Pharma fraudster Martin Shkreli denied prison release after he said he could help find coronavirus treatment

Key Points
  • A judge denied Martin Shkreli's request to be released early from prison to both avoid catching the coroavirus and to work on a treatment for Covid-19.
  • Former pharmaceutical executive Shkreli has about 40 months left on a seven-year sentence for fraud.
  • He gained infamy in 2015 for raising the price of the drug Daraprim by more than 5,000%.
A file photo of former pharmaceutical executive Martin Shkreli.
Getty Images

It's a no-go for the "Pharma Bro."

A federal judge has flatly denied pharmaceutical fraudster Martin Shkreli's request to be released early from prison despite his arguments that he both is at risk of catching the coronavirus and that he could help develop a treatment for Covid-19.

Shkreli "has not demonstrated 'extraordinary and compelling' factors that would mandate his release," Judge Kiyo Matsumoto wrote in a nine-page ruling in U.S. District Court in Brooklyn, New York.

The ruling means that Shkreli will likely serve out the remaining 40 months of a seven-year sentence for securities fraud in a prison.

"Not surprised, but very disappointed," Shkreli's lawyer, Benjamin Brafman, wrote in an email to CNBC about the ruling.

Mastumoto's written ruling denying Shkreli's request for "compassionate release" noted that the 37-year-old inmate is healthy, is not in a high-risk category for the coronavirus and is being kept in a prison with no known cases of Covid-19.

Matsumoto also wrote that she "did not find that releasing Mr. Shkreli will protect the public, even though Mr. Shkreli seeks to leverage his experience with pharmaceuticals to help develop a cure for COVID-19 that he would purportedly provide at no cost."

She added, "Mr. Shkreli's self described altruistic intentions do not provide a legal basis to grant his motion."

She also noted that federal probation officials had argued that Shkreli's claim that "he can develop a cure for COVID-19 that has 'so far eluded the best medical and scientific minds in the world working around the clock' is the type of 'delusional self-aggrandizing behavior' that precipitated the offenses for which he was properly convicted."

Shkreli last month asked Matsumoto to grant him compassionate release to allow him to serve the remaining time of his sentence in home confinement with an unidentified fiance in Manhattan.

Matsuomoto presided over Shkreli's 2017 trial, where he was convicted of defrauding investors in hedge funds he ran, and of conspiring to fraudulently manipulate stock shares of Retrophin, the pharma company that he created after his hedge funds collapsed.

Shkreli's defense lawyers warned in a court filing that he has a "susceptibility to infection [from the coronavirus] due to allergies and asthma."

They also said that while in prison he "has been conducting significant research" into finding a treatment for Covid-19, the disease caused by the coronavirus.

The judge wrote that Shkreli has no documented current diagnosis or treatment for asthma, and that he himself "failed to mention asthma in his March 30, 2020 petition" to the federal Bureau of Prisons seeking early release.

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Matsumoto also noted that prosecutors, in opposing Shkreli's release, suggested that "given the defendant's conviction for perpetrating falsehoods, defendant's late claim that he suffers from asthma is yet another fabrication."

While the judge said that she was making no such determination of that in her ruling, she found "that because the defendant is considerably younger than the [federal Centers for Disease Control] guideline for 'higher risk' individuals, and does not currently suffer from an existing medical condition that would place him into a high risk category, defendant has not demonstrated that he is at a higher risk for the adverse outcomes of COVID-19 in a facility with no reported cases among inmates."

Mastumoto added, "the sophisticated nature of Mr. Shkreli's offenses and the fulfillment of the goals of sentencing all counsel against granting the motion for a reduced sentence."

Shkreli gained national infamy in 2015 when his second drug firm, then known as Turing Pharmaceuticals, raised by the price of an anti-parasite medication by more than 5,000%.

The drug, Daraprim, is often used to treat pregnant women, infants and people with HIV.