Biotech and Pharma

Fraud conviction of 'pharma bro' Martin Shkreli upheld by federal appeals court

Key Points
  • A federal appeals court has upheld the criminal conviction of notorious 'pharma bro' Martin Shkreli.
  • The three-judge panel  in the U.S. Court of Appeals for the Second Circut also upheld the more than $6.4 million in foreiture that a judge imposed on Shkreli last year when she sentenced him for his conviction on two counts of securities fraud and one count of conspiracy to commit securities fraud.
  • He was convicted after a 2017 trial in Brooklyn federal court where prosecutors introduced evidence that he had repeatedly lied  to investors about the performance of two hedge funds he ran, and then used money invested in those funds to help start the pharmaceuticals company Retrophin.
Martin Shkreli, former chief executive officer of Turing Pharmaceuticals AG, arrives at federal court in the Brooklyn borough of New York, on Monday, July 31, 2017.
Peter Foley | Bloomberg | Getty Images

A federal appeals court on Thursday upheld the criminal conviction of notorious "pharma bro" Martin Shkreli.

The three-judge panel in the U.S. Court of Appeals for the Second Circut also upheld the more than $6.4 million in foreiture that a judge imposed on Shkreli last year when she sentenced him for his conviction on two counts of securities fraud and one count of conspiracy to commit securities fraud.

Shkreli, 36, is serving a seven-year sentence in a federal prison in Pennsylvania.

In its ruling, the appeals panel disagreed with Shkreli's claim that his trial judge's instructions to the jury at his trial were incorrect and confusing to jurors.

"The instruction given here correctly stated the law," the appeals panel said in its decision. " As such, we disagree with Shkreli that exclusion of additional language describing an element not required for the charged crime constituted a prejudicial error."

The panel likewise dismissed Shkreli's argument that the forfeiture amount was inappropriate because not all of the investors in his hedge funds testified, that they amount should be reduced to account for losses he incurred by making trades for the funds, and that the large returns seen by investors should reduce the forefeiture to zero.

Shkreli's appeals lawyer, Mark Baker, told CNBC, "We're obviously disappointed, and we will consider and weigh whatever remedies are available."

Baker said he did not think he would ask the entire Second Circuit to review the panel's decision, because "I don't think we have a good faith basis" for such a request.

But he will consider whether to ask the U.S. Supreme Court to hear an appeal of the ruling, he said.

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Pharma bro Martin Shkreli is denied minimum security camp and sent to federal prison in New Jersey

Shkreli was convicted after a 2017 trial in Brooklyn federal court where prosecutors introduced evidence that he had repeatedly lied to investors about the financial performance of two hedge funds he ran, and then used money invested in those funds to help start the pharmaceuticals company Retrophin.

Shkreli was later ousted from Retrophin.

He gained widespread notoriety in 2015 when another drug company he founded, Turing Pharmaceuticals, hiked the price of an anti-parasite medication used to treat pregnant women, newborns, and patients with HIV by more than 5,500%.

Shkreli revelled in trolling people on social media, and in insolently responding to questions from members of Congress outraged by his price increase.

On the heels of his trial, Judge Kiyo Matsumoto revoked his $5 million release bond after she found he was a danger to the public for his offer of a cash bounty for strands of hair from Hillary Clinton's head that his Facebook followers were able to grab.