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Trial of Shkreli's lawyer interrupted by 'potentially career-ending allegations' about government official

  • The trial of Martin Shkreli's business lawyer Evan Greebel was interrupted on Wednesday by "potentially career-ending allegations" about a government official.
  • Greebel is accused of helping Shkreli pull off a scam to repay defrauded hedge-fund investors with assets from the drug company Retrophin.
  • The "serious" claims are related to what an investor in Retrophin was told by government officials after the FBI contacted him.
Attorney Evan Greebel exits federal court in New York, Dec. 17, 2015.
John Taggart | Bloomberg | Getty Images
Attorney Evan Greebel exits federal court in New York, Dec. 17, 2015.

Attorneys for Martin Shkreli's business lawyer reportedly have raised "potentially career-ending allegations" about a government official involved in the prosecution of Shkreli and that lawyer.

The claims, which reportedly may involve a prosecutor in the case, led to a temporary halt of the ongoing criminal trial of Shkreli's ex-lawyer Evan Greebel.

The allegations, first reported by the online legal publication Law 360, were raised Wednesday in Brooklyn, New York, federal court, where Greebel is on trial for allegedly helping Shkreli with an alleged scam involving the publicly traded drug company Retrophin.

Shkreli, 34, was convicted last summer during a separate trial in the same court in connection with defrauding a group of hedge fund investors who were then repaid with money and stock from Retrophin, which Shkreli founded.

Shkreli, who is due to be sentenced for three criminal charges next month, is currently being held in a federal jail without bail.

Shkreli had been free on a $2 million release bond after his conviction. But that bond was revoked in September after the trial judge ruled he was a danger because of a bizarre offer he made on Facebook to pay followers $5,000 for grabbing locks of hair from the head of Hillary Clinton.

Law 360 reported that Greebel's trial "came to a screeching halt" Wednesday during testimony by Steven Rosenfeld, an investor in both Retrophin and one of Shkreli's hedge funds.

Rosenfeld, a non-practicing doctor called to the witness stand by Greebel's lawyer, was reportedly being asked about what happened in 2015 when FBI agents visited his home to ask about a consulting agreement he had with Retrophin.

Shkreli and Greebel were accused of using bogus consulting agreements by Retrophin with investors in Shkreli's hedge fund to repay them for their losses — but Rosenfeld claims he did actual work under the agreement.

According to Law 360, Rosenfeld testified he asked the FBI if he could call his attorney. A prosecutor then objected to that line of questioning.

That objection led to a lengthy discussion with prosecutors, defense lawyers and Judge Kiyo Matsumoto out of the earshot of jurors and observers in the courtroom.

Another long sidebar conference followed after Greebel's lawyer Randy Mastro asked Rosenfeld who had attended a subsequent meeting he had with government officials, Law 360 reported.

Matsumoto reportedly sent jurors home for the day early. She then ordered prosecutors and defense lawyers to file sealed legal briefs "on what she described as 'potentially career-ending allegations' made by the defense," according to Law 360.

Matsumoto said the briefs should address the question of whether statements made by federal prosecutors outside a courtroom are admissible as evidence in a case.

Assistant U.S. Attorney David Pitluck, who is one of the prosecutors in Greebel's case, said in court that the allegations raised by the defense are "very serious," according to Law 360.

Greebel's lawyers, in a letter to the judge filed Wednesday, wrote that statements made to Rosenfeld by government officials should be allowed into evidence "to show why Dr. Rosenfeld would have felt motivated to cooperate with the government and to provide context for what he knew in subsequent meetings."

Defense lawyers later Wednesday filed another letter to the judge, which is sealed.

On Thursday morning, prosecutors filed their own sealed letter to Matsumoto.

Shkreli's criminal defense lawyer Benjamin Brafman on Thursday told CNBC in an email that he did not have any information on the controversy, noting that the relevant documents had been sealed.