"Pharma bro" fraudster Martin Shkreli's hopes for a light prison sentence were dealt a huge blow Monday as a judge ruled that his crimes caused a loss of $10.4 million.
The ruling by Judge Kiyo Matsumoto means that federal sentencing guidelines will likely call for a prison term of up to a decade or more for Shkreli when she sentences him March 9. She is not bound by those guidelines, however.
Shkreli, 34, and his lawyers have been hoping that he will receive either no time in prison — or perhaps just 16 months or less — for his conviction for securities fraud.
Matsumoto's ruling makes that much less likely. As a rule, the higher the loss amount of a crime, the longer the prison sentence suggested by a calculation of the federal guidelines.
Her ruling relates only to the amount of loss for the purpose of calculating Shkreli's recommended sentence — not in determining how much he should pay the government as part of that sentence.
Also Monday, Matsumoto in her same ruling rejected a bid by Shkreli's lawyers to reverse his criminal conviction.
At trial, there was testimony and evidence that showed Shkreli had repeatedly lied to investors about details of two hedge funds he ran — which ended up going bust without him telling investors — and then used money and cash from a drug company he later founded to pay them back their money, and then some.
Prosecutors had argued that Shkreli caused between $9 million and more than $20 million in losses. Shkreli's lawyers have said he caused no loss.
In her ruling, the judge dismissed arguments by Shkreli's lawyers that there was no actual loss because Shkreli paid hedge fund investors more than back on their money with cash and stock in the drug company he founded, Retrophin.
Matsumoto noted, "By the time Mr. Shkreli began to funnel money from Retrophin to his MSMB Capital investors, many of those investors, as well as the Securities and Exchange Commission, had detected the fraud."