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‘Pharma Bro’ Martin Shkreli’s trial: You can’t look away USA News Today

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‘Pharma Bro’ Martin Shkreli’s trial: You can’t look away USA News Today

NEW YORK  — Any other securities and wire fraud trial would probably attract little more than a glance from courthouse spectators, let alone the larger American public.

But the proceeding set to start Monday is not just any trial: It’s the Martin Shkreli legal show!

A year-and-half after his arrest, and following hundreds of tweets, scores of online boasts, dozens of live-streams and his purchase of a unique Wu-Tang Clan rap album for a reported $2 million, Shkreli gets his turn to take on the prosecutors who have charged him with conspiracy and fraud.

And everyone wants to experience it, it seems.

No matter that his case has no direct ties to the issue that brought the former pharmaceutical company CEO national notoriety — ordering a 5,000% price hike on a medication for HIV patients and others with compromised immune systems, then refusing to retreat or apologize. Repeatedly.

And never mind that the man informally dubbed the “Pharma Bro,” a 34-year-old son of Albanian and Croatian immigrants, may opt against taking the witness stand in his own defense.

For the final pretrial hearing last week, many legal interns joined reporters in U.S. District Court, packing it to overflowing. One woman sat on the carpeted floor.

During legal arguments, Benjamin Brafman, the veteran criminal lawyer who’s leading the defense team, indirectly summarized the attraction of Shkreli. He is “traveling to the beat of his very unique drummer.”

Jurors are scheduled to hear dozens of witnesses whose testimony will alternately support and question the eight-count indictment against Shkreli. It accuses him of illegally taking stock from Retrophin — a biotechnology company he started in 2011 and was ousted from in 2014 — and then using it to pay unrelated debts owed to investors in hedge funds he’d previously headed.

The indictment also accuses Shkreli of defrauding investors in MSMB Capital and MSMB Healthcare through misstatements and omissions about the financial performance of the hedge funds, how much other investors put in, and how much Shkreli took out.

In all, he withdrew and spent more than $200,000 from MSMB Capital during the fund’s operating life, “far in excess of any permitted fees,” the indictment charges.

While winding down the funds in 2012, Shkreli raised suspicions by telling investors they could redeem their stakes for cash, or take Retrophin shares instead, the indictment alleges. But, instead of paying departing investors with money from the funds, he allegedly arranged to compensate them from Retrophin, via payments for phony consulting agreements.

Shkreli has pleaded not guilty. So has Evan Greebel, the former Retrophin outside counsel who was also charged in the indictment. In April, the federal judge presiding over the case, Kiyo Matsumoto, ordered separate trials for the men, with Shkreli going first. She ruled that Greebel’s legal defense plan to characterize his co-defendant as a liar “would present a serious risk that Shkreli will not receive a constitutionally fair trial.”

The trial is expected to last four to six weeks, attorneys on both sides estimated.

There’s been no decision yet on whether Shkreli will testify in his own behalf, Brafman said during the final pretrial hearing. Afterward, he declined to discuss the defense plans, saying “I really think that we’re going to try this case in the courtroom.”

However, the proceeding provided glimpses of the strategies and evidence expected to be weighed by jurors.

Along with focusing on Shkreli’s dealings with the hedge funds and Retrophin, prosecutors appear ready to present evidence about other parts of his financial career. During a work stint at Royal Bank of Canada, Shkreli doubled his allowable trading limit and hid it from the company, prosecutors said during the pretrial hearing.

Brafman said prosecutors were also expected to call a witness who will testify about Elea Capital Management LLC, the New York-based hedge fund Shkreli launched in 2006 as one of his earliest independent financial ventures. Within roughly one year, the fund had lost all its investment capital through disastrous trades.

New York court records show the losses resulted in an uncollected $2.3 million default judgment in favor of global financial firm Lehman Brothers, which collapsed in 2008 during the national financial crisis. However, Shkreli failed to disclose the episode to MSMB Capital investors, the indictment against him charges.

Brafman plans to give jurors an alternative view based on testimony from investors he said were impressed by Shkreli’s performance. The list includes Darren Blanton, a biotech investor who profited from stakes in Shkreli’s MSMB hedge funds.

“This is a man who believed in Mr. Shkreli as a scientist, not just as an investment adviser,” Brafman said during the pretrial hearing.

The defense team also plans to show that some investors in Shkreli-led ventures eventually recovered their money, despite earlier losses. Prosecutors said federal laws make clear that an absence of ultimate financial harm does not constitute a legal defense. However,  Brafman said the evidence would be relevant for jurors.

Throughout pretrial proceedings, Shkreli remained quiet inside the courtroom as he jotted notes, periodically swept back his hair with a hand or a pen, and read defense documents.

But before and afterward, other parts of his persona — one that strives to project a “What, me worry?” air of confidence, and another that appears to delight in drawing attention and confronting critics — regularly emerged. The results in some cases have posed potential challenges for Shkreli’s legal defense efforts.

In July 2016, emerging from the courthouse after the judge set the trial date and Brafman announced he would seek separate proceedings, a seemingly nonchalant Shkreli asked his attorney an unrelated question as reporters listened: “Can I go play Pokémon now?

After buying the Wu-Tang Clan’s “Once Upon a Time in Shaolin” one-of-a-kind album in a 2015 auction, Shkreli used some of his frequent live-streams to tease followers about when he might play some of the never-heard tracks. After Donald Trump won the White House in November, Shkreli made good on a promise to air the album via live-stream if the New York billionaire defeated Hillary Clinton.

Separately, Shkreli jumped in after conservative media outlets raised questions about the July 2016 murder in Washington, D.C. of Seth Rich, a former Democratic National Committee staff member. The outlets suggested there was evidence showing that the killing occurred after Rich had contacted WikiLeaks, the international organization that releases secret information provided by informants. Last year, WikiLeaks released troves of hacked emails damaging to Clinton’s campaign against Trump.

In a Facebook posting, Shkreli promised $100,000 for information about Rich’s killer.

The reward offer and Wu-Tang Clan album purchase brought Shkreli widespread attention. But the episodes also prompted prosecutors to oppose Shkreli’s so-far undecided legal motion to reduce his $5 million bail to $2 million, providing funds that would enable him to pay his lawyers and accountants. He evidently has enough free cash, prosecutors contended.

Brafman responded that Shkreli is worth millions of dollars, but said the holdings are in investments that can’t immediately be sold or pledged as collateral. Referring to his famous client’s statements via social media and in public appearances, Brafman said Shkreli had made “preposterous promises” he would never be able to keep.

“Tweeting has become, unfortunately, fashionable,” said Brafman, who suggested that Shkreli’s promises and boasts were part of an effort to maintain his uniqueness. “When people tweet, they don’t always mean what they say.”

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc

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‘Pharma Bro’ Martin Shkreli’s trial: You can’t look away USA News Today

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‘Pharma Bro’ Martin Shkreli’s trial: You can’t look away USA News Today

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