Biotech and Pharma

Martin Shkreli has his day in Brooklyn Court

Shkreli's next court date set for May 3
Shkreli's next court date set for May 3

Mum's the new word for the normally loose-lipped Martin Shkreli.

The former pharmaceutical CEO Shkreli will supposedly no longer be speaking to the media — because his new criminal defense lawyer has ordered him to stop talking.

The self-imposed gag order on Shkreli came to light as federal prosecutors also revealed that the accused fraudster's E-Trade stock account has lost a whopping $41 million in value since last month, when it was used to secure a $5 million criminal release bond.

Martin Shkreli departs U.S. Federal Court after an arraignment and his being charged on a federal indictment filed in Brooklyn on Dec. 17, 2015.
Martin Shkreli uses $45M E-Trade acct for criminal bond
Martin Shkreli and Rapper Ghostface Killah of the Wu-Tang Clan.
Martin Shkreli slaps down rapper Ghostface Killah in vulgar video

"I know that he has previously spoken with some of you, if not all of you, and one of the conditions of my engagement was from henceforth he does not speak with any member of the press at all until the criminal charges are resolved," Benjamin Brafman, Shkreli's new attorney, told reporters Wednesday outside U.S. Federal Court in Brooklyn, where Shkreli was appearing for a hearing related to securities fraud charges.

Brafman added, "We believe this case is very defensible. We don't believe that Mr. Shkreli ever knowingly violated the law or intended to defraud anyone, and we want to try this case in the courtroom and not in the media."

Shkreli has spoken to a number of reporters after he was indicted in mid-December, and also is in the habit of live-streaming his daily routine on the Internet to viewers.

Despite Brafman's vow of silence for his client, a wide-ranging interview that Shkreli gave"The Breakfast Club" show on Power 105.1, a New York City hip-hop station, was posted Wednesday morning, before he showed up in court.

Brafman told CNBC that the interview was recorded Tuesday, "before we came to an understanding" about Shkreli needing to put an end to his contacts with the media.

"I'm confident I'll beat the charges," Shkreli said during the interview, in which he described growing up under modest circumstances with parents who worked as janitors. "I'm from the streets," said Shkreli, who also defended making a video last week insulting renowned rapper Ghostface Killah.

"He disrespected me," Shkreli said of Ghostface Killah, a member of the Wu-Tang Clan, whose one-of-a-kind album Shkreli purchased last year for $2 million.

"If he were here right now, I'd smack him right in the face," Shrekli said. "Come at me, it don't matter."

And after appearing in court Wednesday, Shkreli re-tweeted Twitter postings about his Power 105.1 interview.

Shkreli, who recently fired his previous legal team, arrived at the courthouse in a blue blazer and bright white pants. Looking relaxed, the 32-year-old Shkreli smiled and laughed at times before the the start of the hearing, which lasted just under 15 minutes.

During the session, it was disclosed that Shkreli's E-Trade account — which had about $45 million in it when it was used to secure his $5 million criminal release bond — is now valued at just around $4 million.

The decline in the value is due to the account's large holdings of KaloBios stock, which had spiked to almost $40 a share in late November after an investor group led by Shkreli purchased a controlling interest of 1.2 million shares and the company named him CEO.

Assistant U.S. Attorney Winston Paes, who is prosecuting Shkreli, noted the stock plunge since Shkreli's indictment had devalued the bond's collateral. Paes pointed out that KaloBios shares were trading at just over $2 per share on Tuesday.


Former drug executive Martin Shkreli (R) exits with his lawyer Benjamin Brafman at the U.S. Federal Courthouse in Brooklyn, New York February 3, 2016.
Brendan McDermid | Reuters

But Brafman expressed confidence about the status of Shkreli's bail, saying "I don't believe there will ever be an issue here" in his ability to come up with additional collateral if needed.

During his Power 105.1 interview, one of the hosts noted that Shkreli was worth $45 million, referring to the E-Trade account's former value.

"I'm worth a lot more than that," Shkreli quipped.

Brafman also told reporters after that Shkreli plans to invoke the Fifth Amendment if he appears as scheduled before a congressional committee and won't be "answering any other question." on Thursday. Shkreli is due to appear in Washington before a committee investigating drug pricing, and Brafman said he would accompany Shkreli to that appearance.

But Brafman suggested during Wednesday's court hearing that Shkreli might be excused from having to travel to Congress to plead the Fifth.

However, a spokeswoman for the House Committee on Oversight and Government Reform told CNBC on Wednesday afternoon, "There is no doubt that Mr.Shkreli has to appear in person to the hearing tomorrow. He was served with a subpoena, which mandates his appearance."

Brafman told CNBC, "We will be there."

Martin Shkreli goes after rapper Ghostface Killah in vulgar video
Martin Shkreli goes after rapper Ghostface Killah in vulgar video
Ex-drug CEO Shkreli tweets response to House committee
Ex-drug CEO Shkreli tweets response to House committee
Martin Shkreli is seeking new lawyers
Martin Shkreli is seeking new lawyers

Shkreli first garnered widespread public attention last summer when his company Turing Pharmaceuticals raised the price of its drug Daraprim by more than 5,500 percent.

Daraprim, which went from $13.50 per pill to $750 per pill, is used to treat toxoplasmosis, a parasitic condition that can occur in pregnant women and people with the HIV virus. Since then, Shkreli has seemed to revel in the outrage that the price hike caused, tweaking his critics on Twitter.

However, the indictment lodged against him Dec. 17, has nothing to do with the securities fraud charges that brought him to the courthouse Wednesday.

In the criminal case, Shkrel is accused of looting a previous pharmaceutical company he had founded, Retrophin, in order to pay off investors he was suspected of defrauding at hedge funds he ran. He has denied the charges.

The day after he was indicted, Turing Pharmaceuticals announced that it was naming an interim CEO in place of Shkreli. KaloBios fired Shkreli as CEO Dec. 21.

Former drug executive Martin Shkreli (center R) exits with his lawyer Benjamin Brafman outside the U.S. Federal Courthouse in Brooklyn, New York February 3, 2016.
Brendan McDermid | Reuters

Shkreli's next court date is scheduled for May 3 in Brooklyn federal court.

Judge Kiyo Matsumoto, citing the complex nature of the case, the hiring of Brafman and continued disclosure by prosecutors of evidence as grounds for suspending the speedy trial clock that normally guarantees a defendant the right to trial within 70 days of arraignment.

When asked whether he wanted to waive his right to a speedy trial, Shkreli responded, "Yes, judge."

Wednesday's hearing originally was scheduled for two weeks before, but was postponed so Shkreli could hire new defense attorneys. Brafman previously represented Michael Jackson, Jay Z and Sean "Diddy" Combs and former International Monetary Fund managing director Dominique Strauss-Kahn.

Shkreli, in his Power 105.1 interview, called Brafman "probably the best lawyer in the world."