U.S. News

'Pharma Bro' Martin Shkreli to stay behind bars, loses appeal of conviction

NEW YORK (Reuters) - A federal appeals court upheld the conviction and seven-year prison term of Martin Shkreli, the pharmaceutical executive known as “Pharma Bro,” for defrauding investors in his hedge funds and conspiring to manipulate the stock of Retrophin Inc, a biotechnology company he ran.

FILE PHOTO: Former drug company executive Martin Shkreli exits U.S. District Court after being convicted of securities fraud in the Brooklyn borough of New York City, U.S., August 4, 2017. REUTERS/Carlo Allegri

In a 3-0 decision, the 2nd U.S. Circuit Court of Appeals in Manhattan on Thursday rejected Shkreli’s argument that his trial judge gave incorrect and confusing instruction about securities fraud to the Brooklyn jury that convicted him.

It also rejected his claim that the $7.36 million he was ordered to forfeit was excessive because his hedge fund investors made money, and the amount did not account for some trading losses he incurred.

Shkreli, 36, had been appealing his August 2017 conviction on two securities fraud counts and one conspiracy count.

The decision closes one of the last legal avenues for him to regain his freedom and quickly reenter the public eye.

“We’re obviously disappointed,” Mark Baker, a lawyer who argued Shkreli’s appeal, said in an interview. “We hoped we would achieve a better result.”

Baker said it was unlikely he would ask for a rehearing.

“I don’t see a basis for a good faith reconsideration,” he said. “We will consider whatever further options are available.”

John Marzulli, a spokesman for U.S. Attorney Richard Donoghue in Brooklyn, declined to comment.

Shkreli became notorious in 2015 for raising the price of the anti-parasitic drug Daraprim by more than 5,000% while serving as chief executive of Turing Pharmaceuticals, now known as Phoenixus AG.

He was also known for frequent and sometimes controversial use of social media, including when he offered fans a $5,000 bounty for a hair from former U.S. presidential candidate Hillary Clinton.

Shkreli had founded Retrophin in 2011, only to be ousted three years later.

Retrophin sued him in 2015 for $65 million, claiming Shkreli repeatedly breached his duty of loyalty. Shkreli countered in May with a $30 million lawsuit against three former colleagues over his ouster. Those cases settled last month.

Shkreli is serving his sentence at a low-security prison in Allenwood, Pennsylvania, and will be eligible for release in October 2023, when he will be 40.

He had been imprisoned in Fort Dix, New Jersey, but was moved after The Wall Street Journal said in March he was using a contraband smartphone to secretly run Phoenixus from prison.

The case is U.S. v. Shkreli, 2nd U.S. Circuit Court of Appeals, No. 18-819.

Reporting by Jonathan Stempel in New York; Editing by Bernadette Baum