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“Pharma Bro” Martin Shkreli Gets Seven Years for Securities Fraud

Xconomy New York — 

Outspoken former pharmaceutical executive Martin Shkreli will serve seven years in prison, a sentence handed down Friday following securities fraud convictions related to two hedge funds and a drug company that he once ran.

The judge in the case said Shkreli will receive credit for time served since September, when his bail was revoked, Bloomberg reported. The average prison sentence for those convicted of securities and investment fraud in fiscal 2016, the most recent year available, was four years, according to the U.S. Sentencing Commission.

Shkreli is widely known as the former CEO of Turing Pharmaceuticals, the company that, in 2015, hiked the price of pyrimethamine (Daraprim) from $13.50 to $750 a pill. The price increase for the generic drug, which is used by HIV patients to ward off parasitic infections, won derision from patients, physicians, and many executives at other pharmaceutical companies. But Shkreli staunchly defended the price in his statements to the media and on his once vibrant Twitter account, cultivating a “pharma bro” persona that was brash and outspoken.

Friday’s sentencing is related to Shkreli’s behavior from 2009 to 2014—prior to his role at Turing. The government charged Shkreli with conspiracy for bilking investors in his hedge funds, MSMB Capital Management and MSMB Healthcare, as well as his former biotech company Retrophin. Last August, a jury found Shkreli guilty on three of eight counts of fraud. Two counts involve securities fraud and the third count was conspiracy to commit securities fraud.

Federal prosecutors sought a sentence of at least 15 years. But Shkreli’s attorneys had asked the judge for 12 to 15 months, pointing to his efforts to help patients by developing drugs that treat rare diseases, according to CNBC. Bloomberg reported that Shkreli wept as he addressed U.S. District Judge Kiyo Matsumoto during the sentencing hearing, and he asked for forgiveness from the investors he defrauded.

“I am terribly sorry I lost your trust,” he said, according to Bloomberg. “You deserved far better.”

Government attorneys said their sentencing recommendation was based on the conviction, the financial loss, and the repetition of the crimes. Prosecutor Jacquelyn Kasulis told Matsumoto that Shkreli’s behavior was “four different fraud schemes over five years,” according to Bloomberg.

In addition to serving time, Shkreli also owes money. Last week, Matsumoto ordered that Shkreli pay $7.36 million—an amount equal to what he made from his fraud. Shkreli can pay that amount with a check. But if he doesn’t have enough money, the court order says he can forfeit some of his assets, including $5 million in cash in an E*Trade brokerage account, albums by the Wu-Tang Clan and Lil Wayne, and a Picasso painting.

Photo by Flickr user Travis Wise via a Creative Commons 2.0 license.