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Judge rejects dismissal request by Martin Shkreli's lawyers as 'pharma bro' braces for long closing arguments Thursday

  • Martin Shkreli is charged with defrauding a group of hedge-fund investors.
  • He also is accused of ripping off a drug company he founded to pay off those investors.
  • Shkreli smiled broadly when a judge referred to one of his funds as the "strip-club hedge fund."
Ex-pharmaceutical executive Martin Shkreli leaves after his appearance at the U.S. District Court for the Eastern District of New York on the first day of his securities fraud trial on June 26, 2017 in the Brooklyn borough of New York City.
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Ex-pharmaceutical executive Martin Shkreli leaves after his appearance at the U.S. District Court for the Eastern District of New York on the first day of his securities fraud trial on June 26, 2017 in the Brooklyn borough of New York City.

Get your seat cushions ready.

Lawyers for Martin Shkreli lost a long-shot bid on Wednesday to get criminal charges against the 'pharma bro' dismissed in Brooklyn, New York, federal court, after prosecutors and defense lawyers rested their cases.

The rejection sets the stage for a very long, full day of closing arguments in the case by prosecutors and Shkreli's lawyers Thursday, with those arguments only expected to wrap up Friday morning.

Jurors could then begin deliberations later Friday, exactly one month after opening arguments were made in the trial.

When they do, they will do so without the benefit of having heard any testimony from Shkreli, who declined to take the witness stand.

Nor will they have heard from any other witnesses or evidence from the defense, which rested without putting on a case of their own.

Shkreli, however, commented, in acerbic fashion, on his case on Facebook.

"Have a nice day, and I'll see you at 9," Judge Kiyo Matsumoto told Shkreli as she excused him Wednesday from having to remain in court and listen to her, his lawyers and prosecutors huddle over how she will instruct jurors on the law for their deliberations after closing arguments.

Earlier, Shkreli had told Matsumoto that he was waiving his right to a separate trial by the same jury on the question of how much he should be required to forfeit in assets if he is convicted of the criminal charges.

Shkreli earlier had said he wanted jurors to decide that question in the event he is convicted. He did not explain his decision Wednesday.

Jurors were not in court Wednesday, having been given the day off.

Shkreli, 34, is accused of defrauding a group of investors in two hedge funds he ran by lying to them about his past performance managing investments, and by lying to them about how well he was doing with their money.

He also is charged with defrauding the drug company he subsequently founded, Retrophin, by using company stocks and cash to pay back the investors he allegedly ripped off at his funds.

Shkreli has pleaded not guilty to eight criminal counts, including securities fraud, and conspiracy to commit securities fraud and to commit wire fraud.

The charges are unrelated to Shkreli having raised the price of the anti-parasite drug Daraprim by more than 5,000 percent while serving as CEO of another company, Turing Pharmaceuticals, in 2015.

That action made Shkreli the subject of widespread negative media attention. A number of would-be jurors mentioned the Daraprim price increase when they were considered and then excused from serving on the jury for his trial.

On Wednesday morning, Shkreli's lawyer Marc Agnifilo asked Matsumoto to dismiss the entire eight-count indictment against him.

"There's legally insufficient evidence to substantiate each of the eight charges," Agnifilo told Matsumoto.

Agnifilo argued that the decisions by investors to put their money into Shkreli's funds were not based on the allegedly false statements he told them before they invested. Those statements included claims that the MSMB Capital and MSMB Healthcare hedge funds had an independent auditor, were "transparent" investment vehicles and had enough liquidity to satisfy monthly redemption requests.

Matsumoto brushed aside that argument. She noted that multiple investors have testified that "they did pay attention to the monthly [financial] performance reports" that Shkreli sent them about their purported investment returns.

Those investors "in fact did rely on those reports and felt like they were making money," Matsumoto said.

Prosecutors have introduced evidence that indicates that while Shkreli was issuing glowing financial reports, he was actually losing most, if not all, of the investors' money, or using it without their knowledge to capitalize his new drug company Retrophin.

Agnifilo at one point in his argument said that the eighth criminal count, conspiracy to commit securities fraud on Retrophin, "reminded" him "of the old Wendy's commercial, 'Where's the Beef?' "

Matsumoto interjected, teasing Agnifilo that he was dating himself with the reference to that 1980s-era ad.

"It's not 'Where's the Beef? It's 'A nothing burger,' " the judge cracked, referring to the dismissive term used by some in the Trump administration when commenting on disclosures that Donald Trump Jr. had met with a Russian lawyer during the presidential campaign.

Another humorous moment occurred when Matsumoto mentioned an employee of a third hedge fund run by Shkreli.

"He was with MSMB Consumer, which was the strip-club hedge fund," Matsumoto said.

That was in reference to the employee having testified that at one point MSMB Consumer's funds were so low that it began focusing on a position in just a single stock, Rick's Cabaret, which operates strip clubs.

Shkreli smiled broadly at reporters when Matsumoto made the "strip club" remark.

Agnifilo also argued there was evidence that Retrophin's board of directors had known of and approved of consulting agreements that were used to pay off investors in Shkreli's hedge funds.

That evidence, the lawyer said, undercuts the prosecution's claim that Shkreli was defrauding the company.

Prosecutors have said the consulting agreements were shams and served as seemingly legitimate vehicles to siphon off Retrophin assets to pay back investors for money that Shkreli told them falsely remained in his fund.

Assistant U.S. Attorney Jacquelyn Kasulis argued to Matsumoto that Retrophin's board was "not provided with full and complete information"' about the nature of the agreements that it was asked to approve. Kasulis also said "the money was already paid" at the time the approval was sought.

Matsumoto wasted little time rejecting Agnifilo's request to dismiss the indictment.

"Respectfully, I'm going to dismiss the motion," the judge said.

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