Politics

U.S. sells one-of-a-kind Wu-Tang Clan album forfeited by 'pharma bro' Martin Shkreli

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Key Points
  • A one-of-a-kind album by the hip-hop group Wu-Tang Clan — which was forfeited by "pharma bro" Martin Shkreli as part of his criminal conviction — has been sold by the U.S. government.
  • The buyer and the sale price of the album, "Once Upon a Time in Shaolin," were not revealed by prosecutors because of a confidentiality provision in the contract.
  • Shkreli is serving a seven-year prison sentence for securities fraud. He had been ordered to surrender the unique album as part of a forfeiture judgment of about $7.4 million.
Martin Shkreli and Rapper Ghostface Killah of the Wu-Tang Clan.
Joe Marino | Chelsea Lauren | Getty Images

A one-of-a-kind album by the hip-hop group Wu-Tang Clan that was once owned by notorious "pharma bro" Martin Shkreli finally was sold Tuesday by the U.S. government, more than three years after Shkreli forfeited the album as part of his conviction for securities fraud.

The buyer and the sale price of the album, "Once Upon a Time in Shaolin," were not revealed Tuesday by prosecutors, who cited a confidentiality provision in the contract.

But the Brooklyn, New York, U.S. attorney's office said that the proceeds of the album's sale were enough to satisfy what remained of a nearly $7.4 million forfeiture judgment against Shkreli.

And an April filing by prosecutors in a civil lawsuit in Manhattan federal court against Shkreli by a creditor indicated that Shkreli owed almost $2.4 million on the forfeiture.

Peter Scoolidge, a New York lawyer who says that he represented the unknown buyer, in a statement issued by a spokesman, said, "This was the most interesting deal I have ever worked on."

The 38-year-old Shkreli, who is serving a seven-year prison sentence for his August 2017 criminal conviction in Brooklyn federal court, had been ordered to surrender the unique album and other assets to satisfy the forfeiture.

Those assets had included the Lil Wayne album "Tha Carter V," an engraving on paper by Pablo Picasso and $5 million held in an E-Trade brokerage account.

Shkreli's trial lawyer Benjamin Brafman in an email to CNBC confirmed that the balance of Shkreli's forfeiture was satisfied by the sale.

Brafman also wrote, "I can also confirm that the sale price was substantially more than what Mr. Shkreli paid for it."

Brafman declined to answer whether Shkreli would receive any of the proceeds of the sale after the amount taken to satisfy the forfeiture.

Shkreli bought the Wu-Tang Clan album at auction for a reported $2 million in 2015 — giving him the only copy of the record, and allowing the New York City resident total control of whether anyone else could listen to the music on it.

The publicity stunt purchase of the album came in the same year that he gained widespread infamy for his pharmaceutical company hiking the price of anti-parasite medication Daraprim, which is used to treat HIV patients and newborns, by more than 5,000%.

Two years later, in the weeks after his trial ended, Shkreli had tried to sell "Once Upon a Time in Shaolin" in an online auction.

Martin Shkreli holds up a rare Wu-Tang Clan album for sale.
Source: Ebay

A court filing in Manhattan federal court on Tuesday by Brooklyn prosecutors said the government retains custody of the Picasso engraving, as well as of Shkreli's "preference shares A" in the Swiss-based company Phoenixus AG, the drug company that he founded under another name, Turing Pharmaceuticals, which holds the rights to Daraprim. The Lil Wayne album was never seized, prosecutors disclosed in a footnote.

That filing said that given the satisfaction of Shkreli's forfeiture order, "there is no further need for the government to see priority in the proceeds from any liquidation of Shkreli's interest in Phoenixus."

Prosecutors said they are willing to turn over Shkreli's shares in Phoenixus to a court-appointed receiver for liquidation, along with the Picasso engraving.

The United States sold the sole copy of the Wu-Tang Clan album "Once Upon a Time in Shaolin" (the "Album") previously owned by Martin Shkreli.
Source: D.O.J.

The acting U.S. attorney for Brooklyn, Jacquelyn Kasulis, led the team of prosecutors at Shkreli's trial in 2017.

In a statement Tuesday, Kasulis said, "Through the diligent and persistent efforts of this Office and its law enforcement partners, Shkreli has been held accountable and paid the price for lying and stealing from investors to enrich himself."

"With today's sale of this one-of-a-kind album, his payment of the forfeiture is now complete," Kasulis said.

In 2017, New York state tax officials seized from Shkreli and auctioned off a rare Enigma encryption machine used by Nazi Germany during World War II, an unpublished manuscript signed by the mathematician Isaac Newton, a letter by the naturalist Charles Darwin, and a letter by the only legitimate child of the poet Lord Byron.

The proceeds from their sale, which totaled $134,500, satisfied a mere fraction of the more than $450,000 in state taxes Shkreli owed at the time.

Later Tuesday, Kasulis' office announced that a Brooklyn federal court judge had ordered the forfeiture to the United States of a 3,500-year-old clay tablet depicting a portion of the Sumerian poem "The Epic of Gilgamesh," which had been purchased by the Hobby Lobby arts and crafts chain for $1.6 million from a London auction house in 2014. Prosecutors had said in a lawsuit that the tablet rightly belonged to the government of Iraq.

Shkreli's trial had nothing to do with the price hike of Daraprim, which occurred when he was running the company known as Turing Pharmaceuticals.

Instead, the criminal case revolved around allegations that he had swindled investors at two hedge funds that he earlier ran, and used their money to start his first pharmaceutical company, Retrophin.

Shkreli was later ousted from publicly traded Retrophin, and was convicted of several criminal counts at trial. He currently is in a low-security prison in Allenwood, Pennsylvania, and is due to be released on Oct. 11, 2022.

Retrophin last year changed its name to Travere Therapeutics.

Earlier this month, Shkreli, while locked up in prison, beat back an effort by investors to take control of Phoenixus, the parent company of Vyera, formerly known as Turing Pharmaceuticals.

The investors trying to seize control of Phoenixus from purported allies of Shkreli include Kevin Mulleady, a former close friend of Shkreli.

Mulleady, who was identified by the Federal Trade Commission in a 2020 lawsuit as having been an unindicted co-conspirator of Shrekli in the criminal case, is a former chairman of the Phoenixus board and former CEO of Vyera.

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