraud charge, yet Shkreli was. He was convicted of securities fraud and conspiracy (for the same), which are also specific intent, however, 'recklessness' specifically is insufficient in a wirefraud case (helpful but insufficient), whereas in securities fraud, scienter is often shown prima facie by reckless indifference for the truth. I believe most salespersons would fail this test in this context. And, virtually every startup I've ever reviewed has unwittingly committed securities fraud, and in the hands of a prosecutor, it's usually only a question of whether they are motivated to target you (for some crime, if only they can "find it") for general behavior they disapprove of, and less so motivated to target a clear crime.
You might say that Shkreli was charged with willfully pissing someone off, but he was also tried and convicted in a jury trial in Federal court and then unlike some sad sack foot soldier in the drug wars that prosecutors use to juice their numbers, Shkreli had and has the means for a first class defense, a defense whose singular and most brilliant tactic was telling Shkreli to STFU already.
Yes, Shkreli is probably at best guilty of being guilty. But please don't mind me at all if I enjoy this feel good item just a little more than the usual story about someone being guilty of being poor.
A lot of people who do bad things don't intend to do bad things. He got lucky he didn't fuck up like everyone else who thinks that way. It doesn't make him any better though, on a bad day he could've ended like the rest of them and then everyone would be screaming how awful Shkreli is.
> Just to be clear, this is LITERALLY equating business success with ethical/legal conduct.
No, it's equating restitution and intent with lenient sentencing.
Even if I grant that he intended to defraud people initially (which doesn't appear to be the case), that's still analogous to if someone stole your car, but later had a change of conscience, returned it, and had also fixed your dents and given it a new paint job to make amends. Are they guilty of theft? Yes. Should they be punished? Probably. Should they get the same punishment as someone who stole your car and crashed it, or stole it and sold it? I don't think so. That's leniency. You may have a different opinion.
He's not kidding. He's not human garbage. It's not astounding that different people have different opinions at all. Your post suggests that you're very emotionally attached to your opinion, which is not good. Nor takes into consideration some basic premises which are necessary for people to understand one another.
Spare me the faux "logically objective" pose. There is a reason he's known as the "most hated man in America". His actions have earned him this reputation.
>There is a reason he's known as the "most hated man in America".
Because that title sells clicks, much like every other piece of hyperbolic clickbait spewed onto the internet these days?
If he truly is the most hated man in America, by fact, then it's simply further proof that Americans, as a collective entity, are willingly at the highest extremes of ignorance.
You made it look like "Spare me the logic" was a direct quote but it wasn't, and it clearly is not a summary of what was meant. Always argue against what people say and (even more importantly) what they mean, not against your own not-quite-accurate-but-easier-to-refute version of what people say.
Okay, I'll bite. Why do you think he's human garbage? You felt strongly enough to reply, maybe you can muster the effort to explain why you think that?
The price increase for Retrophin from 12.50 to 750 was NOT for no apparent reason. The previous owners of the rights sold the rights cheaply because they were unable to make money selling Retrophin, and in fact had large losses for years, despite multiple large price hikes. Businesses that continually lose money shut down. Most of the costs are large fixed regulatory costs for each drug manufactured that a business owner cannot cut, so the only realistic alternative is to raise the price dramatically.
A USD 750 list price for a drug does NOT result in most people paying the list price. Most people get it via insurance, insurance companies pay a negotiated rate and you pay the copay (frequently higher than what the insurance company actually pays). Retrophin isn't a widely used drug so the effect on overall premiums was also tiny. His company literally offered the drug for free to anyone who for whom insurance didn't pay for it and who couldn't afford it. He also had a publicly stated business plan whereby he would use profits from Retrophin to invest in research into similar drugs which pharmaceutical companies have not been doing since Retrophin had been losing money.
Given the byzantine manner in which payments are actually made in the US, there simply isn't any other way to price an orphan drug, i.e. a drug that very few people actually need. The only way to make a business that produces life-and-death drugs needed by very few people sustainable is to price the drug very high due to very high fixed regulatory costs per drug manufactured. If you want to change this, it needs legislation and FDA reform. Demonizing businesses that raise prices to ensure they make a reasonable profit, will only result in drugs that are life-and-death for a small number of people either getting taken off the market or not coming to the market in the first place.
What's FAR more concerning is things like the recent increases in pricing for things like the Epi-Pen. Prices were raised 10x but also the expiration date on Epi-Pens is artificially short, so hospitals, schools etc are forced to throw away perfectly usable Epi-Pens for no good reason. Nobody talks about that because that price hike was by order of a senator's daughter. Shrekili just happens to be a bit of a PR nincompoop.
What we really need is a populace that thinks carefully and independently and a press that actually spends money on investigative reporting instead of relying on what politicians tell them to report, which helps their bottom line since it's much cheaper.
> Obtaining a license just to increase a drug's price from $13.50 to $750 for no apparent reason other than greed isn't enough for you?
This case isn't about that. Are you suggesting we should convict and punish people on trial for one crime because we don't like their past activities and behaviors? Even if those other behaviors were illegal, they should be considered during a separate trial that's actually pertaining to them.
That wasn't your question, was it? You asked why he's human garbage, I explained why. I wasn't defending or attacking this case, I was explaining why some think he is human garbage.
> Nowhere was I (or you) saying anything about this case.
Your specific words in your original response were "He's human garbage, let him rot." That response was to me saying I think the details of the case lead me to believe that I think he should a light sentence.
You very specifically noted through that euphemism that you think he shouldn't get a light sentence in this case because he's human garbage.
Edit: Sorry. That was someone else. I was specifically asking in context, but that wasn't you originally. Mea Culpa. Leaving it here with this note so people that saw it previously can see me retraction.
The ways that question are answered in this thread prove your assertion is false. This case IS about that, because without that, he'd just be one more pennyless felon.
Who said he shouldn't be punished? I simply stated that since he made restitution prior to charges being brought, perhaps that should factor into sentencing. I don't know who you're arguing against, or what you're really arguing, but it doesn't seem to have anything to do with what I've been talking about.
Al Capone wouldn't have had to evade taxes if he wasn't obtaining his income through illegal means.
I also see a distinction between Capone and Shkreli in that Capone's other actions which may have influenced his trial were myriad illegal activities that they couldn't get evidence for. Shkreli is just believed to be an asshole.
Is the illegality of the other activities really relevant if they can't be prosecuted?
The justice system is meant to punish specific crimes, which it did done in both cases, but that doesn't prohibit you as a human to see it as karmic justice, for someone being a garbage human, wether legally or illegally.
> Is the illegality of the other activities really relevant if they can't be prosecuted?
Normally, no (which I said explicitly in another comment here). In this case, the activities are linked. There's no need to evade taxes if your income isn't illegal.
Even so, I don't subscribe to the argument that it's entirely a good thing that we prosecuted Capone for tax evasion. We were unable to prove the actual criminal activities, so we instead looked at the fruits of those activities and used that.
Another way to look at it is that the justice system completely failed initially. We couldn't build a case for the major crimes, but we could for the lesser crimes. He was still guilty of both (this is of course assuming his guilt).
In Shkreli's case, we failed to prosecute originally because it's not a crime. The current case isn't related in the same way, and linking them and punishing in the latter because of people's perception of the former is akin to levying a harsher sentence on someone because of their interracial marriage in a region and time when that was legal but frowned upon. Social pressure unrelated to the issue at hand should not be relevant in court. Even if it's related to the issue at hand in the case, it should be restricted to sentencing (where it likely can't be removed anyway).
And what's wrong with that? Be upset that the FDA only approved one company to make the drug.
And it's not like anyone was hurt. Overall, insurers ended up paying a bit more (drugs are only 10-15% of US health care costs, and very few people need Daraprim). Big deal. If more people did this, then the system would get this issue addressed, maybe.
On top of that, he said he was investing the profits into researching better drugs, though of course that's not a requirement.
It came out in congressional testimony that they were completely misrepresenting how they were re-investing profits. Employees were pilfering profits with 100% raises, massive bonuses and lavish parties. Very little if anything was going back into R&D.
If you want to make a profit and drink champagne on yachts that's totally fine, just don't go around telling everyone that you're pouring those profits back into research.
True, and if it comes out that Turing knowingly blocked people from getting it despite knowing their eligibility, then he deserves derision. But so far he's just pointed out the huge issues and laughed, driving up awareness.
At some point if your system is so terribly busted and no one is fixing it, eh, maybe you lose the right to hate people abusing it. Or maybe his wit and charisma is making me blind to the issue here.
I found a rule loophole that allowed me to wear an Iron Man suit while playing in the NFL, so I made a career making millions of dollars a year. Aint I brave and admirable for pointing out the issue?
I'm getting increasingly annoyed at the culture of praising exploiters of the system instead of promoting constructive players (who are less profitable, ie less sexy). I understand that the contrarian view to "The Man" is the easiest one to take, even if I think the identified "Man" is the diametrical opposite.
Can I presume you offer your skills to anyone who asks at a wage that reflects a minimum cost of living (ie no iPhone or other luxuries the bare minimum cost of living). If not what is your reasoning beyond apparent greed?
Take a look at wealth globally, if GDP was evenly distributed every year everyone would get roughly ten thousand dollars. That's pretax, thus the total average spend per human being be in direct cash payments or via governmental programs should not exceed that number in a fair system. In western nations the poor see double that number on average in cash compensation, and more than triple that number when you include government services.
My point is fairness and accusations of greed cut both ways, if fairness was truly the concern of the poster he would also cut his standard of living in order to benefit those much worse off than him. As he more than likely does not his argument is not "let's increase fairness" but rather "people in my class and I deserve more" and that's the same argument the people raising the drug prices are making.
It seems like you are completely missing the point. This has little to do with economic inequality. The issue is not that this guy had a random product and raised its price. If this had been a car or an iPhone, we could not have cared less if he had been "greedy" and selling it for $1M/piece. The issue is that this is medicine we're talking about. People don't view healthcare and medicine like they view ordinary services and products. Many people (perhaps not you) have a much higher threshold for what kind of practice is moral/ethical/acceptable in medicine. That's why even in the middle of a battlefield people think it is inhumane to prevent doctors from treating injured soldiers, the war be damned. There is more to humanity than money.
Retrophin was a company and not a drug, right? The comment is saying things like "Retrophin isn't a widely used drug" which is really confusing me and makes me think either I or the writer (or both) don't have any idea what he's talking about. I'm trying to make sense of it compared to what I'm reading from other sources and am completely failing because of this.
The drug was called Daraprim. I think the linked comment misspoke when calling it Retrophin, but I have heard many of the same things that they are saying. Namely that anyone that cannot get the drug through insurance can get it for free. I don't think that Martin Shkreli is a good guy by any means, but portraying him as "human garbage" is not entirely fair.
I believe he reinvests 80% back into R&D. That's a pretty large sum. It's a lot more than the big companies. If a better drug for toxoplasmosis is developed that doesn't kill people, it would have been a great achievement.
Regardless of big an asshole he is based on seeing the Vice interview and thinking about the big fraud pharma industry makes me think he is actually way better than the conniving people who run big pharma.
This guy speaks out and maybe he is an asshole and suddenly everyone hates him.
The rest keep their profits to themselves and we don't seem to care or mind.
Everyone has choices to make. Martin could have easily not been an asshole to cancer patients or investors at his fund. You want to let him off the hook just because he said "yup I'm a dick" while he was making the choice to be a dick and profited massively from being a dick?
Acknowledging the fact that what you're doing is wrong does not suddenly make that thing right. It's still wrong. And you're still an asshole for doing it.
Of course we care. People are criticizing the pharma industry's practices and calling for change all the time. Shkreli is a particularly obnoxious symptom, but he's not the disease.
Because he defrauded them in order to get their 3x return.
Put simply, if I burn my house down in order to collect the insurance money, I've committed insurance fraud whether or not I pay that money back, and no amount of profit on the payback negates the illegality.
Although, interestingly, he didn't steal their money, he lost it in a bad trade, which is probably (maybe?) covered under the risks associated with the fund's operation. The deception was not telling people their money was gone (and also lying somewhat about details of the fund initially). Given that the loss was an accident that he didn't profit from, and that he worked to repay the money, there's a critical difference between your example and what's reportedly happened here, which is intent.
It's more similar to you managing a property for someone, and telling them you got fire insurance when you haven't yet, and then when the house burns down accidentally you work to make the money to cover what the insurance would have covered. You did commit fraud by not getting the insurance when you said you would, but you also covered the costs in the end.
The fraud part, which also happens to have been the illegal part, is that he misrepresented the size of the situation while soliciting investments. It might eventually have been true, but was specifically not true at the time he made the statements he made.
That said, I agree that my analogy was bad, and I wasn't trying to assert that Shkrelli deliberately set the house on fire as much as I was just looking for an appropriate analogy of something that is illegal even though it did not have any financial damages.
The point was that while damages from fraud may be financial, the fraud is the damage, and the lie is the crime.
> That said, I agree that my analogy was bad, and I wasn't trying to assert that Shkrelli deliberately set the house on fire
Yeah, I was just trying to add more information to it, and point out what I thought were interesting portions of the case. Less a rebuttal and more an clarification and addition. :)
The case itself is very interesting because the situation is very interesting, and that's only compounded by his public persona, which is reviled by many because of prior media attention.
He lied about the current status of the fund for quite a while as he attempted to replace the money, and sent fraudulent reports showing good returns when all the money was lost. He later replaced all the lost funds with profits from the company he founded (and reportedly worked hard to make profitable).
I'm not sure whether that company was the one responsible for the drug price hike, and whether that constituted a lot of the profits or that actually went back into research as I believe he said it did during that episode.
Actually, a bunch of wall street, banking, etc all said the state of the economy was fine, there was no housing bubble, etc all on national TV before the markets collapsed. None of them went to jail.
I mean, everybody came out okay - Shkreli really made his investors a lot of money! Yeah, he lied, but he did some incredible work: typical fraudsters take your money and run - he doesn't fit that mold.
Honestly, the issue was that he's an utter asshole, including to his investors. Investors are willing to put with a lot if you triple their money, but Shkreli managed to cross that line. That made him an easy target for the prescription drugs investigation and media circus.
Just because his investors made money doesn't excuse him.
Suppose you lent 10,000 to a friend and the friend promised to return it within a year. A year later, your friend doesn't pay you back and makes a bunch of excuses. Instead, he takes the 5,000 he has left to the casino, gambles it on the roulette wheel and by luck manages to turn that into 30,000 and pays you back 1.5 years later. I don't think you would be happy with that situation...
> “I asked Fred where the funds had come from, and he responded, ‘The meeting with the General Dynamics board was a bust and I knew we needed money for Monday, so I took a plane to Las Vegas and won $27,000.’ I said, ‘You mean you took our last $5,000— how could you do that?’ He shrugged his shoulders and said, ‘What difference does it make? Without the funds for the fuel companies, we couldn’t have flown anyway.’ Fred’s luck held again. It was not much, but it came at a critical time and kept us in business for another week.” [0]
Technically, Fred committed a fraud (actually I forget the technical term for the crime where you misuse funds). Its just that he wasn't prosecuted for it.
Could you be thinking of Misappropriation of funds? I'm not a lawyer and I haven't spent a lot of time looking it up but from the few places I looked it doesn't seem that it would fit.
Your analogy is slightly off... suppose you lent $10,000 to an acquaintance known for being able to double it, and they promise to return it doubled in a year. A year later you ask for your money and he gives you $6,000 from someone else he convinced to do the same thing along with $6,000 from a different venture that was taking off and $8,000 work of equity for that startup. You didn't quite get what was promised, it seems a little shady, but at least he didn't rip you off.
The problem is, in most cases, historically the type of actions Shkreli tried often ends in disaster (often done by someone intentionally being malicious, I might add).
Shkreli may have been able to work his pseudo-Ponzi-ish scheme to investors' benefit. But it is pretty easy to look up the sordid history of the vast majority of Ponzi-type schemes, to see why this type of activity is generally illegal.
You don't think intent and net harm should be considered in criminal cases? I'd like this sentencing to send a clear message to fraudsters that:
A. If you get caught, you're going to prison
But more importantly -
B. If, however, you work hard to ensure the people you defrauded are not harmed by your fraud, your sentence will be lighter than if you were the type of fraudster to cut and run.
I don't know about you, but in light of the fact that fraudsters are always going to exist, I'd like to incentivize the "benevolent fraudsters", rather than pretending (through equal sentencing) that there is no difference between the two.
I would be perfectly happy to get more than my 10,000 back (like his investors did) late vs getting less or none back ever.
I'd be joyous if the return was better than I could expect to make otherwise, say > 10-20%.
Investments are risky. They are not automatic.
What I wouldn't be happy about is if I was lied to about the risk of an investment. That is closer to what this case is about. The money gained or lost doesn't really matter.
I don't see why it's disingenuous? Investing is extremely risky, and I'm not convinced that he didn't just get lucky on the second bet.
This isn't ok because the original investor was paid off. That's also how Ponzi schemes work - the original investors are paid off (I know, here the money seems to be generated from Retrophin, but the behavior is the same).
I think that's being too results driven and doesn't take into account the risk that was taken. As another example, suppose your uber driver drove you home while intoxicated. Even if the trip ended up being fine (no accidents, smooth ride), you would still have valid justification for complaining about this.
I understand a risk was taken, but gambling has a less than 50% chance of return (by design) while buying a Pharma company that you control is conceivably less risk.
Let me add to this: Buying a company you have a government mandated monopoly on (patent) that owns a product that people will die if they don't take (inelastic demand), and has a huge barrier to entry for new, competing entrants (FDA) is conceivably less risk than throwing chips on a roulette wheel.
What if he lied to you, but then went out and through a combination of talent, hard work, and luck somehow made the money to make you whole and then some?
The law is very clear on what is a crime and what isn't. So when he misused his funds, he committed a crime. And he was prosecuted and convicted for it. Doesn't matter if in the end he cured cancer: he still committed a crime.
I have a feeling that since most people have never dealt with the justice system, they fail to appreciate just how black and white it really is. While the movies/TV do portray cases where "extenuating circumstances" help the case, most cases are pretty straightforward.
> I mean, everybody came out okay - Shkreli really made his investors a lot of money! Yeah, he lied, but he did some incredible work: typical fraudsters take your money and run - he doesn't fit that mold.
I think it's nice everyone came out okay, besides Shkreli in this case I guess. I still think what he did was wrong though because if you don't punish that kind of behavior, then you're encouraging people to do things that are wrong in the hopes they will succeed, and it won't always work out as it happened to do so here.
So, it is okay to lie to investors, as long as you eventually pull a success off? And you make those investors you were lying to money by committing fraud on the investors in your new company (Retrophin), so they make money, but not as much they would have if you weren't secretly taking profits to pay off the investors you previously defrauded?
They agreed he committed a crime not that he wasn't a "great dude." I'm not saying he is, just that this is using a claim without any evidence or response to paint a picture of his whole life.
yeah seems like a great dude...