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Martin Shkreli is found guilty of securities fraud (washingtonpost.com)
752 points by fmihaila on Aug 4, 2017 | hide | past | favorite | 587 comments

There seems to be a misconception regarding what Shkreli was found guilty of. The legal case here has very little to do with the pharmaceutical pricing controversy - it is a separate case based on a separate hedge fund that he managed. The gist of it is that he took people's money to start a hedge fund, lied to investors that the fund was doing fine when the hedge fund went belly up, but ended up returning everyone's money plus a sizable return when his separate pharmaceutical venture went well.

When fraud happens those affected don't usually get their money back much less a return on that money. However, it's pretty clear what he did is also fraud (false documents, not returning people's money when they asked for it) even if the fact that investors came out better makes the plaintiffs less sympathetic.

>When fraud happens those affected don't usually get their money back much less a return on that money.

That will be a footnote at sentencing. Federal sentencing is generally based on intended or actual loss, whichever is greater. Further, the judge is allowed to take into account intended losses from his entire course of conduct, not just the intended losses from the specific counts on which he was found guilty.

In other words, the fact that his investors lost no actual money will have little bearing on his sentence. I don't know what the actual amount he took in was, but he will be sentenced for a multimillion dollar fraud scheme, and because he went to trial and lost, he'll get nowhere near the minimum. The government likes to punish people for making them expend the time and effort of a trial (in 2012, 97% of federal cases ended with a guilty plea instead of a trial [1]). He's probably looking at 5 years at best.

[1] https://www.wsj.com/articles/SB10000872396390443589304577637...

I disagree. I think it will be a major factor at sentencing. First the fact that he did give them their money (with a significant return on it) back to the people well before the government got involved (meaning it wasn't a PR show) to me means there was never any intent for them to actually lose money. I think the judge will see it the same way. Because if that weren't true, he would never have repatriated the money back to pay them out. He would have just said "oops, I lost it" and continued about his regular business. As much as I dislike the guy, I do believe he didn't want to rip the people off, he wanted to try to salvage what he could to make himself look good get them their money. He just chose a deceptive, illegal manner in which to do it.

Also, harm/damage is a big consideration in sentencing. He broke the law, yes. But usually a violation of the law in this regard results in substantial losses. Because it did not here, the only damage is his violation of his contractual obligation to provide money back to those who said they wanted to cash out. By holding the money, he deprived them of their rightful property as per the contract they signed when they invested with him. And considering they would have a real hard time beating his returns, proving any sort of tort injury is essentially impossible. This leaves only the statutory violation, meaning he amazingly didn't necessarily harm anyone or their property but rather just broke the law. Given the lack of injury to the victims of his crime, I think he's likely to see a very light sentence.

Let me start by saying that what you are saying probably should be the way it plays out in this case. Everyone seems to have made money. I was just stating how it actually plays out in the vast majority of federal cases, and will likely play out here.

In this case, because of the amount involved, the guidelines will call for a substantial prison sentence (well over 5 years). There is actually a loss table (again, we're talking about the "intended loss") that determines a certain number of points for the loss [1] (plus 7 points for the "base offense level"), and that number of points is then used with the sentencing table [2] to determine the sentence. The judge is of course free to depart up or down from the guideline sentence, but the sentencing range determined by those tables will be the starting point. The odds that he will receive no prison time at all after having gone to trial and lost are effectively zero. The judge will likely cut him some kind of break because nobody actually lost anything - his lawyers will argue that he showed remorse after the fact by eventually making his victims whole - but that will have a minor effect at best. My best guess, having watched many of these things play out, is 4-6 years.

[1] https://www.ussc.gov/guidelines/2016-guidelines-manual/2016-...

[2] https://www.ussc.gov/guidelines/2016-guidelines-manual/2016-...

I should point out too that his being able to pay them back with profit really had nothing to do with his original taking of money. It is tantamount to pure luck that he was able to, entirely separately from the fraud, recoup their losses. Had it not been for that separate channel of money available to him, he wouldn't have had the opportunity to undo the damage done by his harm. And THAT is why this is a punishable crime. If you stab someone and then treat the wound and it heals entirely - even if you find, say, a tumor while you're treating the wound and end up unintentionally saving the person's life, you have still committed the crime of assault. It was only by coincidence that you helped the person out after the crime was committed.

Yes, exactly. Look at Madoff. Early on, it's entirely possible that he could have gotten lucky trading and made the money back. That still doesn't change the fact that he committed fraud. If we only punish the people who lose money, we create a huge incentive for more fraud, because it encourages yet more "double or nothing" behavior on the part of people who screw up.

I believe it is the SEC suing him for fraud, not investors trying to recoup losses. If you commit fraud in the financial industry, whether with or without harm, the regulator will come after you.

SEC can only file civil actions. This is a criminal case, which can only be brought by the DOJ.

Either way. Not investors suing him.

Interesting point. Never realized the government has a monopoly on bringing criminal charges.

EDIT: OK, nevermind, I guess.

>Perhaps that makes me a bad person.

Not bad, merely ignorant. You're celebrating the incarceration of someone you presumably know very little about, all while searching for "true" victims ("perhaps the public?") to fuel your indignation.

No, I think you actually mean bad. (That's not to say I don't understand your sentinment towards me, but really... I haven't hiked prices on life-saving medicines by upwards of 1000%, etc., so at least I win on moral relatisivm points?)

This man has harmed quite a few people... or their insurance companies... which of course means harming of their customers, i.e. "us" (who can even afford insurance).

I know enough about Shkreli to consider him an awful, awful person. Do I need to know how much he loves his children, or something equally conceited and pointless?

No, no I don't.

EDIT: Oh, wait, you're one of those extremist libertarian types, aren't you? (At least judging by your most recent 5 comments).

EDIT: Look, if he hadn't been convicted of securities fraud, I would still be defending his rights as a... defendant, but now that he has been convicted, I don't feel sorry for him. (For ultimately unrelated reasons, as it turns out. I'm guessing I'm a bad person for that.)

> I know enough about Shkreli to consider him an awful, awful person.

That isn't what this trial is about. Just because you don't like someone because of one thing, doesn't mean they should be getting a harsh sentence for a separate crime (which apparently had no victims).

Perhaps instead of vilifying characters who break the not at all free market pharmaceutical industry, and name-calling people who espouse ideologies that conflict with your pre-existing beliefs, you should instead consider why a single guy was able to stir up so much trouble in your heavily regulated medical industry. Was it because there wasn't enough government to protect people? Or was it more likely due to an extremely high barrier to entry to the pharmaceutical industry imposed by the FDA? (And in other cases, excessive IP protections play a significant role).

I'll leave it as an exercise.

> Look, if he hadn't been convicted of securities fraud, I would still be defending his rights as a... defendant, but now that he has been convicted, I don't feel sorry for him.

Unfair sentencing is just as much judicial malfeasance as is prosecutorial misconduct, unfair court trials or allegations. As citizens of America (which I assume, but do not know you to be) we should all champion fairness at ever level of the judicial process at all times, lest we ever find ourselves or our friends in the crosshairs of a court that we've allowed to give punitive sentencing to.

There are undoubtedly very good debates to be had on what might be considered a fair sentence for a crime of this nature, but if you're damning him for crimes completely disconnected from this case, then by definition you are championing an unfair sentence. That's the sort of thing that has allowed our judicial system to get away with so much unfair treatment in the past, and for all our sakes, we should root against it at every level.

> Oh, wait, you're one of those extremist libertarian types, aren't you?

This counts as personal attack and we ban people for that. In addition, it's not legit to use HN for ideological battle. (Irrespective of which flavors you're for or against.) So would you please not post like this again?

I feel great. Shrekeli's a terrible person and I'm comfortable with him being held to account for his crimes.

Glee at the suffering of others hardly marks a man as more evolved.

From where I sit, I do not see much difference between the man this article is about, and those enjoying schadenfreude at his expense. All are trapped in the same place.

Perhaps society doing a societal good. A shot across the bow when organs of state have failed them.

Like Al Capone going to jail for tax fraud.

Didn't he commit tax fraud, though? There was no stretch of the law was there?

There wasn't but he was hit hard for tax fraud really to punish him for his other crimes.

Very interesting. I certainly hope he gets more time than I am expecting. Personally, my gut is saying 1-2 years. I'd be happy if he gets 4-6 like you expect.

Definitely going to be interesting to hear the judges words during sentencing. I was listening to the Michelle Carter sentencing yesterday, as I was following that relatively closely. Now I'm waiting to see what happens here, but this is much more cut and dry than that case. I'm only interested because it's Shkreli.

Why do you favor harsher sentencing for him?

As a hedge fund manager, losing money is not illegal. The only illegal thing he did was lie about it so that he could get them their money back.

It would've been perfectly legal for him to lose all his clients money in the hedge fund, make them aware of this fact, and reap the profits from his pharma business without dishing it out to his hedge fund clients.

As far as I can tell, Shkreli turned a technically legal "I fucked up and lost your money scenario" into a technically illegal I fucked up, lost your money, but got it back to you scenario.

If I was part of Shkreli's hedge fund, I would much prefer to be involved in the latter scenario than the former.

Sure, I could sue Shkreli to recoup some of my hedge fund losses, but this way they didn't need to.

> The only illegal thing he did was lie about it so that he could get them their money back.

You're missing the point; giving his investors 'their' money back was the thing he did that was unethical and illegal. If you're a fund manager and the value of your portfolio goes down after making bad bets, you can't just inject your own money into the fund to make it look like you have a positive track record so that you can solicit more outside funds.

You're grasping for ways to punish this guy because you don't like him. The fact is, he made a mistake and wanted to pay back the people he made a mistake with.

I'd say it's exactly the opposite. The guy blatantly broke the law, but you seem to he very attached to him because you see him as some kind of noble do-gooder.

At the heart of it Shkreli was robbing Peter to pay Paul.

He took some of Retrophin investors profits and used it to pay back his investors in MSMB. Those profits should have gone to Retrophin investors.

From the perspective of the hedge fund, this is a pretty bad spot to be in. Retrophin investors will be looking to be made whole for the money Shkreli gave to MSMB investors.

I would imagine that this is how Ponzi schemes start.

If you lie about the nature of an investment your fund is doing it is fraud, even if the investment you have secretly been doing turns out to be successful.

I realize that it is fraud, but it's "lesser of two evils" fraud, which is why I personally favor lighter sentencing.

It'd be interesting to hear why you'd like 4-6 years. I'm not judging your preference or response, really just curious.

Seems like a sorta horrible thing to say imo, 6 years is a long time to spend in prison.

I'm willing to say less than 1 year, we'll see who's right ;)

He just said in a podcast with h3h3 that it would something like 6 months.

Most ponzi schemes and unauthorised trading start with someone trying to make up for a loss they made and hoping they will fix things and everyone will be made up. That doesn't make it less serious.

It may look surprising given the hatred of bankers here, but it's a profession based on honesty. A guy got banned from the city in London for regularly frauding on his train tickets.

Yes, this is why - regardless of the outcome - he needed to be charged. People shouldn't be able to think they can get away with a thought process that equates to "I can defraud people and if my plan doesn't work out I'll find some other way to make it right." Fraud is fraud, and if you make it "right" via some other channel you haven't really made it right. You've gotten lucky and made your fraud look better.

He didn't get convicted of the ponzi scheme charge though. So the way he paid back investors is considered legit.

> As much as I dislike the guy, I do believe he didn't want to rip the people off, he wanted to try to salvage what he could to make himself look good get them their money.

I think his behavior in both this case and in his "pharmaceutical" endeavor clearly demonstrate his willingness to rip people off.

If you don't mine me asking, are you actually a lawyer or are you just speculating?

Definitely not a lawyer. Total speculation on my part.

I am just trying to come to some sort of logical conclusion about how the judge might approach sentencing, using my limiting knowledge of law.

I'm pretty sure the "no harm no foul" defense doesn't hold water in a fraud case. A Ponzi scheme is illegal the entire time (because it's fraudulent) even though the early investors receive returns.

I'm pretty sure it does. A ponzi scheme absolutely does harm people through fraud, namely everyone left holding the potato. Sure, it doesn't harm everyone involved, but many people are harmed because of fraud.

In Shkreli's case, he didn't actually harm anyone through fraud, because although he committed fraud, he got them their money back through entirely legal, non-fraudulent means.

Getting money back is just one point in the probabilistic set of possible outcomes. Investment is all about risk, therefore you really cannot ignore that part.

Completely over the top illustrative example: you give me money for ten years to invest in real estate, because your investment portfolio is lacking in that sector. I blow it all on cocaine and hookers, then when the money is due I get nervous, buy lottery tickets and win. You get your money back, with a nice profit attached in the upper parts of what could be expected by a real estate investment. Was I a faithful manager of your money? Hell no! If you wanted lottery tickets you would have bought them yourself.

Yeah, except Shkreli's handling of the HF money was not fraudulent (he didn't blow people's money on cocaine and hookers, or blow it on anything really, the hedge fund just did poorly).

A coverup is a coverup. If he cannot stand up to his investments doing poorly he has no place in the institutional investment business. If you fake (or hustle) good results to lure in the next batch of investors, yes, that is fraud. It would be an entirely different case if he would have let his funds tank but compensated the losses of his investors with large put nominally unrelated personal donations (assuming that the investors are the actual owners of the money invested, not some middlemen fiduciaries). The illustrative purpose of my example was not how bad cocaine is, it was how bad being deceptive about the nature of an investment could be even when it turns out to be successful.

> As much as I dislike the guy, I do believe he didn't want to rip the people of

Not these rich people, no. He had no qualms about ripping off regular people with his other business though.

I think turc1656 meant to say "he didn't want to defraud the people".

> Also, harm/damage is a big consideration in sentencing.

That's how it should be. However, if that were really the case, poor Ross wouldn't be serving two life sentences.

> The government likes to punish people for making them expend the time and effort of a trial

While I understand why this is true, I hate it about our legal system. If you're not guilty then you shouldn't be coerced into a plea because of the draconian maximum punishment they hold over your head.

This is evident nowhere more clearly than drug convictions, where they can lock you up for the rest of your life because you're doing something they don't like.

It's probably even simpler - the conviction is the deliverable produced by a prosecutor, and the thing that moves their career forward. So they are incentivized to always go for the harshest possible punishment, in the same fashion that a company chooses profits over everything else.

The system isn't malicious, it's just not designed to counteract this sort of thing.

Prosecutors don't charge people if they aren't fairly confident that the evidence will result in a conviction. However they will also be willing to bargain for a plea to save the effort and expense of a trial. This lets them get more cases through the system in less time. They (or the police) might also try to pressure a suspect to confess, just to see if he will. That saves them even more time.

So bottom line, you should never admit or confess to anything. If the prosecutor has enough evidence, he'll probably start with an offer of a plea deal. If his evidence is marginal, he might try to get a plea but likely won't bring charges if he thinks his chances in court are iffy.

If you go to trial anyway, in the face of strong evidence against you, then you've probably lost your chance at a light sentence, modulo how good a defense you can afford.

> Prosecutors don't charge people if they aren't fairly confident that the evidence will result in a conviction.

Yes they do. They throw a huge array of charges, provable or now, at people with the intent to scare them.

Punishing people for refusing to plead guilty should be a crime.

However often that may happen in non-computer cases, it doesn't appear to have happened in this case; you can read the whole indictment in less than 4 minutes.


Aaron Swartz?

All the changes there were ridiculous, but easily provable.

> In other words, the fact that his investors lost no actual money will have little bearing on his sentence

AFAICT, the Retrophin investors lost actual money. The losses came out of gains and reduced them, and they still had net gains from Retrophin, but they lost money to the fraud.

Isn't Mr. Shkreli one of those Retrophin investors, too? Like, he could have made his defrauded hedge fund clients whole out of his stake in Retorphin, rather than from Retrophin as a whole.

This is what really confuses me. I haven't found a source that actually specifies what specifically he was found guilty for. At least one of the charges was about defrauding Retrophin investors, but he was found not guilty on several charges, so it's hard to tell. Quotes like this make me think that he was found not guilty on that charge:

> Shkreli said during a press conference after the jury's announcement that he was "delighted by the verdict" since he was found not guilty on a key charge regarding his former drug company Retrophin.


It will be interesting to see the sentence. He definitely seems to disagree with you: https://twitter.com/SamTheManTP/status/893552820548403201

Q: How much time do you likely face?

Shkreli: Uh I'm guessing none on the short side 6 months long side

I could see that he was expecting something like that based upon his press conference outside the courthouse. I think he's in for a very rude introduction to the concept of "intended loss" and the federal sentencing system in general.

Not claiming any knowledge on the subject, just wanted to back up suggestions of his expectations with evidence. We'll see what happens. Personally I'm rooting for him, I think he's misunderstood.

I'm curious, what part of his message is misunderstood to you?

I just think he's generally misunderstood and undeservedly hated. While I don't dispute he committed crimes and should be punished for that, it's compounded with his existing bad reputation over the completely legal and unremarkable Retrophin move. There's been a massive smear campaign against him and he has been unjustly dragged through the mud over that.

Granted his social awkwardness and attention seeking threw a lot of fuel on that fire, so he's partially at fault for encouraging it. But if you look past those immature antics he's a smart and productive member of society. It would be a shame, in my opinion, if he winds up in prison for several years. I think a fairer sentence would be a big fine and parole.

What's the definition of "intended" here? I would not normally say that someone desperately covering up business failures as they keep running it intends there to be any loss.

> When fraud happens those affected don't usually get their money back much less a return on that money.

He defrauded and stole money from the investors in the pharma company to repay the people he defrauded and stole money from in the hedge funds. The one set of victims getting a return only happened by stealing returns belonging to the other set of victims.

> However, it's pretty clear what he did is also fraud (false documents, not returning people's money when they asked for it) even if the fact that investors came out better makes the plaintiffs less sympathetic.

Criminal cases have separate prosecution and victims, but not plaintiffs. It's the victims (well, one of two sets of them) that are potentially less sympathetic for the reason you describe.

> He defrauded and stole money from the investors in the pharma company to repay the people he defrauded and stole money from in the hedge funds. The one set of victims getting a return only happened by stealing returns belonging to the other set of victims.

That is not at all what I read. It seemed like he personally made a lot of money from his pharma business, and used that to repay the investors of the fund?

Can you please source your statement?

I agree, in fact the article specifically states that he was not found guilty of defrauding investors in his pharma business.

True. It'd be like robbing a bank, using the money from that robbery to, say, start up a successful business, and then discreetly give the money and interest back. Money taken on false pretenses, regardless of what you end up doing with it or if you end up getting lucky and being able to pay it back, is still a crime.

Well, that's true, but the article seems to suggest that his brash persona/public conduct made it hard for him to win the case.

There was a joke floating around somewhere (Matt Levine I think?) that one strategy to avoid a jury trial proceeding was to become so publicly infamous that it would be impossible to select an unbiased jury. Clearly didn't work out for Shkreli in this case.

Well, that and he actually was guilty. Just like being nice shouldn't be enough to get you off the hook when you're guilty being an asshole shouldn't be enough to get you to be declared guilty when you're not. In this case the system simply worked as it was designed to.

Nah that's stupid. It might delay your trial but do you really think they would just say "oh ok we won't bother"? Of course not - they'd just go ahead with the least biased jury they could find.

Probably why it's a joke.

It may take a very long time to find an impartial jury if the Trump impeachment goes to trial.

Impeachments are tried by the Senate. We know where to find them, whether they're impartial or not.

You mean, if criminal charges against Trump go to trial, which is far less likely than impeachment (which is tried by the Senate and has no requirement for impartiality) going to trial.

It almost did, I believe it took something like over 200 potential jurors before they found a unbiased jury.

Well, arguably they didn't find an unbiased jury. They just found enough jurors who'd deny being biased.

Yes, matt levine. Curious what his thoughts are on this case on Monday.

Matt Levine is an excellent read. Even for those without a finance background he makes it easy to understand. Would make an exceptional professor.

The issue with this is that I often think of a people, that are not following media (so would not know him at all), to be usually more on a conservative note with strong values. If such a people would meet Shkreli, they would send him straight to the jail.

In a jury trial that would absolutely sway things

Which, all things considering, is ridiculous. People shouldn't be able to be convicted because they're assholes (even if they are).

I don't live in the US, but being convicted by a "jury of your peers" is frankly, ridiculous. When has the average person been able to grasp complex matters relating to say, securities fraud? Most people aren't even able to stay out of debt.

A panel of judges with specialised experience often makes a lot more sense than a jury.

Edit: and for those voting me down, at least explain why you don't agree.

Relying exclusively on bench trials seems unappealing to me (and I guess to James Madison, who enshrined the right of trial by jury in the Constitution) because it creates a much easier environment for an arbitrary court system to throw people in jail who are innocent and removes other protections like jury nullification. You could look at Japan, which tried to solve its problem of innocent people going to jail by introducing a lay-judge system (kind of like jurors who can ask questions during the trial), for a real-life example of some of the problems you might have.

Clearly the US system is far from perfect but I don't think getting rid of juries would make it better.

Also, in practice, judges make rulings on things outside their expertise too.

"because it creates a much easier environment for an arbitrary court system to throw people in jail who are innocent and removes other protections like jury nullification. You could look at Japan, which tried to solve its problem of innocent people going to jail by introducing a lay-judge system (kind of like jurors who can ask questions during the trial), for a real-life example of some of the problems you might have."

Practically, united states of america have biggest incarceration rate in the world, one of the most expensive legal systems (if not most expensive) and quite long sentences compared to other western countries. Jury nullification is basically never used and majority of jury members don't know about it.

I am not saying that other countries have flawless awesome court system, definitely not. But I have yet to read something that would convince me that jury is better or at least worth additional expenses.

You're right the US has a huge incarceration rate, but jury trials have nothing to do with this, since in the US trials functionally do not exist. I don't remember the numbers exactly (and they are changing and they differ by state/federal) but something like 1-5% of people thrown in jail actually go to trial.

But wouldn't the fact that trials might be favoring conviction (I'm not saying they do, but just as a hypothesis) also drastically change the outcome of those non-trial cases (mainly plea bargains, I guess)? If I expect to be convicted, I'm more likely to agree to a worse plea bargain.

I've not seen any reason to believe juries are more likely to convict.

That might be true but it was not my point. I was merely arguing that not seeing many cases actually go to trial is not an argument that can be made in this case.

Juries convict, but judges sentence. The incarceration rate is high because of strict sentencing guidelines written in the law and voters electing tough-on-crime judges. Eliminating jury trials would change none of that.

and Legislatures legislate. The strict sentencing guidelines are the result of "Law and Order" laws (both sides of American politics have their favorite targets). I too agree, eliminating jury trials would change none of that.

But making judges appointed rather than elected positions might.

Federal judges, such as the one who will sentence Shkreli, are not elected.

And you think getting rid of juries would help, or at least not make things worse? One of the reasons it's so high is that most cases are resolved as part of the plea system and never go to trial.

Isn't the main issue with a jury that is inherently unpredictable, and some people would prefer taking a decent plea over a bad verdict? People that aren't guilty shouldn't be forced to take a plea because the alternative could be worse. That is just wrong in every single way.

I agree that the use of plea bargains in the system today is deeply troubling. But getting rid of juries doesn't help. You still have a situation where the prosecutor can tell you your choices are going to jail for two years or taking your chances in court and maybe going away for decades, and you still have the inadequacies of the public defender system. The jury system is one of the parts of the system least in need of reform.

Which happens because of power prosecutors have (ability to decide charge which makes all the difference - plea can make difference between a year and risk of 30 years in prison) which has little to do with jury vs judge. Majority of defendants deciding that they don't want to risk (or cant afford) a day in court is not an argument for that system.

It is a refutation of the argument that juries are bad because the US has a lot of people in jail, though.

His argument was that juries prevent "arbitrary court system to throw people in jail who are innocent and removes other protections like jury nullification". There is nothing observable that would confirm that.

They don't do that, they prevent pretty much nothing.

It says nothing one way or the other because the system isn't being used in those cases.

Put simply, if you want to make claims about whether jury trials or bench trials put more people in jail wrongfully by citing US incarceration data you have to somehow contend with the fact that the vast majority of cases don't go to a trial of any kind. Or at least have an argument as to why switching to bench trials would change that circumstance.

The rate in not because of juries (most cases end up in guilty pleas anyway). It is 90% war on drugs and 10% "tough on crime" mentality which emphasizes punitive aspects and produces thing like mandatory minimal sentences which do not allow to treat things on by case basis. But mostly it's war on drugs.

I think at the very least there should be some kind of juror training process. You'd still tap people from the general public, but these people could maybe serve up to 5 year terms where being a juror is their full time job for that time period, they're trained in advance, they go through some kind of testing period, maybe shadow a couple other juries, and then they go on to serve on real juries. Obviously this would be a paid position much like a postal employee.

Besides being extremely disruptive to jurors' lives, you also have many of the same problems of an all-judge system (people becoming too close to prosecutors and wanting to the rule the "right" way, etc.) without the mitigation provided by the bar and full legal training.

Seemingly free and "just" governments have done much more "disruptive" things in the past, so there is precedent. E.g. Conscription and mandatory military training.

Edit: Typo.

So what? Does that make it a good idea?

I'm a Libertarian, so I'd say No. But my point was that government has in the past done things that have been highly disruptive to their citizens' time.

> People shouldn't be able to be convicted because they're assholes (even if they are).

He wasn't convicted because he was an asshole. He was convicted because he broke the law. I think the fact that he was acquitted on 2 of the 5 counts is evidence that the jury made a determination based on facts, rather than their feeling towards him.

That being said, in a trial in the US, the judge applies the law, and the jury determines the facts, especially as they pertain to the credibility of testimony. If the defendant is an outrageous asshole, it's possibly more likely that the jury would interpret inconclusive evidence less favorably. I don't think that's necessarily the worst thing in the world, and it's also not clear that a panel of judges wouldn't be subject to similar biases.

>He wasn't convicted because he was an asshole. He was convicted because he broke the law.

Well, yes and no. They only bothered looking for his other crimes and prosecuting his because he became unpopular. That's disturbing.

What if I'm the victim of financial crimes by someone who didn't piss of Congress and the public? Where's my justice?

Well, maybe.

Shkreli was first investigated by the SEC in 2003, and had two multimillion dollar judgements against his two bankrupt hedge funds for failing to cover puts and short sales.

So when he shows up running a new company, it's not unimaginable that he was on some people's radar.

The solution to your problems is not found in questioning why one set of crimes which occurred was correctly prosecuted.

The judicial system mostly prosecutes people who have not managed to piss off Congress and the public.

The point is that the bad reasons disproportionately affect their decision of which cases to pursue.

It's a check/balance against state power, i.e. the judicial system. Many countries have used this method for centuries. It's not ridiculous because the idea is that (the diverse selection of) your peers are equal to you in most ways, so are able to fairly judge you. A judge still has a lot of power and usually ultimately the decision goes to them as far as sentencing etc.

Right. But thing is, they are not actually equal on specialised matters? I understand that it works when you're dealing with things like murder. That can be relatively clear.

But how about hacking? Securities fraud? Money laundering? Tax fraud? These are all highly specialised issues that the average person knows nothing about. No average person, unless they have an interest in it, will be able to make a good call on such a case.

There is a significant role for judges in trials as well, especially on complex technical issues. It's up to the judge to decide all "matters of law", for example which conduct would (if it happened) violate a law and which wouldn't. A judge can even throw out the indictment entirely, finding a defendant innocent as a matter of law, if they determine that the conduct alleged isn't actually a violation of any laws, even if it did happen. In complex fraud cases indictments being thrown out (or overturned on appeal) by judges isn't all that uncommon either.

Where it goes to a jury is when there's a dispute of fact rather than law: the judge has determined that whether the defendant violated the law or not depends on a fact disputed between the prosecution and the defense (e.g. whether the defendant actually did or didn't do something, or what the defendant's intent was). The jury then decides whether the facts support conviction, although even then they're typically guided by very specific instructions from the judge about what they would have to find in order to convict.

Just some clarification for those readers not in the U.S.. You as the defendant do not have to select have your case tried by a jury. You can select to have a bench trial instead. There is a presumption of innocence for the defendant, so the prosecutor has to show "beyond a reasonable doubt" that the defendant committed the crime in question. Juries find defendants not guilty more often then judges do. So if you want a society that better reflects the maxim, "better 10 guilty men go free, than 1 innocent man go to prison", then juries are empirically better.


Even if you ask for a bench trial, the state can request a jury trial on your behalf since the presumption in law is that juries are objectively better.

These things can be (and are) explained. Trials that contain complex technical violations tend to take longer, sure. Judges, expert witnesses, lawyers all spend a huge amount of time learning about/explaining these issues. It's especially incumbent upon the prosecutor to explain complicated issues -- if the jury can't understand someone's guilt, they are less likely to consider someone guilty beyond a reasonable doubt. Which is very, very good: it sets the bar higher for conviction, and it encourages the state to, if it wants to convict, make simpler clearer laws. Complex morasses of incomprehensible laws are not necessary and only serve the interests of those who can pay to create or avoid them.

Also, none of these subjects are so difficult and complicated ordinary people cannot understand them. I've never heard of a trial requiring any real deep knowledge, like requiring jurors to have a serious understanding algebraic geometry or quantum mechanics or phenomenology. Hacking can be explained to ordinary people. People are not dumb. People do their own taxes and understand taxes. Trained professionals are not elite superheroes who are the only ones who can understand the world well enough to understand the difference between right and wrong. Untrained people can't do a professional's job, but they can definitely (with some help and background) tell when a professional has committed a crime. This case is easily understandable. I'm not a securities expert but I can make a fine assessment here just from reading an article, even without hours and hours of doing nothing but learning about the specific case and law (which is what jurors get); we all know what fraud is.

Honestly, aren't you underestimating your own intelligence?

Plenty of things can be simplified for non professionals, but the nuance of certain topics is then often lost. A single word in a written law can matter a lot.

No disrespect to anyone, but can an average career teacher understand the nuances of securities law? Can (s)he understand the actual difference between tax avoidance and tax evasion? Some can, absolutely. Others definitely can't and are operating way out of their league.

Lawyers and prosecutors are great at creating stories, but isn't what matters or not whether the law has been broken?

As an example; I had a tax issue (different interpretation of a certain law) but retained an amazing tax lawyer. He was _great_. The way they juggle the story around without lying, yet drawing the line very close, is amazing. Based on personal experience, I just don't think it can work without subject experts.

Amazing charismatic lawyers (or prosecutors) will be able to bend an outcome, and that is just not right.

>No disrespect to anyone, but can an average career teacher understand the nuances of securities law?

Yes they can, that's exactly the position I outlined. After a week of doing nothing but learning about securities law every teacher I've met is capable of this no problem. Teachers are perhaps a bad example here though, they are highly educated (many have masters' degrees, most have bachelors) and interested in learning. But to make your argument stronger, take a minimum wage fast food worker with a GED, yes I think they are capable as well.

>Lawyers and prosecutors are great at creating stories, but isn't what matters or not whether the law has been broken?

Kind of. In fact in the US legal system this is not all that matters, because the law is often vague and abstract and sometimes obviously morally wrong. The purpose of the jury is exactly this, it's a check on a cold soulless system destroying lives robotically; not only must a law be broken, but you also have to convince a group of fairly normal human beings that what you've done is horrible enough you deserve to be punished for it before you are punished.

>Amazing charismatic lawyers (or prosecutors) will be able to bend an outcome, and that is just not right.

I agree with you here, and this essentially means the rich get away with things the poor are punished for. This will always happen, will it not? People who are able to present a more convincing argument in their defense are less likely to be convicted in any legal system? I think things can be done to mitigate this, yes, and they start with a simpler criminal code (fewer crimes) and more equal access to legal talent, like better funded public defenders.

Yeah, but judges are no better at interpreting the law many times. If you don't believe me, go read some of the decisions by americas Supreme Court. For example they said a man was black therefore no a man therefor he had no right to sue in court, which basically means no rights at all. How they missed the part about due process I don't know.

Well, that's simple. They ruled he wasn't a citizen and therefore none of that applied to him. Monstrous but internally consistent.

The judge/jury distinction is basically orthogonal. Judges who hear a case are not necessarily experts. And by the same token, one could easily imagine a system where a jury had to be composed of experts in the field. I'm not convinced that would be a good thing to do, though.

You can always request a bench trial (which must be approved by the prosecutor), and you probably should for any sufficiently complex matter, where bench trials have a 55% acquittal rate vs 80-something % for jury trials (if someone wants a source, I'll try to find it; these figures came from a study). Jury trials work when there are emotional and subjective aspects, especially around intent. The jury in Shkreli returned to the judge for a formal definition of fraudulent intent, and then he was not convicted on wire fraud, meaning that they didn't find for specific intent. If the jury was not properly instructed on the elements of the crime and the issue was raised, it may be a reversible error and I'm anxious to see how the appeal is argued.

Sure, the point is there is no perfect system. This is just the best we've been able to come up with over a few millennia, and no we don't execute wonderfully and certainly our voting/jury population is full of interesting ideals, but it's what we have and it's _mostly_ worked over time. I'm not sure where you are but I'm curious to know of other systems considered "better"

I’m based in Belgium. Definitely not perfect, but different countries use different systems. In general, juries are only used when dealing with murder cases. All other issues are ruled upon directly by judges, who makes a direct interpretation of the law. If you’re dealing with a tax case, you will generally be assigned a judge somewhat familiar with tax law. Same if you’re dealing with a contract or a commercial issue, etc.

One can expect any judge to be an individual with above average intellectual ability.

This is one of those cases where those doing downvoting really should explain why they downvote.

I personally agree with following:

* Defendant being dick or unpleasant should not affect guilty/not guilty verdict in fair justice system.

* Defendant being charismatic or seemingly intelligent should not affect guilty/not guilty verdict in fair justice system either.

* A panel of judges with specialised experience often makes a lot more sense than a jury.

>Which, all things considering, is ridiculous. People shouldn't be able to be convicted because they're assholes (even if they are).

Why not? This is basically what the law does as well: codifies what society considers punishable assholery (e.g. murdering people or stealing or etc...).

So convicting him because he has been as asshole (even if it's in an unrelated case) is not that different to convicting him for being guilt on this or that legally defined behavior -- it's just not written down in a law book.

> A panel of judges with specialised experience often makes a lot more sense than a jury.

This would make sense in a country where trust in authorities is high, and people generally believe that the judges and the justice system is impartial and fair, without too much personal and hidden agendas.

But in a country where the trust in the system is lower, a jury of peers provides a safety mechanism so that the justice system cannot diverge too far from the point of view of the "common man".

People can’t grasp complex matters and lawyers specifically choose the least intelligent easiest to sway and manipulate people to serve on juries.

That's the kind of claim for which it's useful to have a citation. Because it's not generally true. This is an old study ('76), but they found that the jury selection processes biases against both high and low educational attainment, for example: https://www.jstor.org/stable/3053202?seq=1#page_scan_tab_con...

One of my friends just served on the jury for a murder trial. He's got a Ph.D.. From my recollection, at least two of the other jurors also had postgraduate degrees.

Remember that the jury selection process is managed jointly -- which somewhat naturally leads to the clipping off of people at either end of the extremes that the defense and prosecution are concerned about.

A study from 1976 might as well be from 976, we still ate humans and worshipped star gods back then.

Even worse, Star Wars was 1977... In 1976, we were still worshiping Rocky Balboa!

Then I guess it is fortunate that neither the defense nor the prosecution get to just select whichever jurors they want without input from the other side.

Whether it's right or wrong, you don't earn the benefit of the doubt in tenuous cases by being a huge asshole.

The "jury of your peers" exists to provide a contextual moral component to the law. If your peers think you did no wrong, it doesn't matter what the letter of the law says: a crime that is justifiable to society deserves no punishment.

Conversely, if what you've done is not justifiable to society, you should be punished for it even if it is not a crime. The easiest way to understand this is when first-mover advantages run amok. If you're the first person to think of some dastardly evil, you should not be permitted to do it just because nobody has yet written a law prohibiting it. Like, say, the Coca-Cola Corporation is not innocent for putting addictive substances in their drinks simply because it wasn't illegal at the time. And Shkreli's price gouging doesn't sit well with anybody either. A person's ignorance about some harm does not constitute permission to commit that harm against them.

>When has the average person been able to grasp complex matters relating to say, securities fraud?

The defendant has an attorney whose job it is to explain these matters to the jury.

Except, of course, this has a natural side-effect of incentivizing people to not be assholes.

You're not wrong. Humans are fallible and thus so are jury trials.

But judges are infallible and thus so are bench trials?

Um no one said or even implied either of those things

It does seem to be implied if you are invoking human fallibility to bolster an argument that jury trials are bad.

How does jury trials being imperfect imply that bench trials are perfect? A being true does not mean B is false...

The OP was saying that bench trials are much better, not just that jury trials are flawed.

better != perfect

OK, so the argument is that regular people are... more fallible than a judge? I don't understand what you want to say at this point.

Judges are either appointed or elected, both equates to judges being political creatures.

It's a rhetorical question.

Agreed, but I question how smart Shkreli could be if he did not opt for a bench trial given his reputation.

A jury trial is a privilege which defendants can choose to waive.

First, a judge can usually give a "directed verdict" of the person is obviously innocent.

Secondly it is much easier to pay off a judge and keep it quiet than a bunch of random jurors.

Thirdly judges can become calloused by virtue of their continued sentencing people to prison. They won't have the empathy that the jury will feel for both the accuser and the accused.

Fourth, the jury can ignore an outrageous law. For example oftentimes they refused to convict escaped slaves in the north.

Putting your freedom in the hands of one person who may very well be corrupt is much more dangerous than puttIng it in the hands of regular people.

Additionally I can't remember where, but I heard that 10 people or so working together usually come up with as good a solution as an expert anyways.

Probably, but I hope we haven't entered a world where we lock people up based on not liking their tone or attitude.

Try taking a attitude with a judge and see how much Contempt of Court you can rack up.

In modern times we've arrested plenty of performers, Lenny Bruce, various rock musicians for being "lewd" or other retarded reasons. It only gets worse farther back you go.

As a society we love to lock up those who make us feel uncomfortable or are "weird".

Did he make the investors their money back (plus a return) by vastly increasing the price of a drug(s)?

That seems to me morally evil and also very suspect. Although I'm sure the rigidity of the legal system would not allow this kind of inference to be made or pursued legally.

It would just seem to me as a legal/pharma layman that basically a bunch of sick people got screwed so that some investors (gamblers imo) could get their money back.

In the financial service industry there is very little tolerance for fraud. Fraud with or without losing money will get people in trouble. A trader with a massive unauthorised position is as likely to be sanctioned if this position has a positive P&L than if it is a loss.

Similar to OJ's recent parole that had nothing to do with the murder he was accused of committing. MSM, the previous victim's families, etc, seem to be conflating the two.

That's different, though. The goal of a parole suitability hearing is to determine whether an inmate poses an unreasonable risk of danger to society if released from prison. A data point like "this prisoner murdered some people" is very relevant to that determination.

OJ's parole was fair, and done by the book. OJ's sentencing for the armed robbery (30 years - his friends who brought the guns, and had a number of prior felonies all got probation) unfairly reflected his murder trial. The judge and jury were almost certainly out to get him.

> armed robbery (30 years... his friends... all got probation

Those are both extremely inappropriate, tbf...

Not that I think OJ is innocent, but that can't be treated as a "data point"; based on public record he did not murder anyone.

He was found liable for causing wrongful deaths.

In a civil trial, not a criminal one. Big, big difference.

This problem was that the fraud wasn't big enough that he had powerful enough people in his pocket.

If you owe the bank $1 million, the bank owns you. If you owe the bank $1 billion, you own the bank.

They only convict the Martin Shkreli's and the Martha Stewart's. The people with real money are completely safe.

Absolutely right.

Sadly, though: Screw folks by raising the cost of a life-saving drug by 5000%, business as usual. Screw over investors, go to jail.

Yeah, that is definitely fraud. Though as a fraud victim you can't really ask for a better outcome.

Is this "fake news"?


OP is pointing out that because Shkreli initially became infamous for his drug price raising, many members of the public are probably seeing ‘Shkreli found guilty’ and assuming it was because of that incident, which many felt was wrong and immoral. This article (And other coverage of the trial) doesn’t make any such claim.

I use to hate this guy, then I saw the Vice interview on him. It was nice to see his side of the story.

I don't know much about this case in particular. It was kinda sleazy to see the congress question him about his price increases when they knew damn well it was perfectly legal and they haven't done anything to stop it. Shkreli seems to be trying to expose this hypocrisy, but the news loves their stories.

Vice interview: https://www.youtube.com/watch?v=2PCb9mnrU1g

> Prosecutors argued that Shkreli lied to investors in two hedge funds and the pharmaceutical company Retrophin, all of which he founded. Shkreli told investors he graduated from Columbia University, that his hedge fund was large and profitable, and that he had hired an auditor, they said. These were all lies, according to prosecutors.

yeah seems like a great dude...

"but he had a nice twitch stream" is just about the most absurd defense of someone involved in large scale corporate fraud I have witnessed in a long time

When the defense gets absurd, I go looking for the defender's agenda.

In this case, the original commenter wants to tar all centralized institutions as corrupt (congress, news, etc). His strategy is to paint Shrekli in the best possible light, to make him a martyr for the cause.

He even paints Shrekli as another Snowden:

> It exposes it. Not quite as monumental, but a Snowden moment. Remember, congress did squat about the price gouging, because that's what they get paid to do.

Right. Ted Bundy was the picture of charisma, and charm, personality.

Interestingly, his fraud seems to fall into two categories. Lying about his fund's bonafides and status on one side, and working hard to make sure those same investors got what they were expecting by founding a company, making it successful and paying them out from the profits.

It sounds like he definitely lied to investors, but he apparently didn't intend to steal their money, and took pains to make sure he did not cost them money in the end. Apparently most investors in the fund that lost all it's money ended up close to tripling their investment after he worked to replace the lost money in the end.

That leaves me thinking that "up to 20 years" is a bit harsh given the facts. Hopefully the judge will take that into consideration and give him a more lenient sentence.

fraud != stealing

fraud wrongful or criminal deception intended to result in financial or personal gain

stealing take (another person's property) without permission or legal right and without intending to return it

No, Shkreli didn't intend to steal their money since they gave it to him. However, he did in fact deceive them as to what he did with said money. So he was convicted of fraud.

Yes, I wasn't calling for no sentence, or not guilty, just that the details do provide mitigating circumstances IMO, and that might merit a lenient sentence.

Also of note, in the NY Times article[1], they call out how his defense tried to mount a defense based on the financial profit or personal gain portion of the definition.

The defense asked why Mr. Shkreli, if he wanted to commit fraud, didn’t commit fraud: He ultimately paid back his investors with shares of Retrophin, which became valuable, along with cash. His lawyers also asked how Mr. Shkreli profited, painting him as a hardworking oddball who, rather than throwing in the towel after his funds imploded, vowed to get his investors’ money back. He paid them back late, they argued, but he paid them back.

Apparently, that wasn't successful.

1: https://www.nytimes.com/2017/08/04/business/dealbook/martin-...

Wire fraud (1343) is both inchoate and a specific intent crime. To be convicted, it doesn't matter if there was an actual loss, but must be shown that the defendant intended to defraud, that is that "[T]he purpose of the scheme 'must be to injure'" (US v Regent). This is also the 2nd Circuit, which has the most substantive case law on wire fraud in the US (Regent, Starr, McNally, D'Amato, Skilling, etc). I should add that Shkreli was not convicted on his wire fraud counts, which are among the most blunt overused weapons a prosecutor has. Almost no one survives a wire fraud charge, yet Shkreli was. He was convicted of securities fraud and conspiracy (for the same), which are also specific intent, however, 'recklessness' specifically is insufficient in a wirefraud case (helpful but insufficient), whereas in securities fraud, scienter is often shown prima facie by reckless indifference for the truth. I believe most salespersons would fail this test in this context. And, virtually every startup I've ever reviewed has unwittingly committed securities fraud, and in the hands of a prosecutor, it's usually only a question of whether they are motivated to target you (for some crime, if only they can "find it") for general behavior they disapprove of, and less so motivated to target a clear crime.


You might say that Shkreli was charged with willfully pissing someone off, but he was also tried and convicted in a jury trial in Federal court and then unlike some sad sack foot soldier in the drug wars that prosecutors use to juice their numbers, Shkreli had and has the means for a first class defense, a defense whose singular and most brilliant tactic was telling Shkreli to STFU already.

Yes, Shkreli is probably at best guilty of being guilty. But please don't mind me at all if I enjoy this feel good item just a little more than the usual story about someone being guilty of being poor.

A lot of people who do bad things don't intend to do bad things. He got lucky he didn't fuck up like everyone else who thinks that way. It doesn't make him any better though, on a bad day he could've ended like the rest of them and then everyone would be screaming how awful Shkreli is.

Just to be clear, this is LITERALLY equating business success with ethical/legal conduct.

> Just to be clear, this is LITERALLY equating business success with ethical/legal conduct.

No, it's equating restitution and intent with lenient sentencing.

Even if I grant that he intended to defraud people initially (which doesn't appear to be the case), that's still analogous to if someone stole your car, but later had a change of conscience, returned it, and had also fixed your dents and given it a new paint job to make amends. Are they guilty of theft? Yes. Should they be punished? Probably. Should they get the same punishment as someone who stole your car and crashed it, or stole it and sold it? I don't think so. That's leniency. You may have a different opinion.

Are you kidding? He's human garbage, let him rot. It's astounding how people are being taken in by this con man.

He's not kidding. He's not human garbage. It's not astounding that different people have different opinions at all. Your post suggests that you're very emotionally attached to your opinion, which is not good. Nor takes into consideration some basic premises which are necessary for people to understand one another.

>He's not human garbage.

Yeah, but he is.

Spare me the faux "logically objective" pose. There is a reason he's known as the "most hated man in America". His actions have earned him this reputation.

>There is a reason he's known as the "most hated man in America".

Because that title sells clicks, much like every other piece of hyperbolic clickbait spewed onto the internet these days?

If he truly is the most hated man in America, by fact, then it's simply further proof that Americans, as a collective entity, are willingly at the highest extremes of ignorance.

hey, spare me the faux "logically objective" pose, little guy. I'm the only one that can be taken seriously here.

>"Spare me the logic" Yup, this is hackernews alright.

You made it look like "Spare me the logic" was a direct quote but it wasn't, and it clearly is not a summary of what was meant. Always argue against what people say and (even more importantly) what they mean, not against your own not-quite-accurate-but-easier-to-refute version of what people say.

Okay, I'll bite. Why do you think he's human garbage? You felt strongly enough to reply, maybe you can muster the effort to explain why you think that?

The price increase for Retrophin from 12.50 to 750 was NOT for no apparent reason. The previous owners of the rights sold the rights cheaply because they were unable to make money selling Retrophin, and in fact had large losses for years, despite multiple large price hikes. Businesses that continually lose money shut down. Most of the costs are large fixed regulatory costs for each drug manufactured that a business owner cannot cut, so the only realistic alternative is to raise the price dramatically.

A USD 750 list price for a drug does NOT result in most people paying the list price. Most people get it via insurance, insurance companies pay a negotiated rate and you pay the copay (frequently higher than what the insurance company actually pays). Retrophin isn't a widely used drug so the effect on overall premiums was also tiny. His company literally offered the drug for free to anyone who for whom insurance didn't pay for it and who couldn't afford it. He also had a publicly stated business plan whereby he would use profits from Retrophin to invest in research into similar drugs which pharmaceutical companies have not been doing since Retrophin had been losing money.

Given the byzantine manner in which payments are actually made in the US, there simply isn't any other way to price an orphan drug, i.e. a drug that very few people actually need. The only way to make a business that produces life-and-death drugs needed by very few people sustainable is to price the drug very high due to very high fixed regulatory costs per drug manufactured. If you want to change this, it needs legislation and FDA reform. Demonizing businesses that raise prices to ensure they make a reasonable profit, will only result in drugs that are life-and-death for a small number of people either getting taken off the market or not coming to the market in the first place.

What's FAR more concerning is things like the recent increases in pricing for things like the Epi-Pen. Prices were raised 10x but also the expiration date on Epi-Pens is artificially short, so hospitals, schools etc are forced to throw away perfectly usable Epi-Pens for no good reason. Nobody talks about that because that price hike was by order of a senator's daughter. Shrekili just happens to be a bit of a PR nincompoop.

What we really need is a populace that thinks carefully and independently and a press that actually spends money on investigative reporting instead of relying on what politicians tell them to report, which helps their bottom line since it's much cheaper.

I meant Dataprim not Retrophin. Sleep deprived.

> Okay, I'll bite. Why do you think he's human garbage.

Obtaining a license just to increase a drug's price from $13.50 to $750 for no apparent reason other than greed isn't enough for you?

> Obtaining a license just to increase a drug's price from $13.50 to $750 for no apparent reason other than greed isn't enough for you?

This case isn't about that. Are you suggesting we should convict and punish people on trial for one crime because we don't like their past activities and behaviors? Even if those other behaviors were illegal, they should be considered during a separate trial that's actually pertaining to them.

> This case isn't about that.

That wasn't your question, was it? You asked why he's human garbage, I explained why. I wasn't defending or attacking this case, I was explaining why some think he is human garbage.

Edit: Whoops, different person. See bottom.

> Nowhere was I (or you) saying anything about this case.

Your specific words in your original response were "He's human garbage, let him rot." That response was to me saying I think the details of the case lead me to believe that I think he should a light sentence.

You very specifically noted through that euphemism that you think he shouldn't get a light sentence in this case because he's human garbage.

Edit: Sorry. That was someone else. I was specifically asking in context, but that wasn't you originally. Mea Culpa. Leaving it here with this note so people that saw it previously can see me retraction.

For what it's worth, I've colored the usernames on my HN discussions so I don't make mistakes like this. Maybe HN should do that natively.

> This case isn't about that

No. It was about fraud.

Why should we NOT punish people for fraud?

The ways that question are answered in this thread prove your assertion is false. This case IS about that, because without that, he'd just be one more pennyless felon.

> Why should we NOT punish people for fraud?

Who said he shouldn't be punished? I simply stated that since he made restitution prior to charges being brought, perhaps that should factor into sentencing. I don't know who you're arguing against, or what you're really arguing, but it doesn't seem to have anything to do with what I've been talking about.

> I simply stated that since he made restitution prior to charges being brought, perhaps that should factor into sentencing.

Restitution isn't the only reason for punishment.

> I don't know who you're arguing against, or what you're really arguing

That he's clearly unapologetic and simply got lucky, and that this should factor into sentencing.

Al Capone wouldn't have been prosecuted for tax evasion if he wasn't an infamous mobster.

This is how society's immune system functions.

Al Capone wouldn't have had to evade taxes if he wasn't obtaining his income through illegal means.

I also see a distinction between Capone and Shkreli in that Capone's other actions which may have influenced his trial were myriad illegal activities that they couldn't get evidence for. Shkreli is just believed to be an asshole.

Is the illegality of the other activities really relevant if they can't be prosecuted?

The justice system is meant to punish specific crimes, which it did done in both cases, but that doesn't prohibit you as a human to see it as karmic justice, for someone being a garbage human, wether legally or illegally.

> Is the illegality of the other activities really relevant if they can't be prosecuted?

Normally, no (which I said explicitly in another comment here). In this case, the activities are linked. There's no need to evade taxes if your income isn't illegal.

Even so, I don't subscribe to the argument that it's entirely a good thing that we prosecuted Capone for tax evasion. We were unable to prove the actual criminal activities, so we instead looked at the fruits of those activities and used that.

Another way to look at it is that the justice system completely failed initially. We couldn't build a case for the major crimes, but we could for the lesser crimes. He was still guilty of both (this is of course assuming his guilt).

In Shkreli's case, we failed to prosecute originally because it's not a crime. The current case isn't related in the same way, and linking them and punishing in the latter because of people's perception of the former is akin to levying a harsher sentence on someone because of their interracial marriage in a region and time when that was legal but frowned upon. Social pressure unrelated to the issue at hand should not be relevant in court. Even if it's related to the issue at hand in the case, it should be restricted to sentencing (where it likely can't be removed anyway).

And what's wrong with that? Be upset that the FDA only approved one company to make the drug.

And it's not like anyone was hurt. Overall, insurers ended up paying a bit more (drugs are only 10-15% of US health care costs, and very few people need Daraprim). Big deal. If more people did this, then the system would get this issue addressed, maybe.

On top of that, he said he was investing the profits into researching better drugs, though of course that's not a requirement.

It came out in congressional testimony that they were completely misrepresenting how they were re-investing profits. Employees were pilfering profits with 100% raises, massive bonuses and lavish parties. Very little if anything was going back into R&D.

If you want to make a profit and drink champagne on yachts that's totally fine, just don't go around telling everyone that you're pouring those profits back into research.

It is possible to be upset with both the system and the people using it.

True, and if it comes out that Turing knowingly blocked people from getting it despite knowing their eligibility, then he deserves derision. But so far he's just pointed out the huge issues and laughed, driving up awareness.

At some point if your system is so terribly busted and no one is fixing it, eh, maybe you lose the right to hate people abusing it. Or maybe his wit and charisma is making me blind to the issue here.

I found a rule loophole that allowed me to wear an Iron Man suit while playing in the NFL, so I made a career making millions of dollars a year. Aint I brave and admirable for pointing out the issue?

I'm getting increasingly annoyed at the culture of praising exploiters of the system instead of promoting constructive players (who are less profitable, ie less sexy). I understand that the contrarian view to "The Man" is the easiest one to take, even if I think the identified "Man" is the diametrical opposite.

The actual equivalent is that The loophole should only allow you and no one else.. so if rule is set like that who is to blame ?

Can I presume you offer your skills to anyone who asks at a wage that reflects a minimum cost of living (ie no iPhone or other luxuries the bare minimum cost of living). If not what is your reasoning beyond apparent greed?

I don't understand your comment.

Take a look at wealth globally, if GDP was evenly distributed every year everyone would get roughly ten thousand dollars. That's pretax, thus the total average spend per human being be in direct cash payments or via governmental programs should not exceed that number in a fair system. In western nations the poor see double that number on average in cash compensation, and more than triple that number when you include government services.

My point is fairness and accusations of greed cut both ways, if fairness was truly the concern of the poster he would also cut his standard of living in order to benefit those much worse off than him. As he more than likely does not his argument is not "let's increase fairness" but rather "people in my class and I deserve more" and that's the same argument the people raising the drug prices are making.

It seems like you are completely missing the point. This has little to do with economic inequality. The issue is not that this guy had a random product and raised its price. If this had been a car or an iPhone, we could not have cared less if he had been "greedy" and selling it for $1M/piece. The issue is that this is medicine we're talking about. People don't view healthcare and medicine like they view ordinary services and products. Many people (perhaps not you) have a much higher threshold for what kind of practice is moral/ethical/acceptable in medicine. That's why even in the middle of a battlefield people think it is inhumane to prevent doctors from treating injured soldiers, the war be damned. There is more to humanity than money.

Retrophin was a company and not a drug, right? The comment is saying things like "Retrophin isn't a widely used drug" which is really confusing me and makes me think either I or the writer (or both) don't have any idea what he's talking about. I'm trying to make sense of it compared to what I'm reading from other sources and am completely failing because of this.

The drug was called Daraprim. I think the linked comment misspoke when calling it Retrophin, but I have heard many of the same things that they are saying. Namely that anyone that cannot get the drug through insurance can get it for free. I don't think that Martin Shkreli is a good guy by any means, but portraying him as "human garbage" is not entirely fair.

I believe he reinvests 80% back into R&D. That's a pretty large sum. It's a lot more than the big companies. If a better drug for toxoplasmosis is developed that doesn't kill people, it would have been a great achievement.

Regardless of big an asshole he is based on seeing the Vice interview and thinking about the big fraud pharma industry makes me think he is actually way better than the conniving people who run big pharma.

This guy speaks out and maybe he is an asshole and suddenly everyone hates him. The rest keep their profits to themselves and we don't seem to care or mind.

Everyone has choices to make. Martin could have easily not been an asshole to cancer patients or investors at his fund. You want to let him off the hook just because he said "yup I'm a dick" while he was making the choice to be a dick and profited massively from being a dick?

Acknowledging the fact that what you're doing is wrong does not suddenly make that thing right. It's still wrong. And you're still an asshole for doing it.

Of course we care. People are criticizing the pharma industry's practices and calling for change all the time. Shkreli is a particularly obnoxious symptom, but he's not the disease.

Plenty of people who one would classify as "human garbage" make hundreds of millions. Frankly, it does not matter.

What matters is: 1) did people lose money, due to some scam? and 2) did he do anything illegal.

Well he committed fraud but people did not lose money. So yes to question 2 and no to question 1.

I haven't followed everything closely, but did anyone lose money in the end?

The NY Times article[1] presented by an early top level comment implies that no, they didn't.

The investors who invested all made money — by the defense’s tally, more than triple what they invested.

1: https://www.nytimes.com/2017/08/04/business/dealbook/martin-...

I don't particularly like the guy, but I do believe him to be pretty smart. How can he be convicted of fraud if he got them a 3x return?

Because he defrauded them in order to get their 3x return.

Put simply, if I burn my house down in order to collect the insurance money, I've committed insurance fraud whether or not I pay that money back, and no amount of profit on the payback negates the illegality.

Although, interestingly, he didn't steal their money, he lost it in a bad trade, which is probably (maybe?) covered under the risks associated with the fund's operation. The deception was not telling people their money was gone (and also lying somewhat about details of the fund initially). Given that the loss was an accident that he didn't profit from, and that he worked to repay the money, there's a critical difference between your example and what's reportedly happened here, which is intent.

It's more similar to you managing a property for someone, and telling them you got fire insurance when you haven't yet, and then when the house burns down accidentally you work to make the money to cover what the insurance would have covered. You did commit fraud by not getting the insurance when you said you would, but you also covered the costs in the end.

The fraud part, which also happens to have been the illegal part, is that he misrepresented the size of the situation while soliciting investments. It might eventually have been true, but was specifically not true at the time he made the statements he made.

That said, I agree that my analogy was bad, and I wasn't trying to assert that Shkrelli deliberately set the house on fire as much as I was just looking for an appropriate analogy of something that is illegal even though it did not have any financial damages.

The point was that while damages from fraud may be financial, the fraud is the damage, and the lie is the crime.

> That said, I agree that my analogy was bad, and I wasn't trying to assert that Shkrelli deliberately set the house on fire

Yeah, I was just trying to add more information to it, and point out what I thought were interesting portions of the case. Less a rebuttal and more an clarification and addition. :)

The case itself is very interesting because the situation is very interesting, and that's only compounded by his public persona, which is reviled by many because of prior media attention.

He lied about the current status of the fund for quite a while as he attempted to replace the money, and sent fraudulent reports showing good returns when all the money was lost. He later replaced all the lost funds with profits from the company he founded (and reportedly worked hard to make profitable).

I'm not sure whether that company was the one responsible for the drug price hike, and whether that constituted a lot of the profits or that actually went back into research as I believe he said it did during that episode.

The difference is that they actually told their investors what happened instead of lying and bringing in new investors to help cover the losses.

Actually, a bunch of wall street, banking, etc all said the state of the economy was fine, there was no housing bubble, etc all on national TV before the markets collapsed. None of them went to jail.

I mean, everybody came out okay - Shkreli really made his investors a lot of money! Yeah, he lied, but he did some incredible work: typical fraudsters take your money and run - he doesn't fit that mold.

Honestly, the issue was that he's an utter asshole, including to his investors. Investors are willing to put with a lot if you triple their money, but Shkreli managed to cross that line. That made him an easy target for the prescription drugs investigation and media circus.

Just because his investors made money doesn't excuse him.

Suppose you lent 10,000 to a friend and the friend promised to return it within a year. A year later, your friend doesn't pay you back and makes a bunch of excuses. Instead, he takes the 5,000 he has left to the casino, gambles it on the roulette wheel and by luck manages to turn that into 30,000 and pays you back 1.5 years later. I don't think you would be happy with that situation...

You might find FedEx's origin story interesting.

> “I asked Fred where the funds had come from, and he responded, ‘The meeting with the General Dynamics board was a bust and I knew we needed money for Monday, so I took a plane to Las Vegas and won $27,000.’ I said, ‘You mean you took our last $5,000— how could you do that?’ He shrugged his shoulders and said, ‘What difference does it make? Without the funds for the fuel companies, we couldn’t have flown anyway.’ Fred’s luck held again. It was not much, but it came at a critical time and kept us in business for another week.” [0]

[0]: http://www.huffingtonpost.com/2012/10/15/fred-smith-blackjac...

Technically, Fred committed a fraud (actually I forget the technical term for the crime where you misuse funds). Its just that he wasn't prosecuted for it.

Could you be thinking of Misappropriation of funds? I'm not a lawyer and I haven't spent a lot of time looking it up but from the few places I looked it doesn't seem that it would fit.

Your analogy is slightly off... suppose you lent $10,000 to an acquaintance known for being able to double it, and they promise to return it doubled in a year. A year later you ask for your money and he gives you $6,000 from someone else he convinced to do the same thing along with $6,000 from a different venture that was taking off and $8,000 work of equity for that startup. You didn't quite get what was promised, it seems a little shady, but at least he didn't rip you off.

The problem is, in most cases, historically the type of actions Shkreli tried often ends in disaster (often done by someone intentionally being malicious, I might add).

Shkreli may have been able to work his pseudo-Ponzi-ish scheme to investors' benefit. But it is pretty easy to look up the sordid history of the vast majority of Ponzi-type schemes, to see why this type of activity is generally illegal.

You don't think intent and net harm should be considered in criminal cases? I'd like this sentencing to send a clear message to fraudsters that:

A. If you get caught, you're going to prison

But more importantly -

B. If, however, you work hard to ensure the people you defrauded are not harmed by your fraud, your sentence will be lighter than if you were the type of fraudster to cut and run.

I don't know about you, but in light of the fact that fraudsters are always going to exist, I'd like to incentivize the "benevolent fraudsters", rather than pretending (through equal sentencing) that there is no difference between the two.

I would be perfectly happy to get more than my 10,000 back (like his investors did) late vs getting less or none back ever.

I'd be joyous if the return was better than I could expect to make otherwise, say > 10-20%.

Investments are risky. They are not automatic.

What I wouldn't be happy about is if I was lied to about the risk of an investment. That is closer to what this case is about. The money gained or lost doesn't really matter.

Honestly, I would be thrilled to triple my money in 18 months. Using the gambling analogy is disingenuous though.

I don't see why it's disingenuous? Investing is extremely risky, and I'm not convinced that he didn't just get lucky on the second bet.

This isn't ok because the original investor was paid off. That's also how Ponzi schemes work - the original investors are paid off (I know, here the money seems to be generated from Retrophin, but the behavior is the same).

This gave me a perspective: https://www.bloomberg.com/view/articles/2015-12-17/martin-sh...

Investing money with some knowledge and control of the outcome vs. gambling with house stakes are two completely different categories of risk.

I think that's being too results driven and doesn't take into account the risk that was taken. As another example, suppose your uber driver drove you home while intoxicated. Even if the trip ended up being fine (no accidents, smooth ride), you would still have valid justification for complaining about this.

I understand a risk was taken, but gambling has a less than 50% chance of return (by design) while buying a Pharma company that you control is conceivably less risk.

Let me add to this: Buying a company you have a government mandated monopoly on (patent) that owns a product that people will die if they don't take (inelastic demand), and has a huge barrier to entry for new, competing entrants (FDA) is conceivably less risk than throwing chips on a roulette wheel.

What if he lied to you, but then went out and through a combination of talent, hard work, and luck somehow made the money to make you whole and then some?

Then he lied to me, our business concludes, and I testify that he lied to me when asked. Pretty simple.

The law is very clear on what is a crime and what isn't. So when he misused his funds, he committed a crime. And he was prosecuted and convicted for it. Doesn't matter if in the end he cured cancer: he still committed a crime.

I have a feeling that since most people have never dealt with the justice system, they fail to appreciate just how black and white it really is. While the movies/TV do portray cases where "extenuating circumstances" help the case, most cases are pretty straightforward.

> I mean, everybody came out okay - Shkreli really made his investors a lot of money! Yeah, he lied, but he did some incredible work: typical fraudsters take your money and run - he doesn't fit that mold.

I think it's nice everyone came out okay, besides Shkreli in this case I guess. I still think what he did was wrong though because if you don't punish that kind of behavior, then you're encouraging people to do things that are wrong in the hopes they will succeed, and it won't always work out as it happened to do so here.

He started his career as a short seller that defrauded banks: https://en.wikipedia.org/wiki/Martin_Shkreli#MSMB_Capital_Ma...

> ...he did some incredible work...

Can you elaborate on this?

He pivoted from running a hedge fund worth -33 cents to creating a pharmaceutical company currently worth $800 million.

> typical fraudsters take your money and run - he doesn't fit that mold.

So if everything happened identically but he failed to make them money _then_ it would be bad? I don't understand.

Also, according to the NYT article, all investors tripled their money.

"The investors who invested all made money — by the defense’s tally, more than triple what they invested."

So, it is okay to lie to investors, as long as you eventually pull a success off? And you make those investors you were lying to money by committing fraud on the investors in your new company (Retrophin), so they make money, but not as much they would have if you weren't secretly taking profits to pay off the investors you previously defrauded?

While I don't agree to what shkreli did, founders / promoters lie all time .

It's not fraud if investors make money? Someone better tell Madoff that he's getting out.

The operative word here is "all."

That doesn't matter. Lying during a business deal is still fraud.

Ever watch a commercial?

Sounds like the standard playbook for startups. Oh you wanted a product, you should be happy with the mvp.

I never said he was a great dude, but the media's portal of him is inaccurate (shocker).

The epitome of "fake it 'til you make it"?

To be fair, the quote itself says "according to prosecutors" so this is only one side of the story.

Well, 12 jurors agreed.

They mostly didn't agree with the prosecution. He's been convicted on only 3 of the 8 counts.

They agreed he committed a crime not that he wasn't a "great dude." I'm not saying he is, just that this is using a claim without any evidence or response to paint a picture of his whole life.

The YouTube video of him doing an Ebay Analysis [1] was very interesting I thought, both from a technical point of view and another look at his character.

[1] https://www.youtube.com/watch?v=jFSf5YhYQbw

I watched a few of his early stock evaluation videos, really informative. Shkreli's a bit sociopathic, but he's wickedly smart, in his spare time he teaches himself javascript and organic chemistry.

Watching Excel power users is really fascinating.

I think I got an epiphany watching this - is this what the missus sees when I'm tapping away at a bunch of (to her) garbled text flicking between text editor tabs, webpages and CLIs

I spend a good chunk of my day in Excel and some might consider me a power user. He's pretty decent, and I picked up a couple tips from him (using a graphical line object instead of messing with cell borders for something you might need to move frequently for example).

There is definitely something mesmerizing though about watching someone conjure complex data onto a screen seemingly by magic and a few key strokes though. Although really it is just memorizing a ton of hot keys and a bunch of buried menu shortcuts.

The first time I saw that video was when referenced in a HN submission about Excel use[1]. You might find it interesting.

1: https://news.ycombinator.com/item?id=12448545

Oh yeah, watching his Excel You Tube video puts me in awe! Can't tell you how many people I've recommended that video to!

Lots of tapping, little happening really. This is what it must be like when your horizon starts and stops with Excel, you find yourself copying numbers from a SEC PDF to do the same model for the umpteenth time.

Yeah, I think he's better at excel than I've ever been at anything. Jesus.

The timing of this video is a lesson in humility. It's posted one month before a positive earnings report showing high growth in active buyers that gives the stock an ongoing 1.3x price increase. As far as I have viewed, Shkreli seems ambivalent, using vague heuristics to predict the future -- expectation of a yahoo-like slow decline, poor UX and discovery, and stiff Amazon competition.

https://www.google.com/finance?q=NASDAQ:EBAY (click 5y)


He's doing something similar, looking at some companies in the video game industry right now, live.


Thank you so much for sharing this, I've been looking for something just like it.

Are you still inclined to trust his teaching? I mean... he's a convicted financial criminal and you're linking to his finance video.

> Shkreli seems to be trying to expose this hypocrisy, but the news loves their stories.

It's hard to buy into this when he was directly profiting from this attempt to expose.

Why not both? What he's doing, creating outrage legally, is one of the most effective ways to create positive change that actually affects the whole industry. And hes making money too! Win-win?

He committed early on to give financial aid to those that could not afford the new drug's price. His conscious is rather clean. I see it no different to what most private schools do - charge a huge sticker price then offer aid, so that everyone gets charged as much as they can afford, even if barely.

> Why not both?

Because doing so would kill people?

> He committed early on to give financial aid to those that could not afford the new drug's price.

Did he actually do this or just say he would? As has been noted by others through this thread, including by folks who like him, he's prone to lying.

Also, are you really claiming that people of all incomes have equal access to expensive private schools?

Also by increasing the cost for people with insurance, insurance eats the cost and raises the premiums for everyone. Someone definitely lost, and it was basically everyone on an insurance plan that needed those drugs

Schooling still has a minimum price that needs to be charged to be sustainable. Teachers are not cheap, among other costs. Drugs do not. Drugs are very cheap to produce after the R&D. Financial aid (price discrimination) would work rather well for drugs (but we'd all end up paying more, generally, just like higher education).

As for whether he has implemented financial aid yet, I do not know. Bear in mind that only tens of people buy this drug a year, so implementing financial aid is almost as easy as just having an email account for requests.

I agree. My initial perception of Shkreli was the commonly accepted one of revulsion and hatred. After watching the Vice piece, plus a lot of Shkreli's finance talks and live streams, I find him pretty charming and unbelievably intelligent.

"Charming and unbelievably intelligent" are definitely fair descriptors for this man, just please bear in mind that these terms probably describe many other people who are also guilty of fraud. Sure he has his side. And yes he's probably been treated unfairly by the press. And no, he isn't guilty of all of the things people say. And yet none of that makes him actually innocent.

To add, I would argue that "charming and unbelievably intelligent" are prerequisites to being a truly great fraudster.

- Charm: a lot of people don't realize this, but the "con" in "con man" is short for "confidence". They work by abusing and exploiting people's confidence in them. A con man has to have enough charm to get people to place their confidence in him, or the scheme isn't going to work.

- Intelligence: fraud isn't something you can pull off by brute strength. You need a sharp mind to plan a scheme and carry it out.

If a con man wasn't "charming and unbelievable intelligent", I'd doubt his efficacy as a con man.

And I'll also add that "charming and unbelievable intelligent" is a good way to describe a number of serial killers. Charm and intelligence doesn't a good person make.

It's funny how incredibly susceptible HN seems to be to the smooth talkers.

Yeah, I know this person is technically being charged with being a Russian double agent and committing treason, but he just seems so down to earth, relatable, and smart! Swoon!

It certainly doesn't help that we, especially here on HN, conflate intelligence and morality.

"Ah this guy is smart, so he must be a good person!" or "this person is bad, well he must be an idiot!"

I'd argue, this mental shortcut stems from the way we view ourselves:

"I know I'm smart, but I don't know if I'm good, so I'll just set $smartness = $goodness so I no longer have to worry!"

The outrageous price increases directly led to people dying because they couldn't afford life-saving medication.

There's no redeeming yourself from that just because you're charming or intelligent. Psychopaths often are.

FWIW, he claims that he gave the medicine away for free to people who could prove they couldn't afford it, so that he was really only screwing insurance companies. I believe that he was trying to draw media attention to the outrageous, legally-allowed colluding practices of the insurance and pharma industries. It would have been in his best interest to not draw attention to himself and slowly raise the price of the drug over time rather than rock the boat and put himself in the spotlight. I think this agitated a lot of the established powers in the pharma industry, but we're getting into tin hat territory now, so I'll leave it at that.

> FWIW, he claims that he gave the medicine away for free to people who could prove they couldn't afford it, so that he was really only screwing insurance companies.

Screwing insurance companies means increased costs for everyone. I'd really rather not pay 20% higher premiums every year to pad someone like Shkreli's pocketbook.

Sure, but the solution is not to wish that people like Shkreli don't raise prices on their drugs. Instead, we need to reform the US healthcare system to stop problems like this.

Many drugs of similar kind, as Shkreli would point out, have a similar price. The difference is that those drugs are owned by faceless pharmaceutical companies with PR teams. Shkreli was an obnoxious person who was doing an obnoxious thing and as a result the government swatted him with some unrelated charges (Incidentally, I thought his defense of "I didn't commit fraud, because all investors made money" was a pretty good defense).

>the solution is not to wish that people like Shkreli don't raise prices on their drugs

I can wish whatever the hell I want to wish. Just because it's legal doesn't mean it's right, and everyone here arguing that he's a good person because he's not doing anything illegal is inherently arguing that "legal" == "morally right".

No. He's still a shitty person and I can wish him the most painfully infected ingrown toenails and I will still sleep soundly at night.

I wish that people would do the right thing. I also wish Congress would fix our health care issues. I can do both, and they're both just as likely to happen. In the meantime, he deserves all the public shame in the world.

You can absolutely wish whatever you like. That doesn't change the fact that you wishing is not the problem to a poor healthcare system.

>Sure, but the solution is not to wish that people like Shkreli don't raise prices on their drugs. Instead, we need to reform the US healthcare system to stop problems like this.

The solution is both. Just because a broken system allows you to get away with being a monster doesn't justify you being a monster.

I disagree. Only one of those solves the problem. Reforming the healthcare system will (ideally) prevent harmful exploitation. Wishing will do nothing, even if it's your birthday wish.

Why did you think his defense was a good one against fraud? He lied to people who gave him their money. That is what fraud is. The outcome does not matter.

Fraud has other components beyond just lying. For example, I could tell you that I'm Santa Claus, and, due to the rising complexity of children's toys, I need more money to hire additional elves this year, would you please donate?

That wouldn't be fraud though, because, among other things, you aren't damaged by it. You might be damaged by it if you sent me your money, and I actually used it to buy myself sugar cookies, but you didn't.

What I'm trying to get at is "harm" or "damage" is typically a component of a fraud case. In this case, the defense of "My investors didn't lose money, but actually made back multiples of their initial investment" seems very strong to me.

Shkreli had a company which failed and lost investors money. Rather than break the bad news, he lied to them, started another company, made more money, and paid back his investors. I may have the details wrong, but from this article, that was my main takeaway.

The point about damage goes to intent. Did Shkreli lie to people to take their money and make himself rich? Or did he lie to people to get a working productive business and pay off his investors? The fact that he did the latter implies his intent was the latter.

If I were an investor, I'd be upset that the initial investment failed. I'd be litigious if I realized he had lied to me. If he lied to me and returned my money with profit, I'd just stop doing business with him in the future.

Do the early investors who made money from Madoff's funds not have a fraud case against him since they made money even though it was paid out from later investors and not from the actual investments claimed?

It seems like both cases are fraud, it's just that one has a better outcome for the victim than suing and hoping it wasn't all spent on Wu-Tang albums.

Did ALL of Madoff's investors get paid off, or just the "got-in-on-the-bottom-floor" investors? If it wasn't all it's not the same argument as Shkreli's defense.

Great, then get the FDA to approve more people to make lifesaving drugs? A system where you're counting on the generosity of companies to charge low prices seems rather flawed.

Only a couple thousand people use Daraprim in the US. He claims 2/3rd of sales are to the USG at 1c per pill. So if there's 700 full price patients at $100K a course, that's an extra $70M on 3 trillion?

Companies were doing this before he did, and keep doing it now. So get the FDA to change or have a "dire needs" import rule or fix the system.

>A system where you're counting on the generosity of companies to charge low prices seems rather flawed.

Oh, it is absolutely flawed and completely corrupt. It's so corrupt it's costing lives rather than just money. I'm not saying it's happening, but I wouldn't be surprised if the FDA's mandates and budget for approval aren't somehow related to keeping profits high.

There are a lot of details that people seem to gloss over or haven't heard about. I am not sure if its to be believed or if he was just trying to repair his reputation, but he claims that jacking prices up on common drugs was to fund R&D into medicines for less common diseases where treatments are very expensive or don't exist at all. I found that to be a compelling argument because as far as I see it, at least he is (supposedly) trying to do something for these people, while others ignore them. Basically getting insurance companies to pay a lot for some drugs (even if it leads to premium hikes) will socialize the costs of developing other drugs.

>Screwing insurance companies means increased costs for everyone. I'd really rather not pay 20% higher premiums every year to pad someone like Shkreli's pocketbook.\

- Medical malpractice insurance cost (to cover punitive damages)

- FDA approval process

all increase cost for everyone, who is 'found guilty' for that?

And what do you see public institutions of educations, from public schools to taxpayer funded universities do about that in their educational curriculum? How are children and students taught to analyze the causes of 'increasing costs'?

And what are the journalists, those 'beacons of truth' are doing in that regard? Is the coverage of those legimate reasons for higher cost getting anywhere similar of attention compared to Shkreli's?

(btw, not defending Shrkeli's actions ... have not studied this in detail, just surprised at this onesided moral outrage)

If you make money on a trade, someone else is losing money. That's nothing new.

Where he went wrong is going into the healthcare space with that attitude. Shkreli thought that he didn't care about the bad PR it would bring him, but the microscope on him ended up uncovering illegal behavior.

I believe that's only true in flat or declining markets. Growth raises all boats, figuratively speaking.

Any time you buy, there's a counterparty selling, and vice versa. If they had not bought or sold on their end, they would have made the money rather than you.

That's all I was trying to say. Obviously this is simplistic and there are many reasons why someone might rationally be fine with being on the losing end- they might have something else better or less-risky to do with their capital, for example, or they might be a market maker that is not interested in holding anything long-term, etc.

>Screwing insurance companies means increased costs for everyone.

They already increased prices. And they've made an entire clusterfuck in terms of billing codes, bureaucracy, and negotiations before ACA anyway.

Insurance company does poorly while my health improves? My rates go up.

Insurance company does well? My rates stay steady.

I had a car insurance agent tell me this exact reason today. Their underwriters simply increased the price because the company isn't doing well.

Insurance prices can't always go up. Something is going to break. And we're all going to pay a shitload of money and have a bunch of fallout either way.

You'd rather let an entire industry continue to screw over millions of Americans out of money and access to healthcare, than let one troll and admittedly fraud profit from exposing said industry? Fair enough.

Shkreli didn't "expose" anything except his own greed.

I'd love to see the current health insurance situation go away - I'm an advocate of single-payer. That doesn't make Shkreli any less gross.

>FWIW, he claims that he gave the medicine away for free to people who could prove they couldn't afford it,

Sorry, I find it hard to take the word of someone who was convicted of committing fraud. Fraud that was committed before these claims were made. I guess defrauding his investors was also some 11th dimensional chess move designed to show the weakness of the financial industry, right?

Move over Jesus, we have a new martyr who suffers for our salvation.

That's an extremely valid point. But there are documented cases of it being true.

Can you link to any documented cases? I searched and couldn't find any that weren't reported on by him or the company, not exactly independent sources.

Here's at least one, and IIRC there were others sprinkled throughout this topic when it was much smaller. They're probably much harder to find now.


Find one person who got it for free

Not trying to play contrarian here, but are there any reported cases of people who've actually died for lack of Daraprim?

> Find one person who got it for free

This guy got it free, for life. http://www.news.com.au/lifestyle/health/health-problems/this...

Patrick Rice gets it free for life after a Reddit AMA. Google not work for you, or were you trying to stonewall the discussion with Rush Limbaugh tactics?


There's that one, very public, case. That happened after the entire ordeal blew up, and happened after shkreli had said that people got it for free if they needed it

It's not nothing, but it's not exactly impressive either

So maybe instead of saying, "Find one person who got it for free," you should have said, "Find one person who got it for free that I like even though the US has some serious medical privacy laws and therefore it's nearly impossible to find unless that sick someone (with HIV) voluntarily comes forward publicly, risking their career and future job prospects, to be on the side of a person that has been heavily vilified in the media circus."

Or find me a page on company's website that lists steps needed to qualify that are not too onerous and hopefully clear. Phone number would be appreciated too.

You know, something that looks more like a deliberate program and not a one-off.

Patient assistance programs are pretty common.

I'm on a $10k once every three months medication, and the drug company called to offer to pay any out-of-pocket costs up to $20k/year (deductible, copay, coinsurance etc.) I might have had, regardless of income.

The med probably costs them a couple hundred dollars in manufacturing, so they're happy to pay $20k/year to get $40k/year from my insurance.

(I turned them down - I have no deductible and a $15 copay, but plenty of others aren't in that situation.)

>The outrageous price increases directly led to people dying because they couldn't afford life-saving medication.

Who died? I'm curious because if that happened, I figure we would have heard about it. Do you have a link to a story I can read?

I think it's interesting that since we can put a face and a name on that behavior, it's easy to see that if those price hikes led to someone's death, his actions were immoral or downright evil. It's easy to draw a direct line from his actions to someone else's suffering.

It's well established that what he did so wantonly happens in more hushed tones as a matter of business. The lines are blurred, we find it hard to point fingers at individuals. If Skreli's actions are immoral, so are the actions of the anonymous thousands like him. This is the textbook "banality of evil", and we can see similar consequences everywhere. This seems like classic Philosophy 101 material, is it moral to raise the cost of food when someone will starve?

Do you have evidence of this happening? Shkreli said publicly that if anyone couldn't afford his pricey drug he'd ensure that they got it. I have no idea whether he ever followed through.

How many people died directly due to Martin's actions? I'm very skeptical of your claim and found nothing to back it up after a quick Google search. The first result was a Quora answer that even said that his moves resulted in no deaths. Do you have any citations for your claim?

I would like to know more about this if you have sources, I have been following Martin Shkreli on a lot of social media for a while and by his explanations, there shouldn't be any person hurt as result of the price hike that he is famous for.

No it didn't. Provide a source to one person dying from the price hike. His company literally provides it for free if someone can't afford it.

The outrageous fact that police officer pulled over drunk driver and his license got suspended for six months for DUI caused said driver to commit suicide because he couldn't get to work anymore and as a result - he couldn't support his family.

What a horrible police officer right? There is no coming back from this...

In all seriousness I have a hard time blaming investor who had all rights to raise the price of his own product for whatever the fuck reason he wanted to, in a democratic society and on the free market that USA supposed to be. And thenof course then there is EpiPen.

> The outrageous price increases directly led to people dying because they couldn't afford life-saving medication.

Show a single piece of evidence of that.

This is absolutely not true. You're speaking out of your ass here. 0 people died. If they couldn't afford it HE GAVE IT TO THEM FREE.

>I find him pretty charming and unbelievably intelligent.

Isn't that part of why people claim he is a psychopath? Smart, lack of empathy, easily gains people's trust, and charm all bang on for traits for psychopathy.

I have a hard time psychopaths are quite as… blunt, frankly.

He pumps a lot of money into medicine research. He gave away drugs for free to people who couldn't afford it. Neither seem particularly likely for a psychopath, and even if they are, then it's a psychopath having a net positive impact.

He is, largely, just a regular but intelligent asshole. I'm getting kinda tired of seeing "charismatic, smart, has money" == "psychopath" lately.

It is very common for "psychopaths" to play charming. That is one of many ways in which they manipulate others because it makes the victims lower their defenses.

Lots of sociopaths are charming. Fun article: https://www.vice.com/en_us/article/qbxb4m/charming-manipulat...

These are words you'd use to describe any successful con man.

That Vice piece felt like great PR for him, so much that I was very suspect of my feelings of sympathy towards him.

He can be both charming and intelligent, and a complete douchebag at the same time.

Yes, hat was rather my point, I guess I was just trying to put it more delicately

What's wrong with Congress questioning someone about legal but shady activity? If he broke the law, he'd just be prosecuted. No reason for Congress to have anything to do with it. But if what he did was legal but wrong, then maybe the law should be changed, and that's exactly what Congress is for.

It doesn't inspire confidence that they questioned Shkreli, who was a relatively small player in the medical space, while a senator's daughter was in the middle of one of the most egregious price gouging schemes in recent memory. They even wrote legislation to make it mandatory to carry their product in schools and public buildings.

The Shkreli inquiry reeked of hypocrisy and grandstanding. Those congressmen knew perfectly well what was going on, and many of them receive contributions from companies involved in it.

> while a senator's daughter was in the middle of one of the most egregious price gouging schemes in recent memory.

For anyone curious, CEO of Epipen manufacturer Mylar is Heather Bresch . She is the daughter of senator Joe Manchin, who has introduced bills in the Senate to change FDA regulations to favor his daughter's company.

Not to mention that their "questioning" was not even questioning, but instead exactly what you say - grandstanding. They basically unloaded uninformed rants on him while he was forced to sit there.

Because Congress didn't need to find out any facts. They just wanted to put on a show to sway public opinion.

Remember when they questioned Toyota over unintended acceleration? That made Toyota apologize and generally made the public believe that Toyota was at fault.

Now, consider that at the time Congress questioned Toyota they were the largest shareholder in Toyota's biggest competitor (GM) and, when NASA examined the evidence, they found no issues in Toyota's products.

If you want to talk about securities fraud, that Congressional hearing should be at the top of the list.

> when NASA examined the evidence, they found no issues in Toyota's products.

Well they found plenty of issues. The code was unreadable. They didn't find anything that would cause unintended acceleration.

That was not one of NASA's findings. It was the finding of a paid "expert".

This is hardly the first time this happened, they could have easily made a law years ago.

Have they introduced the Shkreli Can't Endanger those Represented by Welfare Act have they?

This was a PR stunt.

Yes, it absolutely was a PR stunt. I mentioned earlier that congress gets paid a lot of money to not regulate pharmaceuticals, this was them trying to save face so the fleecing can continue. Just an example of absolute corruption of our federal government.

> What's wrong with Congress questioning someone about legal but shady activity?

If Congress had invited him to come testify, and he'd accepted, I would have absolutely zero problems with that. But that wasn't the situation he was in -- he was forced to attend a Congressional hearing by federal subpoena, for an action that was obviously not illegal in any way.

At the least, it was a small abuse of power in exchange for a publicity stunt. At the worst, it was unlawful detainment in an attempt to intimidate.

He tried to expose "hypocrisy" by committing fraud and pricing vital medication out of many people who need it's ability to pay? All the while acting like a complete asshole and working hard to disrupt his own trial?

How will society ever survive without this white knight's protection?

Thanks for sharing that. I've never really gotten on board the Shkreli hate wagon. I've just regarded him with a mixture of skepticism and curiosity. People love banding together and agreeing collectively about what they like and dislike. It tends to make me uneasy to get involved with that so I've tried to stay neutral in my views on him.

Shkreli was blunt and open about a sleazy thing that many others are cagey about. That doesn't make him better than them, just more visible.

It exposes it. Not quite as monumental, but a Snowden moment. Remember, congress did squat about the price gouging, because that's what they get paid to do.

I wish it were a Snowden moment, but it wasn't. Analogous things are happening all the time - e.g. http://www.nytimes.com/2012/12/30/business/questcor-finds-pr... - from $40/botle to $28,000/bottle over a period of 7 years; it has, in fact gone up since, and I can't find the source right now, but in fact Questcor has also cornered the synthetic version and jacked it up as well, so everyone in the US who needs it pays >$15,000/vial ; Meanwhile, if you get it outside the US, it's still less than $100/vial anywhere in the world.

All pharma companies are supervillians, and they all corner supplies and jack prices, but they do it more quietly and usually a little slower. Shkreli just went to the endgame faster, and had a villain media portrait. But he is not any different and he definitely did not induce a Snowden moment. I wish he had.

I'm a little more hopeful that regard, perhaps misguided. Shkreli is a commonly known name because of his persona and the way the media latched on to it. It was a perfect story. Bad guy, doing bad things to sick people. Hell I even know how to spell his name and he has been in the news for quite a while.

Questcor on the other hand, I've never heard of. Not a very juicy story, and any juiciness is the result of Shkreli. Will it make a difference? There is a lot of money preventing it from making a difference, but it's about to become a political career killer to allow this to go on I believe. At the very least, it's in the public discourse.

Comparatively, Snowden's revelations hasn't really changed squat either. Maybe I shouldn't be so optimistic.

> Shkreli seems to be trying to expose this hypocrisy, but the news loves their stories.

Ahhh, my favorite pastime, exposing hypocrisy. To do this, you have to play 47 dimensional chess. My recommended strategy for this is to defraud investors and then get rich off price-jacking pharmaceuticals. It's a proven strategy!

(Proven to get you convicted.)

As a Canadian, I'm just curious: what are the current proposals to regulate pharmaceutical sales in the US?

In most Canadian provinces, the provincial government is the only authorized purchaser for prescribed medication. It is then sold to pharmacies and hospitals, who are in charge of distribution. (in some provinces, such as Quebec, a mix of public or private insurance will then cover most of the purchase of medication; everyone is covered by the public plan, but your employer is mandated to get a private plan if they can)

When Shkreli says "f-- Walmart" (in the Vice interview), it's horrifying, because I know a lot of people in the US who are not covered by insurance, so they buy medication at Walmart.. This is really hard to understand.

There are no serious proposals on the table with any chance of becoming law. The ruling party believes that government should not be involved in healthcare in any way and would rather move in the direction of less regulation instead of more.

The minority party has several plans, but are still divided.

That interview changed my point of view as well. It does indeed seem like hypocrisy, and like the competing and stronger drug companies set up this publication lynch. I can't believe that out of all the strong drug companies, the first time a drug was increased in price is this poor 2015 founded company. Why is it, that the first time we hear about this common practice in drug industry it's within this relatively new company?

> It was kinda sleazy to see the congress question him about his price increases when they knew damn well it was perfectly legal and they haven't done anything to stop it

Lots of things are legal uses of taxpayer money.

Lots of things aren't illegal but are worthy of public condemnation.

The intersection of those things are EXACTLY the sorts of things I want my congress people going after.

Do you disagree, or do you just like seeing things burn?

The point is that the system should be fixed, not just "condemn" someone for abusing it. If it's legal to do something unconscionable then that legality should change.

> It was kinda sleazy to see the congress question him about his price increases when they knew damn well it was perfectly legal and they haven't done anything to stop it.

Do you have any suggestions on how what exactly they should've done? Passed a law that says "you cannot increase the price of a drug beyond 5x" or something?

Just to throw something out there to start, I would limit price hikes over time, say 10% a year. I'm open to any alternatives.

Without even any mention of what the manufacturer can do to cover cost increases? You really think it can be so simple?

I would suspect the vast majority of the cost of drugs is R&D, including the FDA approval process. They can factor that in on initial cost when they release the drug. The 10% is only for increases.

Hopefully instead of someone buying a drug that has already been released won't buy it because they can jack up the price 5000%. They would have to factor in the 10% rule when purchasing. Unfortunately this might lead to expensive release costs, but that already happens.

It might not be perfect, but 6000% increases because more yachts is a hell of a lot worse.

Sociopaths, in limited circumstances, can sometimes be very charming.

> Shkreli seems to be trying to expose this hypocrisy, but the news loves their stories.

Sociopaths love pointing out that they only hurt you because they wanted to make you stronger.

Still a horrible person for so many reasons (including this one [1] the other day).

[1] https://twitter.com/laurenduca/status/890960104262180865

The only horrible person in that tweet is the rat messaging her that crap so he can write some clickbait garbage for whatever trash site he works for, tbh. Let's be real - we all say stupid shit while drunk.

Repeated, direct verbal harassment, and inciting a mob of sycophants to follow suit is patently disgusting. He may be technically competent, but he completely lacks social intelligence.

Surely he's made his money at this point - the only thing driving his behavior is narcissism.

Pretty funny if you ask me. They've had a long running and playful "feud" for a while now.


> For some reason, recently a number of writers seem to have taken it upon themselves to salvage Martin Shkreli’s reputation. Previously, there had been a rough consensus that Shkreli, the oily, simpering pharmaceutical executive who raised the price of HIV drugs by 5000 percent before being indicted on fraud charges, was one of the most cretinous human beings alive. This seemed utterly uncontroversial, in fact so self-evident as to render debate unnecessary. [...] But a miniature genre of article has sprung up recently: the Martin Skhreli Is Not As Bad As You Think hot take. From Vanity Fair to The Washington Post to The New Yorker, authors have issued the provocative thesis that, far from being the mealy, smirking, patronizing little snot he appears to be both at a distance and up close, Shkreli is anything from a blameless cog in a vast dysfunctional apparatus to a sweet and tender do-gooder unfairly disparaged by a society too stupid and hateful to appreciate his genius.

> And the Vice profile, while questioning a number of Shkreli’s claims and containing numerous criticisms, calls Shkreli a “finance wunderkind” and “a Horatio Alger story” and sympathetically relays Shkreli’s claim that his unapologetically money-grubbing attitude is merely an exaggerated caricature that he plays for the public to entertain himself. [...] Let’s be clear: these reporters are dupes.

> One of Shkreli’s ex-girlfriends has confirmed that he is a manipulative, psychologically abusive habitual liar with zero capacity for empathy. As she explained: It soon became obvious that Martin was a pathological liar, would pretend to cheat on me and brag about it to raise his value in my eyes, so I’d always feel like I was hanging on by a thread, could be replaced, would vie for his approval and forgiveness.

> Shkreli’s ex-girlfriend also displayed screenshots of conversations in which Shkreli offered to pay her ten thousand dollars for sex, a proposition that revolted her.

> His menacing behavior has been noted elsewhere: he has been accused of waging a harassment campaign against an ex-employee, writing in an email that “I hope to see you and your four children homeless and will do whatever I can to assure this.”

Of course they are legal. It doesn't make him any better as a person.

So here is why it's important to take Shkreli down. Congress gets paid lots of money to not regulate pharmaceuticals. 13 democrats recently voted against a bill allowing the US to import Pharma from Canada, so it's both parties.


Congress is in hot water over the cost of prescription drugs and they need to do something, and something fast ... as long as that isn't actually reducing the cost of prescription drugs, because, you know, donors. Shkreli is the perfect mark, or scapegoat for this because he has been quite vocal. Consider he isn't the only one doing this. Many (donating) Pharma companies do this yet are quiet about it.


Anyway, if they take down Shkreli, congress looks like they are doing something, without actually doing anything. Notice they didn't take him down for his price gouging. Yes, that will continue to go on just as the donors planned. The masses are satisfied with their sacrifice. Carry on.

I appreciate that link. I haven't seen that image though. The clarification isn't that inspiring. It seems to be arguing that they do in fact take money, it just isn't quite as much as the image represents. All of them fell back on their concerns that Canadian drugs don't satisfy our "safety standards." Honestly, if it were El Salvador or something, maybe, but Canada, not so much.

"The 13 Democrats did vote against one amendment that was intended to lower drug prices through reimportation of medicines from Canada, and they have each taken money from drugmakers."

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