For Martin Shkreli, Conviction Is Just The Prologue

What Happened?

A jury empaneled in the U.S. District Court for the Eastern District of New York convicted pharmaceutical executive Martin Shkreli on two counts of securities fraud and one count of conspiracy to commit securities fraud, but acquitted him on five other counts, including conspiracy to commit wire fraud charges that would arguably have increased his exposure under the advisory U.S. Sentencing Guidelines.  

The Rundown

Both the government and Shkreli claimed victory after the verdict, but the real winner will be determined at sentencing. Shkreli was convicted of counts related to making material misstatements to investors about his hedge fund and conspiring to control the stock price of his drug company, Retrophin, Inc. But he was acquitted of wire fraud counts based on allegations that he looted assets from Retrophin to pay off hedge fund victims. Shkreli will undoubtedly argue that the government cannot prove a significant, or indeed any, pecuniary loss tied to his offenses of conviction. The government, in turn, is likely to contend that the Court consider any loss to Retrophin as relevant conduct. Because loss amount largely drives the sentencing range for financial crimes under the U.S. Sentencing Guidelines, the outcome of this dispute will be critical to Shkreli’s sentence. If the Court finds that there was no or little loss, Shkreli could plausibly argue for sanctions short of imprisonment.

Importantly, though, Shkreli’s guidelines sentencing range will only be advisory – the Court may vary or depart from the range upward or downward. Under 18 U.S.C. § 3553(a), the Court must fashion an appropriate punishment based on its consideration of a number of factors, including Shkreli’s history and characteristics; the nature of the offense; the need for the sentence to provide just punishment, promote respect for the law, and to provide adequate deterrence (both to Shkreli and other would-be offenders) to criminal conduct. Shkreli has made numerous statements both during and after the trial – for example, referring to the prosecutors as “junior varsity” and the prosecution as a “witch hunt” – which may cause the Court to punish him more harshly than it otherwise would. On the other hand, Shkreli will have the opportunity to produce mitigating evidence that counsels in favor of a more lenient sentence.     

For the Record

“This was a witch hunt of epic proportions, and maybe they found one or two broomsticks, but at the end of the day, we’ve been acquitted of the most important charges in this case.”  — Martin Shkreli

The Take-Home

The drama of the Shkreli case did not end with the jury verdict. Indeed, the real intrigue surrounds his sentencing.

What Happens Next?

Shkreli will be sentenced at a date to be determined by the Court.