Martin Shkreli Fights U.S. Bid to Delay SEC's Civil Caseby
Ex-pharma executive says livelihood, career prospects at risk
Lawyer charged alongside Shkreli is also opposing delay
Martin Shkreli, after attracting attention with a $10 million offer to musician Kanye West, now wants to fight a two-front battle with the government in court. The former pharmaceutical executive, who faces criminal securities fraud charges, is challenging a request from prosecutors to put a parallel civil case against him on hold.
The civil case, brought by the U.S. Securities and Exchange Commission, “jeopardizes Mr. Shkreli’s livelihood, reputation and future career prospects” and should move forward, his attorneys said in a court filing Thursday. The lawyer charged along with Shkreli, Evan Greebel, also asked to allow some information-sharing to proceed in the SEC’s case.
Shkreli, the 32-year-old biotechnology company founder who gained notoriety after raising the price of a rare drug by more than 5,000 percent, was arrested at his Manhattan apartment in December. He stands accused of illegally using assets in one of his former drug companies, Retrophin Inc., to pay off investors who lost money in hedge funds he ran.
Federal prosecutors in Brooklyn, New York, have asked to delay the SEC’s parallel civil proceedings while the criminal case continues. Shkreli faces a maximum of 20 years in prison if convicted. The SEC is seeking monetary penalties and an order barring Shkreli from serving as an officer or director of a public company.
Defendants facing parallel civil and criminal securities cases sometimes seek to move forward on both fronts to get a glimpse of the prosecution’s evidence. Civil cases are usually put on hold, though, at the government’s request.
An outspoken social-media personality who live-streams himself for hours each day, Shkreli has generated further attention for his antics in the music world. Those included purchasing a one-of-a-kind album from hip-hop group the Wu-Tang Clan for $2 million and publicly feuding with one of its members, Ghostface Killah.
On Thursday he set his sights on West by crafting an offer letter asking that the musician’s new album, “The Life of Pablo,” be provided only to Shkreli for $10 million.
“I believe you (and your partners) will find this financial arrangement more attractive than your current course of action,” Shkreli said in the letter, which he posted to his Twitter account. Journalists from outlets including USA Today, Fox News, Billboard, Huffington Post, Fortune and others seized on the offer. West’s spokesman Gabe Tesoriero didn’t immediately return a call seeking comment on it.
Shkreli, who stepped down as CEO of Turing Pharmaceuticals AG after his arrest Dec. 17, “is already facing severe consequences from the filing of the SEC action and the indictment,” his attorneys said in their court filing. “As a result of the serious allegations against him, not only is his livelihood threatened but the future viability of at least two pharmaceutical companies is threatened as well.”
Ousted by Retrophin in 2014, Shkreli founded Turing in 2015 and later bought a majority stake in KaloBios Pharmaceuticals Inc. He was chief executive officer of KaloBios but was fired after his arrest. The company’s stock price plunged, and it filed for bankruptcy protection.
Earlier this month, prosecutors told a judge that Shkreli may need to put up more assets for his $5 million bail after it was discovered that a $45 million E*Trade Financial Corp. account he used as security was loaded with mostly KaloBios stock. The value of the account has dropped to between $4 million and $5 million, prosecutors said.
Shkreli and Greebel have pleaded not guilty to the criminal charges.
The civil case is Securities and Exchange Commission v. Shkreli, 15-cv-07175, and the criminal case is U.S. v. Shkreli, 15-cr-00637, U.S. District Court, Eastern District of New York (Brooklyn).