Martin Shkreli's Assets Take Hit Following Indictment
February 03 2016 - 1:10PM
Dow Jones News
The criminal charges against Martin Shkreli appear to have taken
a toll on the former pharmaceutical executive's assets, with the
value of his $45 million E*Trade account he used to secure bail now
worth around $4 million, prosecutors said during a court hearing
Wednesday.
The account was mostly comprised of shares in KaloBios
Pharmaceuticals, where Mr. Shkreli was chief executive until he was
fired in December, shortly after his arrest on fraud charges.
Trading in KaloBios shares was halted in December after Mr.
Shkreli's arrest, and its price has plummeted to $2.05 at the
market's close Tuesday, after briefly trading at more than $40 in
December. KaloBios filed for bankruptcy protection late last
year.
"There's nothing like an indictment to affect the value of
shares," Mr. Shkreli's lawyer, Benjamin Brafman, said in court
Wednesday.
Mr. Shkreli used his E*Trade account to secure the $5 million
bond. Mr. Brafman, who took over as Mr. Shkreli's defense attorney
earlier this week told U.S. District Judge Kiyo A. Matsumoto that
he would talk to assistant U.S. Attorney Winston Paes about
possibly putting up additional assets in order to meet the terms of
the bond.
The hearing in Brooklyn federal court was Mr. Shkreli's first
since he was indicted in December along with his lawyer, Evan
Greebel, and charged with running a Ponzi-like scheme. Mr. Shkreli
faces seven counts of securities fraud and conspiracy, while Mr.
Greebel faces a wire fraud conspiracy charge.
Both men have pleaded not guilty to the charges.
Mr. Shkreli gained notoriety last year when he raised by more
than 50-fold the price of a drug that treats a potentially deadly
parasitic infection that his company, Turing Pharmaceuticals, had
purchased. Mr. Shkreli, who resigned as chief executive of Turing
shortly after his arrest, has been called to testify at a
congressional hearing Thursday on the dramatic price increases of
certain medicines.
Mr. Brafman said Wednesday that it was unclear if Mr. Shkreli
would attend the hearing, but that if he did, he would invoke his
Fifth Amendment right not to incriminate himself and would not
answer questions.
Mr. Brafman, who was hired by Mr. Shkreli to replace law firm
Arnold & Porter LLP, is a well-known criminal defense lawyer in
New York who has previously handled cases involving celebrities and
other public figures. After the hearing Mr. Brafman told reporters
that he only agreed to take on the case after the outspoken Mr.
Shkreli promised to stop talking to the media.
He said his client never knowingly broke any laws and that the
drug-price increase had nothing to do with the criminal case. "We
want to try this case in the courtroom and not in the media," he
said.
Wednesday's hearing was largely devoted to housekeeping
items—setting a schedule and designating the case as complex—but
Mr. Brafman did raise one potentially thorny issue. Mr. Braman said
he was in the process of reviewing documents that underpinned
another judge's decision to void the attorney-client privilege
between Mr. Shkreli and Mr. Greebel and could ask the court to
exclude some emails between the pair from the case.
Documents unsealed last week revealed that days before charging
the two men, prosecutors convinced a judge to pierce the privilege
protecting Mr. Greebel's legal advice to Mr. Shkreli, a powerful
legal concept that protects most legal advice, except in certain
circumstances, including when that advice is in furtherance of a
crime.
Communications between the two men underpin the criminal case.
Prosecutors cited emails between the pair in the indictment that
accused them of looting pharmaceutical company Retrophin Inc where
Mr. Shkreli was CEO, to cover losses suffered by in investors in
Mr. Shkreli's hedge funds.
Mr. Brafman said Wednesday he had not yet determined whether he
would ask the court to exclude some of the emails.
Write to Christopher M. Matthews at
christopher.matthews@wsj.com
(END) Dow Jones Newswires
February 03, 2016 13:55 ET (18:55 GMT)
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