Biotech and Pharma

Martin Shkreli wrote a woman to say he would work hard 'to see you and your four children homeless' after husband refused to sell stock

Key Points
  • "Your pathetic excuse of a husband needs to get a real job that does not depend on fraud to succeed," Martin Shkreli wrote a woman, in a letter read to jurors
  • "I hope to see you and your four children homeless and will do whatever I can to assure this," he continued in the letter
Martin Shkreli wrote a woman to say he would work hard 'to see you and your four children homeless' after husband refused to sell stock

Martin Shkreli huffed and puffed and made a big bad promise to do what he could to render a woman and her four kids "homeless" — but when push came to shove the "pharma bro's" company had to cut a big check to her husband.

A former Shkreli employee testified Tuesday that Shkreli told a series of lies and ultimately threatened the man's family in a desperate bid to get the man to sell him stock in a drug company Shkreli had founded.

"Your husband had stolen $1.6 million from me and I will get it back. I will go to any length necessary to get it back," Shkreli wrote to the wife of his former employee Timothy Pierotti in a January 2013 letter that was read to jurors Tuesday in Brooklyn, New York, federal court.

"Your pathetic excuse of a husband needs to get a real job that does not depend on fraud to succeed... I hope to see you and your four children homeless and will do whatever I can to assure this," Shkreli wrote.

The letter also accused Pierotti of being a lazy employee who did a bad job managing investments.

"It was nonsense. There was was virtually nothing in there that was true," Pierotti testified at Shkreli's securities fraud trial.

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Shkreli is charged with looting the drug company, Retrophin, of stock and cash to pay investors in his hedge funds, whom he also allegedly defrauded.

Pierotti had worked as a portfolio manager for one of Shkreli's hedge funds, MSMB Consumer, from 2011 through 2012.

In late 2012, Pierotti said, he was one of more than a half-dozen friends and associates of Shkreli who were offered the chance to buy 400,000 shares in a shell company. That company, Desert Gateway, was used as a vehicle for a reverse merger with Retrophin, the drug company that Shkreli founded, so that Retrophin's shares could become publicly traded.

Prosecutors claim that Shkreli and his lawyer and co-defendant, Evan Greebel, tried to secretly control, and in some cases did control the 2.4 million Desert Gateway shares that were sold to Shkreli's friends and associates as part of the two men's alleged securities fraud conspiracy.

Pierotti told jurors that he agreed to pay $400 for the shares in Desert Gateway from Troy Fearnow, a relative of that company's owner, Michael Fearnow. But Pierotti said that he only ended up receiving 350,000 shares in Desert Gateway, and was told that Shkreli was "holding back" the other 50,000 shares.

Pierotti testified that he never was an employee of Desert Gateway, or of Retrophin.

Shkreli at one point asked Pierotti to sell some of the shares that he had bought to Darren Blanton, a Texas-based investor, according to Pierotti, who declined the request.

Blanton has testified two weeks ago that he had to pester Shkreli for almost three years to get his $1.3 million investment in Shkreli's hedge fund redeemed.

Blanton said he only got $200,000 in cash, and the rest came in the form of stock in Retrophin.

During his testimony, Pierotti suggested, without going into detail, that his relationship with Shkreli turned sour in December 2012.

He said that when Shkreli emailed him and asked to meet with him in New Jersey, where Pierotti lived, Pierotti declined and told Shkreli he could communicate through a mutual friend.

Shkreli didn't take the brush off well.

In a subsequent email, Shkreli wrote Pierotti and said he would like to buy the Retrophin stock he held "for what you paid for it."

And in a later phone call, there was "a lot of screaming and yelling from Martin" demanding that Pierotti sell him the stock, Pierotti testified.

Then came the letter to Pierotti's wife, in which Shkreli, in addition to making scathing comments about Pierotti, offered to pay $40,000 for the Retrophin shares.

Pierotti said that Shkreli claimed that Pierotti had agreed to work for Retrophin as part of the offer to buy the Desert Gateway shares. He also claimed that Pierotti committed "classic" fraud by taking the shares and not doing the work, according to an email.

Timothy Pierotti
Source: CNBC

Pierotti testified that neither of those claims were true.

But Retrophin, then led by Shkreli, later sued Pierotti for the return of the shares under the theory that he had been an employee who was not entitled to the stock unless he performed the work.

Pierotti, in a Manhattan Supreme Court affidavit filed in connection with that case, wrote, "I submit this affidavit to provide first-hand evidence of the repetitive harassment that Shkreli has inflicted on not only me, but on my wife, teenage children, elderly father, as well as other family members."

"Shkreli has harassed me and my family for nearly a year, and his harassment intensified on and around this past Christmas," he said.

"Indeed, Shkreli sent multiple unwelcome texts and social media messages to my family and me on Christmas Day," Pierotti wrote.

The case was later settled out of court after a judge was asked by Pierotti's lawyer to order that Shkreli's computer be examined for evidence of the alleged harassment of Pierotti's family, as well as alleged hacking of Pierotti's email accounts.

When the case was settled, Pierotti testified on Tuesday, he received $165,000 for the 50,000 shares in Retrophin that he was shorted by Shkreli. Pierotti said that money came from "Martin, or perhaps Retrophin."

Pierotti said he eventually sold off his Retrophin shares for "I think, altogether, about $1.5 million."

After taxes and legal fees, Pierotti said he believed he netted about $500,000 from that.

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