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Martin Shkreli Was ‘His Own Worst Enemy,’ Juror Says

By STEPHANIE CLIFFORD and COLIN MOYNIHANAUG. 21, 2017
https://www.nytimes.com/2017/08/21/business/dealbook/martin-shkreli-jury.html?_r=0

Martin Shkreli, a juror at his fraud trial said on Monday, was “his own worst enemy.”

On Aug. 4, after a five-week trial and five days of deliberations, the jury in federal court in Brooklyn found Mr. Shkreli guilty on three of eight counts. He was convicted of securities fraud — for lying to hedge-fund investors — and of conspiracy to commit securities fraud, with a stock scheme surrounding Retrophin, a pharmaceutical company he founded. He faces up to 20 years in prison; a sentencing date has not been set.

“All he had to do was to tell everyone, ‘I’m sorry, I lost the money, all I can say is I’m sorry,’ and that would be it,” said the juror, Lois Pounds, who was contacted Monday after Judge Kiyo A. Matsumoto ordered the names of the jurors in the case released to reporters. “But there’s a side of him — I think it’s partly ego — that he wanted to be thought of as this great financial individual.”

Jurors believed that Mr. Shkreli committed fraud in lying to hedge fund investors, Ms. Pounds said, but as they parsed through the required elements for all eight counts he was charged with, they did not find “that he had the intent and purpose to specifically rob and cause a person to lose money and property” in all of the counts.

Annette Pittman, a speech pathologist from Brooklyn, said a few bits of major evidence had helped convince her that Mr. Shkreli had committed securities fraud. For instance, she said, that one of his hedge funds had not hired an auditor was “a problem.”

It was also troublesome that there were discrepancies between bank deposits and financial statements sent to investors, she added.

“You can’t lie about the money,” she said. “If you’re going to send a statement to someone who invested, it should be truthful.”

The jury found him not guilty of two securities fraud conspiracy charges, two wire fraud conspiracy charges with regard to the hedge funds and a charge of defrauding Retrophin by routing money from it to his hedge fund investors, a wire fraud conspiracy count.

Another juror, who asked to remain anonymous because one of the lawyers in the case lives near him on Long Island, said in an email that on the conspiracy counts, the jurors all agreed that the government should have called Marek Biestek. The hedge funds were named MSMB — for Martin Shkreli and Marek Biestek. Without testimony from him and another alleged co-conspirator, the juror said, the jury was missing a piece of the puzzle.

The biggest disagreement, that juror said, was on Count 5 — conspiracy to commit wire fraud with respect to MSMB Healthcare, one of the hedge funds; it took jurors a day and a half to resolve that.

Though there was evidence that Mr. Shkreli had committed wire fraud with regard to Retrophin, the juror said, in the end, after a long debate, they focused on a single word in the judge’s instructions with regard to that count: intent. They decided that Mr. Shkreli had not intended to defraud Retrophin or his investors, and found him not guilty on that count.

The juror said that the jury got along very well, even exchanging phone numbers, and that there was no aggressive arguing in the jury room; everyone respected everyone else’s opinion. However, the juror said, the process was stressful because of the duration of the trial and the length of Judge Matsumoto’s instructions, which took her several hours to read to the jury.

About Mr. Shkreli, Ms. Pounds, a Queens resident who is a retired procurement specialist for the utility Consolidated Edison, said that “most of us agreed that there was a little something off with him.”

She cited testimony from government witnesses, elicited on cross-examination, that Mr. Shkreli slept in his office or spent several days cloistered in a hotel room, telling a Retrophin executive his medication was being adjusted.

However, she said, that was “not enough that he was incompetent.”

“There’s a good side to him, in which he wanted to make everyone whole,” she said, referring to how he tried to pay back investors who’d lost money in his hedge funds — through, the government argued, illegal means.

Ms. Pounds said the jury had not taken an initial vote, though the jurors had discussed it. Instead, she said, they went through the counts one by one. “We took each charge and broke it down based on the judge’s instructions,” she said. “There was a lot of going back and forth, a lot of debate, particularly on the conspiracy charges.”

She said that on finding Mr. Shkreli not guilty on the count of defrauding Retrophin, the jurors had looked at one consulting agreement that the government had argued was fraudulent, and the defense had said Mr. Shkreli thought was legitimate. It was from Lee Yaffe, an acquaintance of Mr. Shkreli’s. Mr. Yaffe’s father had invested in, and lost money in, an early hedge fund of Mr. Shkreli’s.

Eventually, to get his father’s money back, Mr. Yaffe said, he signed a consulting agreement with Retrophin, which specified that he would handle work on cluster-headache research and other services. He knew nothing about them: He was “flying blind when it comes to cluster headaches,” he testified.

On cross-examination, though, Mr. Shkreli’s lawyer Benjamin Brafman showed that Mr. Yaffe had received articles from the firm about cluster headaches, and that Mr. Yaffe had discussed the headache topic using technical terms like “mechanism of action” on calls with Retrophin.

When Mr. Yaffe said the calls were just a couple of minutes, Mr. Brafman asked, “So it’s, ‘Hello, Lee, cluster headaches, mechanism of action, see you later’; is it that type of call?”

Ms. Pounds, the juror, said that “ a number of us felt that the intent was for Yaffe to actually be a consultant — but I don’t think Yaffe intended to be a consultant.”

That count carried the most weight in terms of potential prison time, since the suggested sentences in white-collar cases are based on the amount of actual or intended loss, and this had the most loss associated with it. His lawyers have said that with the not-guilty finding on this count, they may argue no money was lost, as his hedge-fund investors were ultimately paid back.

Government lawyers are expected to focus on the intended loss, and say that it was in the millions.

Ms. Pittman said jurors had considered suggestions by the defense that Mr. Shkreli had not been fully aware of his own actions and their repercussions. But ultimately, she said, they disagreed.

“He knew right from wrong,” she said. “He knew what he was doing.”

Kitty Bennett contributed reporting.

A version of this article appears in print on August 22, 2017, on Page B6 of the New York edition with the headline: Shkreli Was ‘His Own Worst Enemy,’ Juror Says.

https://www.nytimes.com/2017/08/21/business/dealbook/martin-shkreli-jury.html?_r=0