Shkreli must forfeit $7.36M in assets, including Wu-Tang album and Picasso

The judge didn’t buy Shkreli’s argument that he didn’t profit from the fraud.

Beth Mole – Mar 5, 2018 3:04 pm | 140

Martin Shkreli, former chief executive officer of Turing Pharmaceuticals AG, exits federal court in the Brooklyn borough of New York on Friday, Aug. 4, 2017. Credit: Getty | Bloomberg

The disgraced pharmaceutical executive and hedge fund manager Martin Shkreli must forfeit $7.36 million in assets (PDF) to the federal government following his fraud conviction, a judge ruled Monday. The assets up for forfeiture (PDF) include the single copy of the Wu-Tang album Once Upon A Time in Shaolin that Shkreli reportedly bought for $2 million, as well as a painting by Pablo Picasso.

The forfeiture follows Shkreli’s conviction last October on three of eight counts of securities and wire fraud. The federal government had indicted Shkreli in December of 2015 for running a Ponzi-like scheme, alleging he defrauded investors in two hedge funds he managed and siphoned millions from his pharmaceutical company, Retrophin, to cover losses.

But, despite the high-profile trial, Shkreli is best known for raising the price of a drug for parasitic infections by more than 5,000 percent—from $13.50 a pill to $750 a pill—while he was the CEO of Turing Pharmaceutical. The drug is often prescribed to babies and people with HIV/AIDS.

Following the fraud conviction, the federal government argued that Shkreli should hand over the $7.36 million in assets because the law states that the court can order forfeiture of any property “which constitutes or is derived from proceeds” of securities fraud. But Shkreli and his lawyer argued that he shouldn’t be forced to forfeit the assets—or, at most, give up $504,414—because he didn’t make any profit on the scheme. Also, money went back into the stock market and defrauded investors made their money back in the end.

US District Judge Kiyo Matsumoto rejected the legal argument in an order Monday. She noted that Shkreli provided “only bare citations… and minimal analysis” as support for his case.

The forfeiture includes: $5 million in cash that is currently held in an E*Trade brokerage; all interests in Vyera Pharmaceuticals (formerly known as Turing Pharmaceuticals); the album Once Upon A Time in Shaolin by the Wu Tang Clan; the album Tha Carter V by Lil Wayne; and his Picasso painting.

Shkreli is still awaiting sentencing for his conviction, which is scheduled for March 9. He faces up to 20 years in prison. In a previous ruling, Judge Matsumoto ruled that Shkreli’s crimes resulted in nearly $10.5 million in losses, which could mean a sentence on the harsher side. Shkreli and his lawyer have argued that a 12- to 18-month sentence is appropriate.

Shkreli, who was initially out on a $5 million bail after his indictment, is currently being held in jail following online antics goading followers to pluck a strand of Hillary Clinton’s hair. Though Shkreli painted it as an “awkward attempt at humor or satire,” Judge Matsumoto called the move a “solicitation of assault” and ordered him behind bars to await his sentencing.