Martin Shkreli Is Found Guilty of Fraud

Martin Shkreli, 34, has confidently courted controversy in recent years, bulldozing his way into Wall Street and the drug industry, raising the price of a lifesaving drug by 5,000 percent overnight, boasting that he would outwit prosecutors in his federal fraud case, and live-streaming and tweeting throughout his five-week trial.

But on Friday, after five days of deliberations, jurors convicted him on three counts of fraud in federal court, and he now faces up to 20 years in prison on each of the first two counts, and up to five years on the final count.

Mr. Shkreli looked shaken as the judge read the verdict. But not long after, he appeared outside of court and returned to form, saying that he was “delighted, in many ways,” with the verdict. “This was a witch hunt of epic proportions, and maybe they found one or two broomsticks,” he said.

Later in the afternoon, he was live-streaming once more, sipping beer and joking about prison life from his Manhattan apartment.

At the trial in the Federal District Court in Brooklyn, Mr. Shkreli was accused of securities and wire fraud related to two hedge funds he ran, MSMB Capital and MSMB Healthcare. Prosecutors charged he illegally used a pharmaceutical company he founded, Retrophin, to repay defrauded MSMB investors. And they said he secretly controlled a huge number of Retrophin shares.

He never seemed to take his case seriously, meeting with federal authorities without a lawyer, making faces during testimony, calling the prosecution “junior varsity” and reading a book during final statements.

Jurors convicted Mr. Shkreli of three of the eight counts: securities fraud in connection with his hedge fund MSMB Capital; securities fraud in connection with MSMB Healthcare; and conspiracy to commit securities fraud related to the Retrophin stock scheme, in which he tried to quietly control a huge portion of Retrophin stock.

He was acquitted of counts one and two, conspiracy to commit securities fraud and conspiracy to commit wire fraud regarding MSMB Capital; counts four and five, the same charges with MSMB Healthcare; and count seven, conspiracy to commit wire fraud with regard to defrauding Retrophin by using funds from it to pay MSMB investors.

Count seven carried the most weight for sentencing, charging Mr. Shkreli with defrauding Retrophin by creating sham consulting agreements and unauthorized settlement agreements to pay back MSMB investors. It was associated with the biggest loss, which judges take into account when deciding sentences in fraud cases, said Benjamin Brafman, Mr. Shkreli’s lawyer.

As Judge Kiyo A. Matsumoto read the verdict, Mr. Shkreli, wearing a black polo shirt and khakis, sat with his arms crossed. He showed outward relief when Judge Matsumoto said he was not guilty on count seven, mouthing “Yes” and patting Mr. Brafman on the back. When she said he was guilty of count eight, the Retrophin securities-fraud conspiracy, he hung his head.

After the verdict was read, he gathered in a circle with his lawyers, looking a little shaken, then pulled on a hoodie. By the time he got outside court, where he gave his statements, he was smiling and speaking smoothly.

Bridget M. Rohde, the acting United States attorney for the Eastern District of New York, the federal prosecutors’ office in Brooklyn, said she was gratified by the verdict. “Our work is not done: Mr. Shkreli remains to be sentenced, and there’s a co-defendant in the case,” she said, referring to Evan Greebel, Mr. Shkreli’s onetime lawyer, who is scheduled to be tried in the fall.

A sentencing date was not set; Judge Matsumoto said she would wait for submissions from both sides on how much money was lost. She set a fall date for those submissions. Mr. Brafman said the defense might ask for no prison time.