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Martin Shkreli has been sentenced to seven years in prison (theverge.com)
355 points by denzil_correa 10 months ago | hide | past | web | favorite | 411 comments



He was so obnoxious that I guess it is easy to be happy about that, but he was so small time in the grand scheme of things.

But nearly no bankers responsible for the 2008 financial crisis ever went to jail:

https://www.theatlantic.com/magazine/archive/2015/09/how-wal...


Like it or hate it, this is what the SEC does. You think Martha Stewart deserved jail time for making 50k in an insider trading scheme she didn't really care about?

The SEC finds very public cases and then brings the hammer down in order to act a deterrent. Martin Shkreli broke the law, something he didn't have to do. It isn't like it was mob justice and some hugely biased jury convicted him of all the crimes he was committed of without thought. The jury by all accounts fairly deliberated his actions and convicted him of crimes that he did, while letting him off for crimes he didn't do.

Then all Shkreli had to do was show some remorese and kiss the ring a little bit, but he continued to be a troll and mock the justice system. He downplayed his crimes literally minutes after being convicted of them, which showed a lack of remorse (and maybe honestly so, but the justice system doesn't like that). He continued to be a troll, including the whole Hillary Clinton incident, many of these statements used against him in sentencing.

This isn't a case of the tall blades of grass getting cut first. It's a case where we have a subjective justice system that doesn't want to be mocked while it is doing it's job. Shkreli went out of his way to mock it, he went out of his way to mock the SEC, all the while he actually did commit a crime. Yes, it is a witch hunt in that the SEC will throw the book at some people while letting other people who committed worse crimes off the hook (Phil Mickelson vs Martha Stewart), but that how any limited investigative body works. If you don't want to be a target of a witch hunt, don't break the law. And if you do, kiss the ring. I'm not convinced it is a huge indictment of our society that people who break the law all the while trolling everybody get unfairly harsh punishments, though I admit it is unfair in the sense that life as a whole is unfair.


Well put. Just because O.J. was found not guilty and no big bankers went to jail in 2008 doesn't mean judges in other courtrooms are going to relax their standards when you flip them off

https://www.nbcmiami.com/news/local/Penelope-Soto-Woman-Who-...


OJ is an interesting example, as his sentence for armed robbery was considered extreme compared to the facts of his case, and influenced by the fact he away with murder.

I think it’s troubling that judges have the ability to hand down sentences far above some established norm, even if those sentences are legal.


> I think it’s troubling that judges have the ability to hand down sentences far above some established norm

I agree, but that's not what happened in Shkreli's case. The crime he committed really does have a very long sentence.


The SEC, DOJ, et al also have limited amounts of resources. They just can't go after everyone.


The fact that they can't go after everyone doesn't mean that they should punish Shkreli extra hard for what amounts to being a jerk.


No, but the fact that Shkreli is a jerk, and showed no remorse for what he did, and disrespected the court mean that they shouldn't go easy on him, either.


One would assume however, that given the choice between

1) guy who lied to investors, still made them money (ie. Shkreli)

2) guy who lied to investors, lost 90% of their money (for example, ironically, Clinton's son in law [2], who has lost more money than the GDP of about 70 countries, and yet [3] happened)

They would have a strong preference for 2). But the SEC is a HUGE example of selective justice. Harsh "correct" treatment for whomever offends the elite, just for insulting and rejecting them (Shkreli IS an idiot, VERY publicly rejecting and insulting one of the elites WHILE she was running an election for president AND giving her an excuse ("threatening her") to send the law after him), or just by being poor. But nothing ever gets done about members of the elite, even if they're very low level.

And I get it, what Mr. Mezvinsky did was probably in a panic, and it was political decisions of someone else that did him in, nothing he could have done (as I'm sure is true for 90%+ of criminals of course, it never seems to count as an excuse). And it did do serious damage to his career. But he should be in prison, and owe hundreds of millions of dollars to people.

The issue I have with that is, if you or I, or probably anyone who may read this did what he did, we'd be locked in a maximum security prison for 40+ years, as well as being destitute.

[2] https://en.wikipedia.org/wiki/Marc_Mezvinsky

[3] https://www.recode.net/2017/5/18/15660060/social-capital-hir...


[2] and the links going from it don't suggest anything about "lying to investors", merely making bad bets in Greece shortly before the crisis, in a fund that was advertised as making bets in Greece. Got a source about that, or is the argument just that everyone loosing a lot of money has to be fraudulent?


It's pretty common for defendants who show remorse to get lighter sentences, no?


It does actually.

If you waste their time by trolling them and drawing excessive attention, it consumes their resources responding to comments from the media. Instead of y'know, performing their investigatory/judicial functions.


Parent said should. This is not how law works, so it’s not how its enforcement should work.


They have limited resources precisely so that they can't go after everyone.

Add revolving doors to this and everything makes sense.

On top of this, Shkreli brought a seedy but commonplace practice in the mighty pharma industry to the front page during a presidential campaign and made powerful enemies, including public opinion.

He wasn't sentenced for that, just like Al Capone wasn't sentenced for gangsterism.


> I'm not convinced it is a huge indictment of our society

The indictment of our society is that hundreds of millionaires can enrich themselves further via dishonest and illegal means, wreck world economies, and suffer no consequences, while a regular joe can be chocked to death for selling cigarettes on the street (disruptive!)

This isn't an impossible problem to fix. We just start voting for politicians willing to execute white collar criminals.


[flagged]


This kind of thing is a bannable offense on Hacker News, so could you please comment civilly and substantively instead?

https://news.ycombinator.com/newsguidelines.html


> Then all Shkreli had to do was (...) kiss the ring a little bit

An American writes this and doesn't shriek in anger. 2018.


So what you are saying is that he had his sentance increased because he hurt a judge's feelings?

That's basically what this comes down to.

Imagine if jay walking was punishable by death but it was only ever enforced against people who mocked Trump.

Inconsistent enforcement just allows the people in power to go after their political oponents for the "real" crime of hurting their feelings.


> That's basically what this comes down to.

The judge didn't create the law regarding securities fraud, nor did she instigate the charges of fraud, nor did she even have a voice when it came to deciding to convict (it was a jury trial). So how does this all boil down to a judge's feelings being hurt?

All crimes will be inconsistently enforced until we've built a policing apparatus that operates like the equivalent of red-light cameras but for every crime [0]. Hopefully we never get to that point, which means enforcement will continue to be resource-limited and inconsistent, so are you arguing for no enforcement at all?

[0] I'm being rhetorical of course. I don't mean to suggest at all that the enforcement of red-light violations, even when caught on camera, is anywhere near consistent: http://www.chicagotribune.com/news/watchdog/redlight/ct-met-...


> So how does this all boil down to a judge's feelings being hurt?

The way I read the parent is that this conviction would almost certainly not merit seven years in a typical non-Shkreli case.

But the judge handed down seven years, not because of his crime, but because of his attitude. The OP even suggested as much, suggesting if he had just "kissed the ring", the sentence would have been substantially less.

I read the parent's outrage as being that justice isn't blind - it metes out sentences based on the feelings of a judge toward a defendant's attitude. The crime itself only matters insofar as judges must abide by minimum and maximum sentencing guidelines. Within those guidelines, how you feel about a defendant is fair game.

edit: I would also add that, for those of us with less than stellar social skills, it's easy for social incompetence to be misinterpreted by other people as being an asshole. For us, this aspect of the justice system is at least mildly worrying.


Why don’t we approach his sentence from the opposite direction: the prosecution proposed a 15-year sentence, which is less than a reported max of ~25 years under federal guidelines. 7 years is a fraction of what Shkreli could face, so why don’t we accuse her of being emotionally swayed to be lenient?

I agree that feelings are inextricably involved when human judges and juries make decisions. And all initiatives to correct for this — such as the 3-strikes law and mandatory sentencing guidelines — are likewise imperfect. I’m personally surprised at the severity of Shkreli’s sentence, but that’s because I don’t know this area of law or its precedent. And in the arguments I’ve seen asserting the sentence is too severe, I haven’t seen citations and evidence that contradict the precedent she used in her judgment.

Yes, much of Shkreli’s situation has no precedent. But we should consider that judges can act cautiously in extremely publicized trials, especially ones involving defendants who are rich enough to mount an appeal. You think the judge faces no risk if she decides to draw up a sentence without defensible legal basis?

I agree that we should worry if justice is meted out by judges who aren’t aware or empathetic toward defendants who are socially incompetent or otherwise social/psychological outliers. But just because popular media/opinion seems to hate Shkreli doesn’t necessarily mean we can ascribe such bias to the judge without empirical evidence.


>Why don’t we approach his sentence from the opposite direction: the prosecution proposed a 15-year sentence, which is less than a reported max of ~25 years under federal guidelines. 7 years is a fraction of what Shkreli could face, so why don’t we accuse her of being emotionally swayed to be lenient?

Because other, similar cases seem to have lesser sentences, not greater. This case has a larger sentence compared to other actual practical cases, though clearly it wasn't as large as it could legally have been.


I’m ready to be convinced, but which similar cases are we talking about?


Thank you for this response. I'm genuinely curious about this, though:

> You think the judge faces no risk if she decides to draw up a sentence without defensible legal basis?

What are the risks that judges face? My understanding is that Federal judges are appointed for life, with no chance of removal outside of impeachment. Is this not the case?


I didn’t mean to imply an obvious direct risk (e.g. impeachment or being voted out), but I do assume the judge is not completely uninterested in moving up the federal circuit. Being called out, or having a decision overturned due to impropriety, on a very famous case, may not be necessarily nothing to the judge. Of course it works both ways — a too lenient sentence puts her under scrutiny too. But I think burden of proof is on those who think she is being too harsh when it specifically comes to Shkreli.


That's not at all what's being said. There are far more possible cases that could be prosecuted than there are resources to prosecute them, so to better discourage all crime they will tend to go after higher profile targets, in particular those who flaunt their criminality.

Similarly, cops don't spend all their time giving out tickets to every single jaywalker or every single speeder. That would be a waste of their time. But they need to give out some tickets every once in a while or else the law becomes meaningless. Given a choice between giving a ticket to a random person spotted jaywalking, vs. giving a ticket to someone who took out a full page ad the day before declaring the time and place in which they plan to jaywalk and taunting the police for being unable to do anything about it, the police will choose to give the ticket to the latter person, and that totally makes sense to me.

That's very different from going after socially awkward people who don't know when they're being assholes.


> But they need to give out some tickets every once in a while or else the law becomes meaningless.

This has actually been shown to be a very bad idea. It is way better to punish immediately, even if lightly, every single transgression than to do it randomly but more severely. (Probably because we're all thinking "it won't happen to me".)

What you're saying afterwards is "the mundanes should not taunt their rulers". True in the world-as-is, but that reinforces a caste system. No. The cops and the judges are NOT nobility. They should NOT be treated as superior to the little people.


Shkreli is one of the “little people”?


In the US federal justice system, the US Sentencing Guidelines are officially advisory as of several years ago. Judges have to consult them and are expected to explain any deviation they adopt, but they can impose any sentence allowed by the statute which was violated.

I guess the statute text has embedded minimum and maximum sentencing guidelines in a sense, but the term Sentencing Guidelines in the US federal judicial context means something specific.


The interesting thing about this casae, if I recall the facts correctly (I'm sure someone will fact check this, I'll attempt to and update this in a bit), is that in this case the breaking of the law was mostly an attempt to make sure his investors were left whole.

Here's the facts as I understand them:

1) He ran a hedge fund, and lost a lot of money.

2) He didn't disclose to his investors that he lost the money, and falsified reports.

3) In an effort to make sure people didn't lose money (whether to protect himself or to make sure his investors were made whole) he took profits from another company he ran and used them to pay these investors.

4) Almost all investors in the hedge fund ended up making a profit because of this.

It's fairly easy to interpret this as someone that screwed up bad, and then broke the law to cover it up and try to make it right, and by lucky happenstance was actually able to get people's money back, but still ended up breaking the law. That's a fairly good story to have, and I would think lends itself towards a mitigated sentence.

On the other hand, he repeatedly presented himself in an unsympathetic way that antagonized the judge and the regulatory bodies involved.

It is, to put it mildly, a fairly complex and (to my layman eyes) unique situation, compounded by the fact that his behavior may or may not have to do with being socially inept (is it right to punish someone for a social disability, if that is indeed the case here?)

There was a discussion about this when the guilty verdict was announced[1]. Much of my info comes from that article and this other one[1] from the same time period.

1: https://news.ycombinator.com/item?id=14931004

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


Punishment seldom if ever fits the crime. There's a strong case that punishment exists to give society a chance for collective catharsis. Otherwise it makes little sense to imprison someone for 7 years. If they can be rehabilitated then do so; if they need to be removed from society permanently then do that. Public ostentatious punishment is really a form of vicarious group sadism directed at the unpopular.


> But nearly no bankers responsible for the 2008 financial crisis ever went to jail

That is a myth. Dozens of bankers were arrested and put in prison over crimes related to the 2008 financial crisis. That includes a number of bankers at large enterprises. It excludes the very top tier bankers, at the systemically important financial firms, who all managed to skate.

It's not illegal, generally speaking, to make dumb investment decisions, and or to take a lot of risk, and lose money. The responsibility for the 2008 financial crisis is spread across both the public and private sector, from Congress & multiple Presidents to the Federal Reserve to hundreds of banks, thousands of bankers, and tens of thousands of mortgage brokers and realtors. Spurred on by low interest rates, it was collective financial insanity that millions of people willfully, cheerfully, participated in.

"The idea that no bankers went to prison for crimes related to the financial crisis is a myth, according to the watchdog overseeing the federal government's bailout fund. There have been 35 bankers sentenced to prison, said Christy Goldsmith Romero, the special inspector general for the Troubled Assets Relief Program (SIGTARP), in a report to Congress released Thursday."

"There have been 59 bankers convicted of crimes, including two executives at NOVA Bank in Philadelphia who were convicted on Wednesday of fraud conspiracy related to TARP funds. An additional 19 bankers have been charged with crimes, with many awaiting trials."

http://money.cnn.com/2016/04/28/news/companies/bankers-priso...


I'm no expert on the financial crisis, most of my knowledge comes from The Big Short. But wasn't there actual fraud also being perpetrated? E.g. the ratings agencies that knowingly assigned A grades to bundles of decidedly low-grade debt just to keep clients happy?


The agencies' ratings are essentially protected by the First Amendment, as the rating represents the agency's opinion on whichever security offering.

Fraud isn't purchasing a house that's advertised as "clean" only to discover that there was asbestos in the basement. Fraud is advertising as such after a legal definition for the word "clean" has been established to include "asbestos-free" and yet the house has asbestos anyway.

There aren't any strict legal definitions for what "BB" and "BBB" and "A" and etc. mean, and that's why the ratings agencies could rate them as AAA, because the subjective expectation (as unfounded as it was) was for the housing market to keep booming forever, which was enough to slap a AAA rating without it being fraudulent.

(note I'm not trying to excuse or justify the ratings agencies behavior, only to explain)


It's a bit more complicated too - rather than the AAA ratings being completed unfounded, they often seemed to have justification (at least on the surface), as various kinds of CDOs were typically packaged with insurance baked in, to make them appear less risky to the ratings agencies' models. One big problem ended up being that a lot of those insurance payouts were theoretical, as the entity on the other end (often ultimately AIG) didn't have have the money to pay out when so many mortgages were defaulting.

But, yeah. The agencies didn't really have much incentive to be skeptical of their models.


Yes, some small-time traders were put away. The odd CEO or CFO of a bank that's decidedly not TBTF. The poor shmuck who gambled outside his capital allowances with house money.

But if you are Jon Corzine - well, you can abscond with $1.2B of your customers' money, tell Congress you just don't know where it went, and then pay $5MM to avoid an embarrassing and inconvenient trial, all the while throwing that sucker Edie O'Brien under the bus for being dumb enough to miss that "getaway" at the Hamptons last year. (yes, this was a bit later than the 2008 blowup, but the cause and effect were the same)

Or you can be Lloyd Blankfein, who testified to knowing full well that their MBS desk was shorting the very products they were selling to their clients with sales pitches containing materially false claims. But Lloyd is a great guy, and he's had a rough go if it what with losing his hair and all. So we're not even going to prosecute, er, actually, we won't even bother to investigate the captain of who was privvy to the fraud on his ship, but didn't technically commit the fraud himself. So we'll go after that dumb trader Fabrice Tourre instead. $800k is a pretty stiff fine for someone who earns double that in a year. I'm sure he'll learn his lesson.

Or you could be Dick Fuld....

Perhaps you see a pattern here?

In the 1980s, when regulators and prosecutors didn't regularly get together for drinks with each other at Valentino, over ONE THOUSAND bankers were convicted, with roughly a third going to prison, with an average sentence of 3.2 years for the crimes. Not only including, but ESPECIALLY the captains of the ships.

And they went after EVERYTHING - even violations of campaign contributions laws unrelated to the S&L crisis itself.

Fast-forward to today. For a crisis arguably MORE fraught with fraud, with substantially worse fallout for the country: 59 convictions. Most were traders, in security sales, or ran tiny local banks. ZERO of them were Wall Street C-suite, directors, vice presidents, or anyone else who signed off on the fraud at a higher-than-upper-management level.

In most cases, regulators and prosecutors are hesitant to even INVESTIGATE.

This is to say nothing of the fact that nearly all large Wall Street banks are regarded by Federal regulators as recidivist banks, meaning that they keep breaking the law, getting fined less than the profits made from the crime, and doing it again. And again. And again.

Nobody at HSBC went to prison for facilitating the murder of thousands of Mexicans by cartels. And nobody ever will. There are plenty of statutes on the books to criminally prosecute the bankers responsible. But we won't. Because some people are more equal than others.

These constant apologetics for the parasites are, frankly, sickening.

Same with the constant apologetics for arbitrary enforcement of law. What exactly is the point of having laws if the existential importance of the criminal to a bank is a critical deciding factor in whether or not to investigate, charge, prosecute, or convict?


As far as I can make out from that article all the executives were jailed for tarp-related crimes. Since tarp post dates the crisis, it's not really accurate to cure it in response to a claim about bankers responsible for the crisis. They admit most of those jailed were low level. Certainly the one top executive using cited was tarp related. Which makes sense, since there were quite good anti fraud controls in tarp.

> It's not illegal, generally speaking, to make dumb investment decisions, and or to take a lot of risk, and lose money

You're not going to find criminals if you don't look for them. Bill black:

> All right so you have massive fraud driving this crisis, hyperinflating the bubble, an FBI warning and how many criminal referrals did the same agency do, in this crisis. Remember it did well over 10,000 in the prior crisis. Well the answer is zero. They completely shut down making criminal referrals

http://neweconomicperspectives.org/2011/09/william-black-why...


One banker did. For 30 months.

I think Shkreli was obnoxious and crude; the sentencing should've aligned with the crime. But America, so vengeance porn.

https://www.nytimes.com/2014/05/04/magazine/only-one-top-ban...


He was also obnoxious and crude in a manner that made it near impossible for the judge to be generous in mitigating his sentence with regards to acceptance of responsibility. He couldn't even wait for an hour after being convicted before going on YouTube and bragging about how he thought he wouldn't face any prison time: https://www.marketwatch.com/story/martin-shkrelis-lawyers-fa...


What were the specific laws that you believe the 2008 crash bankers broke?


Fraud, securities fraud, and forgery would do as a start.


Who committed fraud, specifically? This always comes up and, while I agree that maybe things possibly weren't investigated enough, I don't think there are any clear examples of people who committed fraud and got away with it.

A lot of people being stupid does not equal fraud.


I recommend reading Karl Deninger at https://market-ticker.org/ ; I don't know if his archive back to 2007 are available to non-subscribers, but he's been documenting these issues, quite well presented, since 2007.

The bottom line is, for the 2007/8 crisis, there are hundreds if not thousands of people guilty of fraudulent misrepresentations, and for inventing their own laws, with no reprecussions. I think the most egregious case is the "robo-signing" and MERS case (which are intertwined), which appear to involve thousands of cases of perjury, non of which were prosecuted, or even investigated -- but the publicly available evidence is damning enough, even if no justice official decided to investigate.

But why go back so far? So far, the recent wells fargo fraudulent account opening case [0] has resulted in a slap on the wrist and no one being charged. I don't know who committed fraud specifically, and it seems no one who can find out wishes to find out either. In 8 years, someone like you is going to ask "but who specifically committed fraud? this always comes up". There are clear examples of fraud; if there aren't clear examples of who committed that fraud, it is only because the powers that be decided they do not want to know.

[0] https://en.wikipedia.org/wiki/Wells_Fargo_account_fraud_scan...


Efery single banker who submitted forged documents in foreclosure cases. Possibly every banker who blacklisted honest real estate appraisers in order to find ones who would give them an appraised value high enough to justify the loans (to people whom the bankter assisted in fraudulently applcations for) which they would sell off profitably securitised to investors duped by credit rating agencies lyingly giving them AAA ratings.


Which laws did the bankers break?

The 2008 financial crisis was very complex and had many bad actors on many sides, but the majority of outright fraud was committed by small time mortgage originators (or employees of large originators) and the individual homeowners who lied to get loans.


Nowhere in that article does it describe an actual crime that went unprosecuted.

Shkreli broke the law. The financiers causing the financial collapse did not. Perhaps the laws should be changed.


"The financiers causing the financial collapse did not."

They weren't prosecuted. That doesn't mean they didn't break the law.


Likewise, just because they caused the financial collapse doesn't mean they broke the law.


CDO (Collateralized Debt Obligation) origination fraud is a crime. The GFC was not caused by law abiding activities. It was fraud, plain and simple.

https://www.justice.gov/opa/pr/bank-america-pay-1665-billion...

As part of the RMBS Working Group, the U.S. Attorney’s Office for the District of New Jersey conducted a FIRREA investigation into misrepresentations made by Merrill Lynch to investors in 72 RMBS throughout 2006 and 2007. As the statement of facts describes, Merrill Lynch regularly told investors the loans it was securitizing were made to borrowers who were likely and able to repay their debts. Merrill Lynch made these representations even though it knew, based on the due diligence it had performed on samples of the loans, that a significant number of those loans had material underwriting and compliance defects - including as many as 55 percent in a single pool. In addition, Merrill Lynch rarely reviewed the unsampled loans to ensure that the defects observed in the samples were not present throughout the remainder of the pools. Merrill Lynch also disregarded its own due diligence and securitized loans that the due diligence vendors had identified as defective. This practice led one Merrill Lynch consultant to “wonder why we have due diligence performed” if Merrill Lynch was going to securitize the loans “regardless of issues.”

Disclaimer: I was privy to this having known several mortgage underwriters who identified this fraud, and despite reporting it with extensive documentation (which I personally collated and delivered via FedEx) to the SEC, DOJ, and OCC, were ignored.


"Fraud" can be civil fraud, or criminal fraud. Criminal fraud is something like "they said they were going to sell me something, but just took my money instead." Civil fraud might be something like "they sold me 10-inch sandwiches as 12-inch sandwiches."

What you're describing in the paragraph above is even one step removed from the sandwiches. Knowing that "loans had material underwriting and compliance defects" doesn't prove that Merrill Lynch lied when it said "the borrowers ... were likely and able to repay their debts." It might lead to an inference to that effect, but it's not indisputable proof. Likewise, the fact that it "rarely reviewed the unsampled loans to ensure that the defects observed in the samples were not present throughout the remainder of the pools" might lead to an inference of negligence, but is not indisputable proof of fraud.

Everything described in that paragraph is classic civil fraud and negligence, not criminal fraud.


> Criminal fraud is something like "they said they were going to sell me something, but just took my money instead." Civil fraud might be something like "they sold me 10-inch sandwiches as 12-inch sandwiches."

Is it purely a matter of partial delivery, or does magnitude matter? What if it's "they sold me 10 tons of gold as 12 tons of gold?" Because that's a big difference.

Then again, 10 inch sandwhiches sold as 12 inch sandwhiches allows you to save over 15% of materials, which if you're a nationwide chain could be quite a lot of money as well.


Civil fraud versus criminal fraud is very fuzzy. it often comes down to what you think you can prove about fraudulent intent. I gave the sandwich example because you can create “reasonable doubt” by saying the mistake was due to bad QA, rather than fraudulent intent. The fact that the sandwiches are shorter, by itself, does not prove fraudulent intent.

The mortgages are even harder. The banks are accused of lying about whether borrowers could pay. The fact they couldn’t pay doesn’t prove that. The fact that the banks ignored warning signs doesn’t prove that. The fact they knew about underwriting failures doesn’t prove that. Not beyond a reasonable doubt.


Thanks, that makes sense. It's less of a it broke these specific laws" and more "can you prove intent" (IIUC).


OK now do SarbOx. Let's use Jamie Dimon as our example.


I assume you're talking about this: https://www.salon.com/2013/12/18/jamie_dimons_perp_walk_why_....

The article is garbage.

The author's theory is that Dimon is liable under SOX Section 906, because he certified that JP Morgan has "adequate internal controls" under SOX Section 404, but admitted that their controls need some work a month later.

But Section 404 is addressed to "internal control structure and procedures for financial reporting." I.e. do you have controls in place to address the Enron-style situation of people using creative accounting to cook the books. What Dimon was talking about, in the context of the London Whale, were risk management controls. The author tries to lump them together, but the statute clearly addresses accounting controls, not risk management controls. See 15 U.S.C. 7262(a). There's lots of different kinds of "controls" in a company. E.g. there are controls to make sure employees don't pay bribes in foreign countries so as to expose the company to FCPA liability. SOX only addresses controls in connection with financial reporting.

Even if you got past that hurdle, the article is wrong to suggest that you could bring a SOX 906 prosecution for violation of a SOX 404 requirement.

SOX 906 states:

> The statement required under subsection (a) shall certify that the periodic report containing the financial statements fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer. That's the result of the Enron debacle, where the company and its auditors were misrepresenting the financial status of the company (revenues, liabilities, etc.).

Securities Exchange Act Sections 13(a) or 15(d) don't say anything about adequate internal controls. That's part of SOX Section 404. By the plain terms of the statute, Section 906 liability doesn't attach to misrepresentations directed to Section 404 requirements.

There is a separate certification provision that covers the Section 404 requirements, SOX Section 302.[1] But to bring a criminal action for violation of the Section 302 certification, you have to get a little creative, applying the other securities criminal statutes: http://dodd-frank.com/u-s-brings-criminal-charges-for-false-....

The problem is, those other criminal statutes are directed to protecting people who own or are considering buying JP Morgan stock, not people who bought financial products from JP Morgan. They're designed to prevent Dimon from misrepresenting JP Morgan's financial health to JP Morgan's investors, not to prevent JP Morgan employees from lying to transactional counterparties.

[1] https://www.mofo.com/resources/publications/sec-requires-ceo...


This article [1] states that the nature of the offense doesn't necessarily distinguish civil from criminal fraud, but rather the party pursuing the legal action:

> A single act of fraud can be prosecuted as a criminal fraud by prosecutors, and also as a civil action by the party that was the victim of the misrepresentation.

> It might lead to an inference to that effect, but it's not indisputable proof.

Again we're back to the lack of evidence not implying innocence if the supposed crime wasn't adequately investigated. That's what an investigation is for, to find and assemble evidence for a suspected crime.

Its a common belief that no serious effort to incriminate top bankers was initiated. To me it is beyond argument at this point. Do you still believe that is a questionable supposition?

[1] http://bochettoandlentz.com/criminal-fraud-vs-civil-fraud-wh...


Indeed. There was fraud committed at all levels which lead up to the crash.


I like how absolutely critical little 'details' like this get missed on HN so easily, by people speaking with extreme confidence. Thanks for the reality check!


Madoff went to prison, but then he foolishly made rich people the victims of his ponzi not the economy at large.


Excellent point. 0 bankers went to jail (other than that one BofA dude). One of the great travesties of this decade.


You think people should go to prison for being obnoxious?


Cases like this always use expressions like "showed a lack of remorse." It speaks to how likely they are to reoffend.


That's not what was said at all.


To give some background on how his sentencing increased so dramatically, initially he was convicted but since no one lost any money his sentencing guidelines were 0-12 months(most likely no jail time since it was his first offence). As a general rule of thumb in federal fraud cases sentencing is primarily determined by the what's called the "loss amount" of the crime in question. But a couple weeks ago the judge decided to come up with a HYPOTHETICAL loss and base the sentencing on that! And that hypothetical loss was set at $10.4M! Meaning he just went from no jail time 7 years overnight. This seems beyond absurd and as far as I know has no precedence.


> To give some background on how his sentencing increased so dramatically

It didn't increase. His sentence was never anything else.

> initially he was convicted but since no one lost any money his sentencing guidelines were 0-12 months(most likely no jail time since it was his first offence).

False again. When the sentencing phase began, his lawyers argued there were no legal losses caused by his fraud, and prosecutors argued that losses were in the $9-20 million range. Both sides presented evidence and legal argument to support their position.

> As a general rule of thumb in federal fraud cases sentencing is primarily determined by the what's called the "loss amount" of the crime in question.

This much is correct.

> But a couple weeks ago the judge decided to come up with a HYPOTHETICAL loss and base the sentencing on that!

False; it was not a hypothetical loss amount. The court applied existing legal precedent that “loss in fraud cases includes the amount of property taken, even if all or part has been returned.” [0]

[0] http://www.courthousenews.com/wp-content/uploads/2018/02/Shk...


Interesting! From your [0] link:

"The Second Circuit repeatedly has held that “loss in fraud cases includes the amount of property taken, even if all or part has been returned.”"

"(Rejecting the defendant’s argument that the value of his fraud victim’s equity in his partnership should be subtracted from the loss amount, and holding that “[t]he ‘loss’ was the money that the investors were fraudulently induced to invest ...irrespective of the value of the [property].”)"

"The Sentencing Guidelines provide for specific “Credits Against Loss,” whereby loss calculations may be reduced by, inter alia, “[t]he money returned . . . by the defendant to the victim before the offense was detected.” The Guidelines define “time of detection” for purposes of credit against loss as “the earlier of (I) the time the offense was discovered by a victim or government agency; or (II) the time the defendant knew or reasonably should have known that the offense was detected or about to be detected by a victim or government agency."


Where are your sources that he was only facing 0-12 months when he was initially convicited? There are stories from the time of his conviction (in 2017) that say he could potentially face decades in prison:

https://www.thestar.com/news/world/2017/08/05/lack-of-remors...


> initially he was convicted but since no one lost any money his sentencing guidelines were (...)

So.. If I try to rob a bank and fail and no money is stolen, then the sentence should be reduced?


Running a hedge fund in completely different than robing a bank. You should use at least an iota of intelligence before commenting.


Sure, you don't go to prison for running hedge fund. That is legal. He was not convinced for running fund.


And yet, you avoided answering the question :-)


No your sentence should be that of whats historically been the sentence, not 700% more than average.


I heard it was originally going to be 50 days but the judge decided to mark it up by 5000pc


Guidelines were 27 years.


[flagged]


I never suggested the judges decision was off the cuff, you just made that up. I simply stated that he is doing 7 years for a $10.4M hypothetical loss that never happened.


> hypothetical loss

There were massive losses. It was only after Shkreli's scheme was unraveled and he realized was likely going to prison for his crimes that he gave disgruntled investors Retrophin stock to make up for their losses.

Making things right after being caught committing a crime doesn't make the crime disappear.


Are you saying that the investors money was not actually taken under false pretenses? Because the legal rule, based on precedent, applied was that the value fradulently taken (whether or not later returned) is the “loss amount” for sentencing purposes.


Not disputing that. Just saying there were no ACTUAL losses.


No actual loss because he returned it?


It does say something depressing about our laws that he got sent to prison for the thing where he lied to rich people while still making them money rather than the thing where he extorted sick poor people...which is still fully legal even if the majority of society thinks it shouldn't.


Not it doesn’t. Our legal framework doesn’t oblige you to save someone’s life just because you have the means to do so. If it did, we’d all be in big trouble—for the cost of a fully loaded MacBook Pro, you could save someone from malaria in Africa.

The fact that people think a particular unpopular thing shouldn’t be legal doesn’t change that. There are a lot of things people believe should be illegal that aren’t illegal, because that would conflict with higher principles of law. People are easily swayed by emotion; the law at least attempts to be rational.


You mistakenly compare a failure to act ("save someone from malaria") with a clear purposeful action ("extorted sick poor people").

And there's no particular "higher purpose" of the law here that prevents us from making Shkreli's behavior illegal. Price gouging is illegal under other circumstances [1]; as far as I can tell his actions were legal just because nobody thought someone would be this awful.

If you'd like to defend this sociopath, please at least try to make your argument relate to the actual situation.

[1] https://en.wikipedia.org/wiki/Price_gouging


    Malaria person: please wpietri, help me.
    wpietri: No

    Sick person: please shkreli, help me.
    shkreli: Sure, for $500
At least in the second scenario the person is being offered an option under which they get help. It sounds a lot better than the first scenario for the afflicted.


2012 - Malaria person: please dwild, help me.

dwild: no

2017 - Malaria person: please dwild, help me.

dwild: no

2012 - Sick person: please Daraprim, help me.

Daraprim: Sure, for US$13.5

2017 - Sick person: please Daraprim, help me.

shkreli: Sure, for US$750

You see the difference? With me, they stayed at the same level of help, none. In the second, he purposefully profited from the help they were getting from Daraprim. He removed something they had beforehand.


Gosh I wonder if a replacement was made for Daraprim..

>Imprimis Pharmaceuticals, a specialty pharmaceutical company that creates compounded drugs, released a $1 a pill alternative to , a toxoplasmosis treatment whose price skyrocketed by over 5,000% in recent months.

>While the new pill is a boon for patients in need of treatment for the food-borne illness, especially those with weak immune systems like HIV/AIDS and cancer patients, the alternative drug is not an exact copy of Daraprim.

>Imprimis’ pill is a combination of pyrimethamine—the sole ingredient in Daraprim—and leucovorin, a medicine that helps reverse the negative effects on bone marrow caused by the way pyrimethamine works in the body. The two medicines work synergistically and are recommended to be taken in tandem by the Centers for Disease Control. Leucovorin is often prescribed alongside Daraprim.

Not only was the replacement cheaper, it was daraprim coupled with another drug to fight side effects of daraprim.

The judge in this case has a history of using her bench as a bully pulpit. She claims that outside factors had 0 influence on her decision. I find that pretty hard to believe especially with her history.

As for the cost increase I believe they were funding a non side effect version of the drug, which would probably be nice for alot of people. Bone marrow is something thats hard to live without.

This will be overturned. So what if he's a trolling douchebag.


He wasn't charged for raising the price of daraprim. That wasn't illegal. Defrauding investors is illegal. I highly doubt the case will be overturned.


He was prosecuted for raising the price of Daraprim, at least indirectly. This case is peanuts in the world of investment fraud, but Shkreli was an extremely soft target and a prosecutor looking to make a name for themselves saw the opportunity and took it.

There's very little chance of the case being overturned, but I'm guessing he'll go for a sentence reduction by trying to emphasize that his sentence is based on a hypothetical loss number.


Would you like to bet on it? I've got $100 that says his sentence will be reduced by at least 50%.


Sure. Know a good betting platform? Maybe his sentence will be reduced somewhat, but I doubt by half. Also, we'll need to remove time-off for good behavior (which everyone gets by default unless they get in trouble) as part of the bet. 7+ years for defrauding investors is not uncommon, regardless of the other circumstances around the case and the defendant.


Federal good time credits are limited to 15% of the sentence, so he'll serve at least 6 years if the sentence isn't reduced on appeal.[1]

[1] Actually, slightly more than 6 years because Congress is completely incompetent: http://famm.org/wp-content/uploads/2013/08/FAQ-Federal-Good-....


I agree to your terms. I'm fine without a betting platform. All my contact info is in my HN profile. If you want to ping me via email or twitter so we know how to get in touch that would be convenient.


How is dwild still not strictly worse from a utilitarian point of view?


Yes I see the difference.

Shkreli is charging more. What still better than dwild though.

So maybe dwild should go to jail


    Sick person: please moderately profitable pharma company, help me.
    moderately profitable pharma company: Sure, for $50

    Sick person: please insanely profitable pharma company post shrekli, help me.
    insanely profitable pharma company post shrekli: Sure, for $5000


Exactly. Same thing. Both voluntary business transactions subject to the same rules as any other voluntarily exchange. No one is obligated to sell any particular good or service for any particular price.

I know a lot of people see this differently but I don't think they have an ethical leg to stand on. When it gets down to it they have no particular rule for fair pricing other than "that feels too high to me."


And yet, Harry, if you had bothered to read the link in my comment, you'd discover that there are laws against price gouging.

Fair pricing can be tricky to determine. However, in Shkreli's case, his entire strategy was to take drugs where a fair price had already been determined by the market and then take advantage of supply constraints to raise the price drastically, by 20-50x.

If you really can't tell the ethical difference between his behavior and normal business, I think you aren't trying hard enough.


And yet, William, if you had bothered to read the link in your comment, you'd discover in the "Opposition to laws against price gouging" section that there are numerous people who think these laws are bad and that they make some pretty good points.

In the case of Shkreli and Daraprim the price change induced Imprimis to bring a new drug online which added strength and diversity to the marketplace which is what we expect to happen in a well functioning marketplace when parties work to maximize their own self interest.


There's a big difference between "some pretty good points" and "don't have an ethical leg to stand on". If you're now acknowledging that there is in fact a reasonable case for anti-gouging, that's a step forward. Thanks.

Sure, one of Shkreli's attempts to gouge was partially thwarted by a competitor. Were all of them? Is there any guarantee that all future gouging attempts would be equally pointless? Of course not. Because, your free-market fundamentalism aside, markets fail all the time. That's why to get well-functioning marketplaces we outlaw a great variety of market-harming behaviors. Including things like price gouging for things people need to survive.

Markets are not ends in themselves. They exist, with extensive societal support, because they're a useful mechanism to provide a reasonable distribution of goods and services to humans in those societies. When parasitic actors use those mechanisms to cause societal harm, it's entirely reasonable to tinker with the mechanism.


There are multiple cases where someone can be obligated to sell for a particular price. Eminent domain is the most obvious example but Reasonable and Non-Discriminatory Licensing [1] is more applicable. Patent laws creates a temporary monopoly. This monopoly needs to be regulated to prevent abuse. Avoiding extortionist pricing of patented medications seems like a reasonable area for regulation.

1. https://en.wikipedia.org/wiki/Reasonable_and_non-discriminat...


But the patent on daraprim expired decades ago. It was a single source drug because there wasn’t enough money in the market for another manufacturer to make a competing alternative. There are something like 8,000 prescriptions a year.


In which case that sounds like market failure to me, which is another excellent time for regulation. We do this all the time with other "natural monopolies".


> No one is obligated to sell any particular good or service for any particular price.

Well, nobody was forcing him to sell goods or services for any particular price. He set the price and now he has to face the consequences.


"Nobody will force you to sell your goods for a particular price, but if you pick the wrong price, there will be consequences."

Do you have some special definition of "force" that you are using which doesn't involve you deciding for someone else which course of action they will take and then making them take it at risk of "consequences"?


Regulating the price of medication isn't a slippery slope to outlawing MacBook pros. What a preposterous thing to say.

The law is whatever society decides it should be. There is nothing inherently rational about it. You'd have to accept some pretty messed up things as rational if you actually believed that.


Just 2 nitpicks:

1) The law is what a very small group of people decides it should be, and

2) Slippery slopes in law are a very real thing. Just listen to Supreme Court oral arguments. That's (supposedly) why it takes so much forethought and time to enact them.


This group of people consists of who a very large group of people think it should consist of. You can actually go and vote or even go into politics yourself!


As the old saying goes: "If the democratic elections really could make a difference they would have been forbidden by now".

American law for example reflects views and interests of small group of oligarchy, and not general public. It's been like that for quite a long time, to quote [1]: "The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy"

[1] https://www.theatlantic.com/magazine/archive/2018/03/america...


Lmfao, the law is whatever those that own the politicians say.

My favorite in my current industry is how codified insurance costs are built into the system. You can't charge below X, because that would undercut the big players. So you have price floors, for no reason other than regulatory capture and payoffs.


hmmh, sounds like you agree that it says something about laws, but that jacking up prices on drugs is something you don't think the law should prohibit.

well, everything that's undesirable shouldn't be illegal.

but the system isn't working very well if Shkreli's desire to make millions trumps someone's desire to live.

democracy and markets only work if people are decent. you don't have an efficient outcome if one guy has a monopoly, or if one guy has to buy or die.

and the purpose of property rights is a system that works and has good outcomes, if property rights as construed mean everyone dies or is immiserated, the nature of those rights is going to be renegotiated.


So, you would argue that directly profiting from raising the price of a necessary life-saving medication is equivalent to making charitable donations to foreign countries?

That seems to be a stretch to me...


What makes it a stretch?

In both scenarios there is a tradeoff between personal gain and someone else's wellbeing.


I think philosophically it has to do with being the agent that causes harm.

If I never existed to give charitable donations, those people in Africa are not in a worse situation because I am not here. My existence, and my possible charity can only improve this situation.

If Martin never existed, those poor people would possibly be much better off, getting a more fair price for their medication instead of paying the theoretical maximum.

The difference is One Thing is pushing a ball up a hill, and the Second Thing is pushing a ball down a hill. You can say, they are the same... both have balls and hills... but you have simplified out the most important distinction.

You are not obligated to make someone else's life better. But you ARE obligated not to make it worse.


If Martin never existed, those poor people would possibly be much better off

Well maybe. One of the reasons that drugs get invented is because people are willing to buy the rights to manufacture and distribute them. If Shkreli, and other people like him, didn't exist the drug might not be there in the first place.

But you ARE obligated not to make it worse.

I can think of lots of places that people make my life worse[1] and that's fine. People raise prices on things I want to buy. I've been fired before. I've been dumped by romantic partners. I've been spurned in various personal or business dealings.

I honestly think that people have a very unusual set of rules that they think should apply to medicine and health care services. They don't see these goods as typical products but as moral totems worthy of special rules.

1. This is not to say that my life is unusually bad. I think these things are pretty typical for most people.


Just because someone, business or person doesn't want to continue a relationship with you, doesn't mean they are doing you harm. Harm is not doing something you don't like.

Harm is purposely spilling nails and glass on the public road so that you can sell people more tires.

If you are trying to take the pure libertarian stance, that whatever the free market dictates is ok, I am actually fine with that. But you can't grant Patents to companies in that situation and give them special legal protection.

When the public grants you a legal monopoly and special protection, whether it is through a patent, or your local power company, they are only required to act responsibly and not take advantage of that protection.

I actually think the most just punishment for Shkreli's actions would have been to open source all the medications he abused. So any person or business with the tools to combine the chemicals would be allowed to do so, and sell them for whatever price they wanted.


There were no patents in play for any of the medications Shkreli's companies were selling.


You are right about that. He is really only protected by the high cost of F.D.A. approval for generic drugs.

In many ways Shkreli showed us the flaws and hypocrisy in our system, and helped show us what we need to do to create a better one. But I don't think that was his intended purpose.

And it doesn't change my original argument.... Not giving to charity, is not the same thing as profiting from the exploration of vulnerable people, even if both things are technically legal.

Edit: Rayiner, I can't reply to your comment but your analogy is completely wrong.

It's like a Fire Department used to put out house fires for $50. And Martin identified one street on the outskirts of town that vulnerable, and he purchased the contract to protect that street from the Fire Department... and now charges them $10,000 for putting out fires.

It's not 'the same' as the guy who does nothing. He didn't INVENT helping them, like every one of these crazy analogies suggest. They were being helped much better before he got there and he made the situation a lot worse for them. You can't ignore that context and set it up as a choice between "Not being helped" or "Being helped for an exorbitant price".


He’s not protected by that either—Imprimis released a competing generic shortly after the price hikes. All Shkreli did was identify a mispriced drug, and profit during the short duration it took for the market to correct itself.

You’re begging the question: what is “exploitation?” Is it “exploitation” to make money from helping someone? If so, why is that worse than not helping someone at all?

It’s like saying the guy who charges $10,000 to put the fire out on your house is worse than the guy who doesn’t do anything.


> If Shkreli, and other people like him, didn't exist the drug might not be there in the first place.

Right, and the law grants a limited term monopoly for novel pharmaceutical compounds to encourage innovation. In this case, the patent for Daraprim had long since expired.

What Martin Shkreli did was acquire the marketing and distribution rights for Daraprim, raise the price to $75,000/month, and then withdraw all pharmacy distribution, instead relying on a direct distribution model specifically to prevent other generic drug manufacturers from obtaining the drug for comparison purposes in FDA-required bioequivalence studies.

Is it legal? Sure. But he basically weaponized FDA regulations to reap a substantial profit.


The part you’re missing is that nobody else bothered to release a competing generic for all these years because there was no money in the market.

And, exactly as you’d expect the market to work, after the price hikes a company did release a generic alternative.


It sounds to me like the FDA regulations for approving new drug manufacturers haven't been very carefully designed. Whatever ire we have should be focused on them for screwing up the regulatory environment in the first place.


It's a question of personal responsibility:

* I mug you, compared to being a bystander while you are mugged.

* I hit you with my car, compared to being a passenger in the car ahead of the one that hit you.

* I price-gouge you on a medication you need to live, compared to buying a laptop for my job instead of sending that money to buy food for someone half a world away.

Do you really not see the difference?


So called price-gouging is more of an inaction (failing to sell you the product you want at your preferred price) than an action.


In many of the cases people think of when referring to price gouging in pharmaceuticals (such as Mylan with the EpiPen, Turing and Daraprim, or Valeant and a whole host of products) it was a positive action on behalf of the company, raising the prices by multiples. Regardless of one's feelings of whether this is legal, moral, or otherwise, calling price-gouging in these cases "more of an inaction" is a misrepresentation.


> positive action

The relevant inquiry isn't "positive action" versus "inaction" but causation. The bystander doesn't cause you to get mugged; he simply declines to prevent it. Likewise, raising the price on Daraprim doesn't cause you to get toxoplasmosis, it simply changes the terms on which the third party is willing to prevent the harm.

So the proper analogy is standing by while someone gets mugged, charging him $10 to stop the mugging, and charging him $1,000 to stop the mugging. The guy who does nothing is still the worst.


Agreed. I can see that my comment was a off-point. I tend to think of price gouging as the act of raising the prices, as opposed to selling at a price others may feel is unfair, and the latter rather than the former is what's being discussed here. Cheers.


I don't think the outrage was ever about Shkreli not saving someone's life. It was about Shkreli making lots of money from people's suffering, after artificially inflating the price of a drug that he controlled. In other words, getting rich from increasing the amount of misery in this world.


AFAIK, only the insurance companies paid his exorbitant prices.


That's not entirely true.

If it was billed to insurance, they would pass those costs over to the people paying the premiums.

Some insurance policies are self-funded: Meaning they have plans, but the insurance company is really just the administrator. The actual costs are paid by the company employing the people buying the insurance. They can both pass the costs onto the employees paying health insurance premiums plus add in that cost to the goods they sell.

A great deal of insurance plans have a co-payment for drugs. If you had to pay 20% of the cost of this drug, that is still quite an increase for the patient.

Not everyone needing these drugs has insurance. Luckily, some charities exist to try to pay the bills for these folks and sometimes there are other discounts available for the uninsured.

Some people are on government insurance plans, both in the US and in places with state health care. In these cases, the costs are passed onto tax payers.

Sorry, but pretty much everyone pays for this sort of thing.


Some insurance companies put the expensive drugs into a "specialty" tier, which can be significantly more expensive for the patient.

It's the difference between a $10 co-pay for a generic drug, a $25 or $50 co-pay for a non-generic drug, and a 30-percent co-pay for a specialty drug.


Increases to insurance company costs are passed on, with markup, to the insured.


No, in the United States they're generally passed on to the insured's employer. There are several negative aspects of that, but the big one is that the patient is less likely to complain about being overcharged if someone else is paying for it.

The whole idea of employer-paid insurance in the U.S. is an artifact of some tax law jiggery pokery back in (if I'm remembering right) the Depression/WWII era. Before that people paid for their own health insurance.


> No, in the United States they're generally passed on to the insured's employer.

Who takes them out of the total amount they are willing to pay for labor, so it still comes from the insured.


Perhaps that's how the mythical homo economicus would see it, but that's not how real people see it.

See also: the way that most people view a tax refund as "free money" that the government is "giving" them, rather than them having given the government an interest-free loan of that money (which is the actual case).

When they get a (partial) refund of the taxes withheld, they're happy, rather than being disappointed that they've had too much withheld (as homo economicus would).

If, instead, no taxes were withheld and they were forced to come up with the (non-refunded) portion in a lump sum payment once a year they'd be outraged.

Human psychology and math don't really overlap that much.

In one sense, yes, the money the employer pays would be available for wages, but the problem is that any savings would come out of a pool of potential wages for all employees. There is no direct incentive for an individual employee to save money on health care, because those savings will make zero impact on his paycheck.

One way of trying to get around this is, of course, the "copay". If the employee saves money, he does, in most cases, have a somewhat smaller copay. But the incentive isn't nearly as high as it would be if all the savings accrued directly to the employee.


And to whom do you think the insurance companies pass those costs?


Schools and some other public places were also required to keep Epi-pens on hand, by law. Some of them did pay the exorbitant prices.


Shkreli did not increase epipen prices.


[flagged]


Shkreli literally did not increase EpiPen prices. That was Mylan.


The commenter who brought up EpiPens was drawing a comparison between two recent, famous instances of "exorbitant prices" in medicine, pointing out that in the EpiPen there were non-insurers paying the crazy prices, i.e. that non-insurer payers for medicine exist. Shkreli not being behind the EpiPen prices is irrelevant to their point.


> In other words, getting rich from increasing the amount of misery in this world.

This is the fallacy. He didn't get rich from increasing the amount of misery in the world. He didn't give people toxoplasmosis. He got rich from not doing something he could do (i.e. sell drugs more cheaply) to decrease the amount of misery. Which is the exact same thing you do when you buy a Macbook Pro instead of donating the money to save a life from malaria: you forgo the opportunity to decrease the amount of misery in the world in return for your own personal benefit.


The arugment is that if Shrkeli hadn't involved himself in Retrophin, it would have continued selling the drug at the same price.


Intention matters. Your argument is purely utilitarian.

https://plato.stanford.edu/entries/ethics-deontological/


[flagged]


He did not make it harder for patients to get treatment, he simply made treatment available at a higher price point. At least he made treatment available when others weren't willing to do so.


[flagged]


You've been breaking the guidelines a whole lot by posting uncivil and or substantive comments. This just isn't the kind of conversation we're after here, so please fix this.

https://news.ycombinator.com/newsguidelines.html

Edit: we've banned this account. We're happy to unban accounts if you email us at hn@ycombinator.com and we believe you'll start following the guidelines.


There's zero rationality in allowing a critical drug (which the Epi-pen became) to have the price jacked up several hundred fold "just because".


Another way to look at this is that he got a harsher sentence than he should have on the "stealing from the rich" part which is a crime, because he was so unpopular on the extorting the poor part which (sadly) isn't.

Whether that's how we would like the system to function is, of course, up for debate.


He didn’t “extort sick poor people”, he extorted insurance companies. If you couldn’t afford his drugs, he was offering them for free.


You do realize that insurance companies have to charge people more money than they spend in order to be profitable, right? Exorbitant drug costs is just another one of the factors that price poor people out of insurance, which is actually a much worse outcome than simply denying access to that specific drug.


The price of the drugs is amortized over everyone with insurance. The drug in question has a total potential audience of around 2000 people in the United States, if I remember correctly, so that means the cost of the treatment will be spread very widely.

Also, the drug he raised the price on was a horrible 50-year-old drug. Shkreli raised the price with the explicit aim of getting funds to research a new drug, with less terrible side-effects.


Never mind the fact that he offered the drug for free to those in that 2000 group of people that couldn't afford it. People should read into why he really went to jail. The toxoplasmosis drug has very little to do with it and a lot of companies do the same with little repercussion.


The drug he was selling is used to treat a pretty rare disease, so it made little to no effect on the overall cost of insurance. And even at a higher price it was a good deal to insurance companies who would have to spend massively more if this drug wasn’t available at all.


Insurance premiums are pricing more and more people out of the market and that trend is driven by this sort of behavior.

I'm glad that Shkreli felt obligated to help the people who could directly attribute their suffering to him, but he's still a jerk who extorts sick people.


So do Health Care insurance companies. People don't realize how broken that system is until they or someone they know gets really sick.


Alternatively, life is sometimes a sad story, and once it happens to someone they know people start looking for systems to blame.


He played a zero sum game where he profited by imposing an incremental tax on the buyers of health insurance, the common public.


And schools, and other places which, by law, were required to have Epi-pens on hand.


I think you are confused, Shkreli's company owned retrophin, the toxoplasmosis drug, not epi-pen's.

And as the parent commenter said, he was charging insurance companies alone, and claimed the drug was only used by a few hundred people.


Schools waste disgusting amounts of taxpayer money overpaying for things all the time. What’s a couple more dollars to the books?


I suspect that will be an unpopular fact although true.

He was made an example of by Insurance companies and politicians. You have to remember Shkreli is very connected on Wall St and can call Soros et al friends.

I am of the opinion that the Judge was also biased in this case. She had a disdain for him from the beginning.

Junk away ...LOL....


If you make it punishable by prison time to charge more than some unknowable fair amount of money to make drugs, then nobody will make drugs.

If you make it not a crime to deceive investors and misuse their money, then rich people won't invest their money, they will keep it in vaults.

I consider "a world in which people who don't want to risk prison are still able to make drugs" and "a world in which capital is invested instead of hoarded" to be noble goals.


> If you make it punishable by prison time to charge more than some unknowable fair amount of money to make drugs, then nobody will make drugs.

That's not true. First because price gouging laws already exist, so it's not entirely unknowable - especially if this rule became a law. Second, because once it's known, it's like any other existing limit. If you pay people lower than minimal legal wage, you're liable - that hasn't stopped everyone from hiring.


Price gouging laws are generally applied only during emergencies, and ones that aren't are not, to my knowledge, well-enforced or constitutionally tested.


If you're going to complain, offer a solution. What should be illegal? Patents? Transferring patents?


Cruel and unusual given the crime. Half the sentence of Jeffrey Skilling who destroyed thousands of families. No question in my mind that the judge had it out for him from the get-go.


He really screwed himself over while he was on bail. He probably could have gotten off with what his attorneys wanted (around a year) if he just shut up until after the sentencing was over. But he kept trolling on livestream and twitter and acting like it was a given that he would get off easy. Obviously he was joking around with the Clinton "threat" but he should not have given prosecutors anything to use against him. I like the guy overall, his educational streams were pretty good, but trolling very powerful people while you are facing potential 20 years in prison is insane.


Shkreli taught me lots. If it wasn't for shkreli's advice and guidance my stock portfolio would be a mere fraction of what it is today.


Wow, it really is a treasure trove. I'm interested in biotech and could definitely use this kind of primer. Are you investing in biotech or are you just speaking in general?


I do minor investing in biotech. The skills I learnt generally helped me to focus on sectors that applied to my knowledge base more.


As a quick first pass at this, it looks like Shkreli was convicted of 2 counts of securities fraud (15 USC § 78j) and 1 count of conspiracy to commit wire fraud (18 USC § 1343) [0][1]. According to the US Sentencing Guidelines[2] §2B1.1, each offense of securities fraud carries, conservatively, 6 points, plus let's say 4 additional points under §2B1.1(19) for being an officer or broker, which it's my understanding he was. Let's ignore the fact that this fraud deals with potentially millions of dollars, and how that increases the number of sentencing points. Let's just say the conspiracy conviction carries the same penalty (although it seems like it could actually be higher, but not sure).

This all adds up to 30 sentencing points, which carries a recommended sentence of 97 to 121 months in federal prison under the US sentencing table [3].

A 7 year sentence (84 months) in prison doesn't seem cruel or unusual by any stretch of the imagination, and if anything seems like he got off easy. The judge didn't have it out for him, he committed a serious crime, was found guilty by a jury of his peers, and is now going to serve serious federal time for it. He broke the law and knew what he was doing. Maybe the guidelines are harsh, but that's way our laws our written. Take it up with congress.

[0] http://money.cnn.com/2017/08/04/news/martin-shkreli-verdict/...

[1] https://www.scribd.com/doc/293530336/1-main

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

[3] https://www.ussc.gov/sites/default/files/pdf/guidelines-manu...


Excuse me, the first statue should be 18 USC § 1348, not 15 USC.


The judge forced him to actively troll people, including goading his large audience into physically harassing a presidential candidate? I don't have a position either which way, but judges can consider whether the defendant shows a measure of responsibility and understanding [0] (e.g. remorse). Shkreli was bragging post-conviction on livestreams [1] and interviews that he wouldn't be spending time in prison. Whether people like Skilling deserved more punishment or not is orthogonal to Shkreli giving the court plenty of room to doubt he had recognized what he had been found guilty of.

[0] https://en.wikipedia.org/wiki/Acceptance_of_responsibility

[1] https://www.marketwatch.com/story/martin-shkrelis-lawyers-fa...


Yes going "fuck you judge" whilst on trial does tend to have that effect.

Its also why contempt of court and malfeasance in public office has such harsh panties


Damn You Autocorrect.


Genuine ROTFL I think I will leave that typo in :_)


My brain autocorrected it right back to what was intended on both the first and second readings :P


ha me too, had to read a third time to see what the typo was.


Are judges Kings now and if we hurt their ity bity feelings, they will send men with guns to arrest us for it?

This is exactly the same thing as when Kings used to kill people because they insulted their honor or something.


No, judges are not kings. The concept of a judicial branch came as a response to monarchies in which kings and ministers were given unchecked executive and judicial powers. That doesn't mean the judicial branch can operate without having laws and standards to prevent proceedings from falling into chaos. Shkreli and lawyer were made well aware of these laws.


Are people computers? It's not always perfect, but judges ideally have leeway in sentencing because the circumstances around the same crime are always different. A person that actually understands the gravity of a crime and is remorseful shouldn't get the same sentence as someone who has no respect for the law and seems willing to repeat the same crime or similar. It's actually a pretty big complaint about mandatory minimum sentencing when it is used against poor people of color.


I used to watch some of his investment tutorials on youtube as well as other videos. For someone called the "most hated man in America", he actually seemed like a nice person. I also enjoyed his trollish sense of humor.


His video series on investing and chemistry are like an adult version of Khan Academy. Martin literally sat on-air for weeks on end with a Chemistry textbook and went chapter-by-chapter explaining each topic in pretty good detail.

https://www.youtube.com/channel/UC8gjB1PSXv_oAUSAQ16S0fA/vid...


This gives me an idea to create a hand-curated list, "Useful Knowledge From Terrible People".


> I also enjoyed his trollish sense of humor.

I think that makes the title that much easier to understand. I'm an old-fuddy-duddy (for example, I say things like 'fuddy-duddy'), but to me there are two forms of trolling.

One where you're doing it to get their reaction and entertainment when they get it. I find this usually fun - the person doing it has fun, any audience has fun, and the person has that anguish-relief-joy cycle. When you do this to someone, you aren't gaining joy from the first emption your stoking, you get joy when it's found out and that emotion changes. The trolling itself is building anticipation. An example: My wife bought me a PalmPilot (back when those were a thing) but secretly took it out of the package to charge it, then gifted the surprisingly-not-much-lighter box to me. After my moment of feeling like I'd have to wait longer for my new toy (to try and return it) she revealed it fully-charged, and we had a laugh.

The second way is subtly different. The trolls are still poking at a person's emotions. They can SAY the target should get it and enjoy it ("relax, it's just a joke"), but really the goal is to entertain the troll and any audience. The targets of this trolling don't get a laugh. They get anxiety/hate/fear/dread/panic/anger or whatever, and the troll gains satisfaction from that, not from when that ends. Example: Posting political/moral thoughts that you don't have, but that are deliberately chosen to invoke outrage within the forum you are posting to, then moving on to the next once that's gotten enough reaction.

I'm obviously biased, but while I can appreciate the first kind, the second kind just seems to be increasing the misery in the world for a laugh. Laughs aren't so hard to get in other ways. Misery is miserable, by definition.

So if someone is described as a "troll" I tend to be leery rather than eager. When I encounter someone, it's very easy to find EITHER kind of trolling annoying. Perhaps because your brain is trying to fit people into a context/schema and trolling disrupts that. Brains don't tend to react well to that sort of thing. Known friends and family don't cause that reaction.

I don't know anything about Shkreli other than what I've read, but if you say "most hated man in America" and "trollish sense of humor", my instinct is to nod knowingly.


Love this. Glee from seeing somebody else suffer belongs in the 17th century, not today, and whatever "humor" value it may have does not give cause to dissociate it from its very nature of cruelty.


The old internet adage is that anonymity and lack of face-to-face interaction is what's caused this rude sense of humor to flourish.


The second is really the original essence of trolling. Evoking a reaction from people by pretending to be something you're not. Ken M is a classic example of this.

I don't mind it that much because I think it is a good reminder to people that they shouldn't take the internet too seriously.


> For someone called the "most hated man in America", he actually seemed like a nice person.

Not to be an ass, but many horrible people are skilled at manipulating an audience and crafting a particular persona. This man couldn't have defrauded his investors without a great degree of charisma and the ability to appear trustworthy and likable.


Used to watch them as well, really bright guy, entirely self taught. I TA'd organic chem and he might have had a deeper understanding than I do.

He really needed to learn when to stop talking, and where to draw the line with his actions, sadly.


He's exceptionally intelligent and I think he also has one or more kinds of personality disorder


>he actually seemed like a nice person. I also enjoyed his trollish sense of humor.

I see where you're coming from and don't want to get pedantic, but isn't as trollish sense of humor by definition at least a little mean-spirited?


The funniest comedy routines I have ever seen by the most prominent comedians are almost always disparaging of a person, group, or idea held dear by many people. Simmer on that and ask yourself if mean-spiritedness really matters in this context.


> seemed like a nice person

> ask yourself if mean-spiritedness really matters in this context

Yes?


> The funniest comedy routines I have ever seen by the most prominent comedians are almost always disparaging of a person, group, or idea held dear by many people.

I suggest that says more about you than about anything else.


The majority of comments here being sad about Shkreli kinda reaffirms my views about HN, I have to say.

Shkreli always seemed like a personified 4chan teenager "memelord" with money. Good to see that playing out your delusions of grandeur and arrogance toward the justice system is met with consequences.

Maybe in prison he will mature a bit.


I think you're going for the low hanging fruit by judging HN that way. The more interesting thing is that the majority of comments are shocked by the 7 year sentence rather than the minority who think he was "an ok guy."

I keep seeing this naive understanding of the law over and over again in tech circles. The justice system is made up of several people with a ton of leeway on how laws are applied. The letter of the law is just a small part of what "illegal" means. Being clever or cute about only breaking the spirit of the law will not save you in court, in fact many times trying to only break the spirit is what will get you convicted on the letter of the law. I hate to say it but I think Aaron Schwartz fell victim to this fallacy and in recent memory so did those flight sim guys who put a keylogger in pirated software.

I've spent a lot of time around lawyers and judges and I can tell you they have absolutely no tolerance for the kind of "well, actually" smart-asses that the tech community excels at churning out.

edit: I just want to add this exchange from the movie Blow which I think really sums up how I feel about the whole thing.

>Judge: George Jung, you stand accused of possession of six hundred and sixty pounds of marijuana with intent to distribute. How do you plead?

>George: Your honor, I'd like to say a few words to the court if I may.

>Judge: Well, you're gonna have to stop slouching and stand up to address this court, sir.

>George: [stands] Alright. Well, in all honesty, I don't feel that what I've done is a crime. And I think it's illogical and irresponsible for you to sentence me to prison. Because, when you think about it, what did I really do? I crossed an imaginary line with a bunch of plants. I mean, you say I'm an outlaw, you say I'm a thief, but where's the Christmas dinner for the people on relief? Huh? You say you're looking for someone who's never weak but always strong, to gather flowers constantly whether you are right or wrong, someone to open each and every door, but it ain't me, babe, huh? No, no, no, it ain't me, babe. It ain't me you're looking for, babe. You follow?

>Judge: Yeah... Gosh, you know, your concepts are really interesting, Mister Jung.

>George: Thank you.

>Judge: Unfortunately for you, the line you crossed was real and the plants you brought with you were illegal, so your bail is twenty thousand dollars.


> I've spent a lot of time around lawyers and judges and I can tell you they have absolutely no tolerance for the kind of "well, actually" smart-asses that the tech community excels at churning out.

It sounds like the smart-asses' only mistake is thinking that the same clever lawyering that protects the rich and powerful will work for them as well. The guys who put a keylogger in pirated software were in the wrong, but after seeing Sony do basically the same thing and get away with it[1], I can see how they might think that courts will give you a free pass if you come up with some loophole or something.

Martin Shkreli, like the rest of us, has no-doubt seen the rich and powerful flout the law and walk away clean after invoking some ridiculous legalism. Then he got rich, and figured he could do the same. Turns out that he's either not rich enough yet, or power flows from something other than money.

[1] https://en.wikipedia.org/wiki/Sony_BMG_copy_protection_rootk...


> I've spent a lot of time around lawyers and judges and I can tell you they have absolutely no tolerance for the kind of "well, actually" smart-asses that the tech community excels at churning out.

It's really satisfying when someone articulates so well that nagging sensation that you've had for a long time but failed to expressed. Like scratching an itch. Thank you.


I can tell you have they have absolutely no tolerance for the kind of "well, actually" smart-asses that the tech community excels at churning out.

Or perhaps it merely attracts them.


It certainly doesn't help. A web designer wouldn't like being told by a lawyer what their job entails either.

When you're dealing with professional egos sometimes it pays to tread lightly. Shkreli learned this the hard way.


Seems like a pretty even split to me. I'm glad the community is healthy enough to have this kind of debate even though I'm very much on the anti-Shkreli side.


> delusions of grandeur and arrogance

I don't think delusions qualify as crimes. However, bending laws to judge someone on actions outside of the scope of a trial is a crime.


Yeah it’s 2018 and still we send people in prison.


I think his fan club is hilarious. That they picked such a whiney troll to follow speaks volumes about their character.


Nobody is actually following him as you describe. Most of people that side with him do so because they are amazed at the unfounded witch hunt that he received and at the amount of people who demonize him 95% because of the Daraprim drama and 5% for his actual conviction. And of that 5% - 0.5% might have an idea of what they are talking about.

See his videos. You wouldn't stand a chance debating him unless you were a lawyer or pharmaceutical exec.

You are coming from emotions rather than facts. Really. His troll persona is only a small portion of his character.

https://www.forbes.com/sites/matthewherper/2018/03/09/you-ha...


>See his videos. You wouldn't stand a chance debating him unless you were a lawyer or pharmaceutical exec.

I have. He's seemingly a intelligent guy with some personality issues that have gotten him into trouble. I hope he takes time during his sentence to seek help because he seemingly has more to offer the world than trolling and unethical professional behavior.

Beside that, I don't care about Shkreli himself or the silly trolling (Wu Tang, Hillary Hair, etc). I have a fascination with fan club that feels the need to hand wave his behavior every time their is a discussion about him.

Yes, it's awful that we forgot about the pharmaceutical industry's price gouging schemes.

Yes, it's awful that people get away with worse financial crimes than Shkreli has been convicted of.

Yes, there are much worse people in the world than this small-time pharma player turned troll/media sensation.

None of that excuses the fact that he committed fraud and the handwaving of his behavior doesn't do anything to highlight the other injustices.

People that defend him may think that they are being profound by sticking up for him and possibly highlighting injustice. In reality, they appear to be diminishing the seriousness of unethical behavior and justifying self-indulgent and childish behavior.


> I have. He's seemingly a intelligent guy with some personality issues that have gotten him into trouble. I hope he takes time during his sentence to seek help because he seemingly has more to offer the world than trolling and unethical professional behavior.

Good point. Let's leave it at that because him helping the world is all that really matters.

Wouldn't you agree that his childish behavior is a response to the unfair reporting he received? Some people can actually see through that behavior and find more about the truth[1][2]. Would you like to receive thousands of calls every day? death threats? being told that you are are responsible for killing children in Africa? You see that he's smart and mature yet you focus on his OBVIOUS childish acting.

Yeah. A little hand waving is fine by me.

[1] https://www.youtube.com/watch?v=WLP-2jD1eH0

[2] https://www.forbes.com/sites/matthewherper/2018/03/09/you-ha...


Because I do not grant people an excuse for acting like a child because other people are acting childish towards them.

That entire line of reasoning is itself childish.


Legalities aside, being smart does not excuse childish behavior. Being smart is not an excuse and it is ridiculous to lower the bar for smart people.


He already is quite mature. The media brought him to the stage and he gave a little show. You should see one of his videos shutting down people like you who read 3 or 4 articles and formed an opinion based on that.


For every Shkreli that gets locked up there are hundreds of others that walk free. They wanted to make an example of him - it doesn't help that his character is almost a cartoon-villain of sorts.


Really recommend watching Shkreli's interview with The Breakfast Club where he's attacked for all the things he's become infamous for in the public sphere (drug price hikes, wu-tang album, etc.)

The guy gets it, and played the game the way it was presented to him. He actually comes across as a very smart, thoughtful, and respectful guy that can roll with the punches and dish back when needed. Sure he's a bit of a troll, but can you blame him when some of the most public figures/role models currently in the US are paid and rewarded for extreme trolling? Feel he's been very misunderstood, and it's a shame he got the book thrown at him

https://www.youtube.com/watch?v=JTNOWSKMS10


I agree he's very smart. But you argue that, besides being a boy genius, he is a very thoughtful and respectful guy -- yet he's too dumb and ignorant to recognize the consequences of extreme trolling? Even when he was warned repeatedly against such trolling, and that it was clear to everyone that such trolling would be absolutely a detriment to his own welfare?

If we agree that he is very smart, how does being thoughtful and respectful play into his trolling behavior post-conviction?


He understands the justice/social system and its absurdity and decides to have a bit of fun subverting the system and stirring up drama, even if it has detrimental effects on his ongoing case, because he enjoys giving the middle finger to authority and the established order/system.

He's respectful to the interviewers, but he seems to absolutely detest authority (especially authority which seems arbitrary or archaic).


What absurdity about the justice system did he perceive (that the status quo doesn't)? And if he knew what he was doing, and properly ascertained its detrimental effects, then why did he reportedly weep and plead for mercy when the sentence was handed down?

To put this another way, if Shkreli received what he thought he would get -- which is 0 days in prison (when considering time served up to now) -- then how is that less a mockery of the justice system than the other cases people complain about, when smart, clean-cut, cultured white-collar executives don't get what they purportedly deserve? I bet if Enron's Jeffrey Skilling (who received an initial sentence of 24+ years) had a YouTube channel, he too would come off as a relatable intelligent and clever human, which is what you'd expect of someone who worked his way up to CEO.


I don't have the answers you're looking for, just sharing my view of his character/motivations after watching a 30 minute interview with the guy on his upbringing, rap, and the pharma industry.

I'd wager Enron's CEO would come off as an actor or a sociopath reading press releases or prepared scripts for money, whereas Shkreli still exhibits genuine human emotions, quirks (genuinely passionate about rap/hip hop because it got him through tough times growing up), compassion (gave drugs away for free to those who couldn't afford, taught a youtube series on chemsitry/pharma for younger generation of investors), etc. It seems like it's not all about money for Shkreli, he wants to impact the culture and give back in unselfish ways.

I put myself in his shoes, and I feel bad for the guy having 7 years of his life taken from him, especially when many other white collar crimes of seemingly greater magnitude go unpunished


Well he wasn't sentenced for any of those things. His real "play" was securities fraud.


Sure, he had the spotlight on him after the "pharma bro" stories came out and everyone started to hate him unequivocally without considering how perverse incentives within the pharma/insurance system have allowed countless other drug manufacturers to take advantage of the same loopholes and price gouging techniques.

Unfortunately for him he has a hateable face, fit into the "young rich person flying too close to sun" story arc, and was dumb enough to continue his trolling activities instead of fading from the limelight and allowing the mob to pass on to the next social media pariah.

Think about it...his crime was that he lied to a few rich people who gave him money, then ended up making these rich people even more money in the end, ending positively for them. Then ask yourself why prosecutors have failed to go after any of the bankers responsible for the great financial crisis, which affected hundreds of millions of people and their families, causing many people to lose their homes, jobs, etc. Is that really a fair system? Or are people just gloating about this guy going to jail as some type of proxy for justice being served somewhere, in some fashion for white collar financial crime that many have been indirectly victimized by, but have never received due compensation/justice.

Really, nobody on HN should care that he's going to prison, drug price gouging will still continue on unabated, and 20 more snake oil ICOs will pop up tomorrow to steal investors money. This conviction is hardly a sign that the system is working as intended.

https://www.theatlantic.com/business/archive/2016/08/why-are...


Here's what we just witnessed.

1. Companies were cornering certain drugs, then hiking their prices up significantly. Shkrelli did the same thing (but stated he was willing to give it free for anyone who asked). Note, that this is not illegal in any way, but news was all over it and citizens were pissed.

2. Shkrelli, being outspoken, became the focus of this issue. He dug a hole for himself, but concerning drug prices, he did nothing illegal.

3. Prosecutors, needing to do something got him on fraud charges where he misstated information on an investment but still tripled their money.

4. Shkrelli goes to jail, news and citizenry quelled. Companies still free to continue cornering the market and jacking up prices with impunity.

That's how you get away with this stuff. News made money with the story. Companies made money with their drug hikes, politicians and prosecutors look good because they took action, Shkrelli investors made money. Shkrelli lost, patients lost, taxpayers lost. Rinse, repeat. Systemic corruption.


No here's what actually happened.

1. Shkreli lied to investors. Regardless of whether the investors eventually made money, Shkreli put them needlessly at risk, and broke the law.

2. He could have gone away for 15 years, or walked away with a slap on the wrist. The judge sentenced him for 7 years in prison, given the fact that this guy showed no remorse, and thought it made him likely to reoffend, perhaps with more serious consequences.


Yes, but you are getting distracted by exactly what you were supposed to get distracted by. He was hated because he hiked drug prices (and he was a dick). The news jumped all over this story and he was a perfect scapegoat.

Sadly, It's still perfectly legal to corner a drug and hike the prices. That was the bigger crime, and it continues to go on, costing taxpayers and patients millions if not billions of dollars, and sometimes costing their health.

Yes, hiking drug prices isn't what you should be looking at. Look at Shkrelli! He's in jail; problem solved. Politicians are now off the hook with this conviction. No problem here, justice served. /s


I initially did not agree with you, then re-read your posts several time, and have come to the conclusion you are absolutely right. Cornering a drug and hiking the price simply for profit and no other legitimate reason (supply chain issue, newer/more effective version, etc...) should be illegal. It is a crime, maybe not in the letter of the law, but ethically, it's a crime.


They're also leveraging the very thing that was intended to keep pharmaceuticals a legitimate industry; the FDA. The drug he (and many companies) target are drugs where the patent has expired but there is no FDA approved generic. I believe FDA approval can take up to 5 years, so that's 5 years it takes for the market to react. Of course in a free market, this would never happen because 10 other companies would start making the drug, but the FDA safeguards are being leveraged against fair competition.

Not only are these companies jacking up prices with monopolistic practices, but they are eroding the legitimacy of the FDA (also to their benefit).


> Cornering a drug and hiking the price simply for profit and no other legitimate reason (supply chain issue, newer/more effective version, etc...) should be illegal.

This is how all patents work. Are you against patents?


Daraprim is not patented.


In this dialog, only one party has constructed a narrative that involves drug prices, and it is not 9889095r3jh.


I'm not entirely sure what you are trying to insinuate.


You're claiming that the person who responded to you was distracted by something, but their response didn't indicate that at all.


It wasn't meant to be a personal attack against him, it was more of an observation that the citizenry are now quelled from being (rightfully) pissed about companies cornering a drug and hiking up prices.

Shkrelli is a scapegoat in reagards to the drug price hiking. It's still going on; it's still perfectly legal; and it seems the politicians are getting paid to keep it that way.

It's more of a thought of how the citizenry can get manipulated. Shkrelli was the face of this practice; Shkrelli is in jail; justice served. Or so the narrative seems to be.


Don’t assume that people who disagree with you are distracted or deluded.


He was arguing the wrong topic; whether or not Shkrelli got a just sentence. That's what we are supposed to be talking about; not the fact that it's legal to monopolize a drug then pursue monopolistic pricing practices on said drug. That's what Shkrelli was infamous for, not fraud.

I may or may not agree with the justness of the sentence, but that wasn't the thrust of my argument, therefore the distraction.


No, you're arguing the wrong topic. The linked article is about the outcome of the trial that occurred. Your 5-point "here's what happened" muddled the relationship between this sentencing and other reasons Shkreli is a public figure.

And thus the "here's what happened" attitude is exactly false; what happened was a petulant fraudster got a middle-of-the-road sentence for exactly the crime he was on trial for.


You're discussing the latest chapter, I'm discussing the whole book.

I'm including all the "Pharmabro" chapters over the last couple of years. Google his name. He isn't famous for fraud.


We understand, you're trying to draw attention to drug price hiking still occurring, and you think that this conviction will blow the whole thing under the rug. I agree with you on the first statement, but I think we disagree that the second was intentional.

The original replier (9889095r3jh) had an issue with (3), which is not really an accurate summarization (I don't think the prosecutors acted because he was hated; using the word misstate makes it seem like a mistake rather than outright lying; and it's totally irrelevant whether he tripled their money).

I agree we should change the regulation structure to prevent drug price hiking: any suggestions on how to do it? I for one would love to donate money to this cause if it's actionable.

Also, I'm sorry you're getting a lot of flak for that comment. It's mostly nitpicking, so safe to ignore once you see the point the nitpickers are making (including me).


I see. Yes, misstated was probably the wrong word. Here is what he got convicted of fraud for:

...the fund was managing $35 million in assets and had an independent auditor.

He said he later learned both of those claims were false

https://www.reuters.com/article/us-usa-crime-shkreli/investo...

That is a lie and therefore fraud, but the 7 year sentence seems out of line with the actual fraud committed (there are degrees).

Shkreli lied to him repeatedly, although he eventually made millions of dollars from the investment.

He made the defrauded investors money. In this crazy country, I'm not sure that giving someone shares in another company to cover other losses is illegal (Retrophin Inc). It seems like a Ponzi, but who knows. Fund managers are given a hell of a lot of leeway.

So to summarize, 7 years seem harsh for lying about the size of the assets and an independent auditor, given the fact that the investors made money. To me this seems more in line that he was punished for the press he got, and embarrassing Congress when they called him in for his perfectly legal monopolistic practices. I would much rather him be convicted for that.


He isn't convicted for being famous. He is convicted for fraud. The sentence takes into account his behavior with regard to his fraud case. He didn't show remorse, and it was likely that he would do it again. Hence a harsher sentence than he expected.


Don't forget 3b) had to go through hundreds of jurors while the news/twitter laughed about people saying they could not be impartial because he "had a punchable face" and "disrespected the Wu Tang Clan". Better hope you don't say anything too mean on Twitter and ever end up in court :(


It's more, "don't be an asshole". Which I feel is quite good advice for anyone. People are less willing to help people who are assholes to others.


In the defense of the potential juror, you cannot disrespect the Wu-Tang Clan. They'll banish you to the 36 chambers.


> 3. Prosecutors, needing to do something got him on fraud charges where he misstated information on an investment but still tripled their money.

I don't think the outcome should matter. Lying to investors should land you in jail. It shouldn't become okay "if investors still made money"


> I don't think the outcome should matter.

According to the article, "prosecutors had pushed for at least 15 years, saying Shkreli had not shown remorse for his actions"

How come the jury is allow to consider his alleged lack of remorse but is not allowed to consider the outcome? Both are current events


If he shows no remorse, and he faced no consequences, why wouldn't he pull another scam? That makes him more of a danger.


1 time is an accident, 2 times is a trend.


What jury? Federal criminal sentencing is done by the judge, not a jury.

Also, I don't agree with GP, but arguably the outcome is less relevant to the risk to society posed by reoffense than is genuine remorse or the lack thereof.


If I push my wife off a cliff for life insurance but she falls onto and kills a terrorist or school shooter does that lessen my crime? Does it even change the nature of my crime? No so it shouldn't enter in.


Judges take into account the "impact" of the crime all the time in sentencing. As they should.

In this case, his crime had no negative impact on anyone, and the unduly harsh sentence sure looks like a sentence for the unlikable (but perfectly legal) price hikes he did.


If you intend to kill someone and fail its less of a crime than if you succeeded. So maybe


Except this investigation was already in progress when the drug price thing happened.


Do you have a source?


It's easily verifiable yourself.

Here's a Newsweek article from September 2015, when the Turing Pharmaceuticals story broke: http://www.newsweek.com/martin-shkreli-drug-manipulation-dar...

> Since at least in January, Shkreli has been under criminal investigation by the United States Attorney’s Office for the Eastern District of New York, court records show. And Shkreli is not alone—some of his business associates have also received grand jury subpoenas in the case.


3. .. tripled their money

haha no... he LOST their money (All of it), LIED about it (fraud), and paid them back with OTHER funds.

Get the facts right first. Misstated - information, the only misstatements are in your post.


https://www.reuters.com/article/us-usa-crime-shkreli/investo...

(Reuters) - One of the investors former drug company executive Martin Shkreli is accused of defrauding testified on Wednesday that Shkreli lied to him repeatedly, although he eventually made millions of dollars from the investment.

This was apparently the guy who alerted investigators to the fraud. He made millions.


I make no claim that they were not paid back and in excess of their initial investment (which was not in pharmaceuticals)

If I lose your money, lie to you, but then I give you 10X your money because I had that in a bank account somewhere because I won the lottery doesn't mean that I didn't commit fraud in relation to your original investment.

Just because your "investment" was repaid at a greater amount doesn't mean you weren't defrauded. He made money because of a settlement, NOT because the investment was in pharma. From your own source article:

...largely through an agreement in which Shkreli gave him shares in his drug company Retrophin Inc.

Shkreli committed fraud, got caught, investors realized they were defrauded, Shkreli then settled privately and paid them above their initial investments with funds completely unrelated to their investments.

He made millions because Shkreli got lucky and was able to settle with them privately. That does not absolve him from the criminal actions he committed just because he settled the civil cases. If Shkreli didn't get lucky with his pharma scheme those investors would not get paid back because their original investment funds were all gone long ago, and again, were not involved in the pharma scheme.

You seem to lack the understanding of the facts in this case.


>Just because your "investment" was repaid at a greater amount doesn't mean you weren't defrauded. He made money because of a settlement, NOT because the investment was in pharma. From your own source article:

Show me where I said he didn't commit fraud. Tell me which facts are wrong. I cited where he made his investors money. You just threw insults. Jackass.



In regards to 3:

His investors only eventually made money after Shkreli paid them in stock and cash from Retrophin.

Prosecutors, on the other hand, have argued that Shkreli should not get any credit for what they described as stealing from Retrophin to pay off the investors.

source: https://www.cnbc.com/2018/03/09/pharma-bro-shkreli-to-be-sen...


Well, you seem to be saying that because the investment tripled, then no crime has taken place.

That's not really how it works.


Exactly. Matt Levine has a good summary:

https://www.bloomberg.com/view/articles/2018-02-28/big-compa...

"The government's argument is that those investors did lose money; it's just that Shkreli eventually paid them back after they started complaining. If your fraud loses money for investors, and they catch you, and you pay them back, then the losses still count. And while Shkreli has an argument that that's not what happened here -- that he gave Retrophin stock to the funds out of the goodness of his heart after they suffered honest losses, rather than to settle legal claims from disgruntled investors accusing him of fraud -- it is frankly not a very good one. And so he is getting tagged with the full amount that investors put into his funds, even though those investors all ultimately got paid back.

That seems analytically correct, though also a bit rough on him. Shkreli is obviously an unpopular character but he is not, as these things go, a particularly bad fraudster. His lawyers were seeking a sentence of "perhaps just 16 months or less," and that actually sounds about right to me for this sort of fraud. If he gets much more than that, I suppose it can be technically justified by legal arguments about the amount of loss that he caused, but I suspect it will really be driven more by his all-around dreadfulness."


I didn't intend to insinuate that. I was more trying to paint a picture of him being a scapegoat for the monopolization of drug prices. His prosecution diverted the public eye from this much larger problem.


Shkreli has repeatedly flaunted his wealth, privilege and false sense of superiority. Although not illegal, it's offensive. Offending the public, whether right or wrong, has consequences. Shkreli is getting a taste of mob justice, or just what he asked for.


> ...Offending the public, whether right or wrong, has consequences. Shkreli is getting a taste of mob justice, or just what he asked for.

Isn't that exactly what the justice system is in place to prevent?


No, it’s what the justice system is in place to formalize.


... in the US, apparently.


Pretty much everywhere, if the justice system doesn’t reflect the population’s desire for mob justice, the people will administer it extrajudicially. The places with low bloodthirst traditionally have strong civic fabrics and low violent crime. If those things change the justice system will adapt or die.


Isn‘t this a chicken and egg problem? If people don‘t get to know court proceedings when they happen it doesn‘t give them more outrage and justice porn and calms down the overall atmosphere. To compare, Swiss people generally don‘t care about what happens in courts, they care about the next direct democractic vote (and get riled up about it sometimes), but I consider that at least more at the root of politics and not targeted at individuals.


Then that "justice" system should be overthrow, along with every judge who supports that line of thinking.


The justice system is theoretically supposed to be somewhat isolated from this by limitations on democracy. But we've sort of morphed our way out of half of those limitations and we're almost getting the bad stuff without getting the good. The system is very prone to mass public opinion, but there's hardly anything any one individual can do to actively participate in the system. There used to be a strict upper limit of 40,000 citizens to one elected representative. Now the average is something like 20x that iirc, which is such a large number of people that it isn't really practical for most people to self organize and get their representatives attention on an issue. At the same time, people can get hyped up about what they read in internet tabloids or are told through the media, and politicians will be forced to respond to that.


>At the same time, people can get hyped up about what they read in internet tabloids or are told through the media, and politicians will be forced to respond to that.

This is spot on. That gives a heck of a lot of power to news organizations. That's scary when thinking of the quality and journalistic integrity of many, if not most news organizations. People react much more strongly to what they read/watch/listen to on the news. If the news can get them hyped up on a topic (opioid crises is the latest) then the politicians react, typically just enough to get the news off their back. We're left with ham-fisted solutions that make the problem worse. x30 years.


I‘d say it gives a heck of a lot of power to influential Twitter users, the press just seems to react to them nowadays.


Yes, social media definitely plays a huge role here. At the same time, the average person has next to no power at all. They have virtually no influence on mass opinion, little chances of having any influence on it, and even if they could, mass opinion typically doesn't have much influence on public policy unless its of the 'Manufactured Consent' variety. Perhaps we should be talking less about Russian Twitter bots 'hacking' our democracy and more about the fact that our democracy was barely working long before the 2016 election.


Yes, it doesn't help that most of the news is incredibly lazy and very easy to manipulate.


Criminal punishment in a republic [0] is exactly the institutionalization of the idea that offending the public has consequences. Hence, in the US, the popular styling of criminal cases as “The people vs. defendant”.

[0] a “republic” in the sense of a regime where government is notionally an institution for the interest of the public rather than a private property interest of a ruler or distinct ruling class; in non-republics, the non-public “owners” are the persons of whose offense consequences are institutionalized by the criminal justice system.


It's breaking the laws of the country who are indirectly created by the "public," it has nothing to do with mob mentality. We are a nation of laws. In fact, republics are a safeguard against mob mentality which can happen in direct democracy.

Until being offensive is illegal, it should hold no bearing in a just trial. Fortunately, we have the first amendment, which makes being an obnoxious asshole in and of itself perfectly legal.


Wouldn't a more complete explanation mention constitution or code of laws or some such as well? Maybe some ex post Latin?


> Wouldn't a more complete explanation mention constitution or code of laws or some such as well?

Constitutions and codes of laws in a republic are intermediate tools to the effect discussed.

> Maybe some ex post Latin?

You mean, more than “republic” is ex post Latin?


In our system of law being offensive is not illegal and we are be wise to remind everyone of this.


Contempt of court is though


The question is whether we as a law based society should be ok with this.


You only go to jail for being offensive in authoritarian-ruled governments. If we're not better than mob justice, please install decent people in NYC's legal system.


Since when? You can always get yourself in trouble by pissing off the public, regardless of government structure.


You don't go to jail for 7 years for it. (Supposedly) not in first world countries.


You do when you also commit fraud with a 7 year sentence.


Remember this when you end up on the wrong side of the law, and the book is thrown at you when it shouldn't be. Easy to cast the first stone.

Aaron Swartz was eligible for 50 years in prison and a million dollar fine based on his computer crimes. That's fair too, right?

Y'all need some empathy and compassion. People are human, and make mistakes. The punishment should fit the crime.

https://en.wikipedia.org/wiki/Aaron_Swartz#Arrest_and_prosec...


That's quite disingenuous. Entirely different circumstances and facts.

You're using the absolute maximum prosecutors were threatening Swartz with in order to extract a plea deal. They would not have brought anything near that to trial had it gone to trial, much less convicted him on it. In fact, in your link, this is what he was offered: "During plea negotiations with Swartz's attorneys, the prosecutors offered to recommend a sentence of six months in a low-security prison".

The statute Swartz was charged under has also widely been recognized as flawed. Not the case with what Shkreli was charged with.


That is the issue though, someone has to decide whether to "throw the book at you" or not. As long as someone is left to decide that, then you risk things like "being offensive" working against you, or "showing remorse" helping you.

The allowance for empathy, compassion and mistakes are what lead to the (to you) unfair punishment that was given.


Shkreli did not "make a mistake". He purposefully defrauded investors.


Aaron Swartz did not make a mistake. He purposely obtained unauthorized access to JSTOR and exfiltrated data for public consumption [1].

Poor judgment with minimal damage should not cost you a tenth of your life, or in Aaron's case, his entire life.

[1] https://archive.org/details/JSTORSwartzEvidenceAllDocs


Yeah, no. I'm rejecting your argument. The two are nowhere near the same. Shkreli purposefully did what he did, and more so, he showed no remorse in doing it, and he insulted the court.


How does 1,2, and 4 matter ? Did he defraud investors ? Yes. Was it illegal, yes ? How does it matter if he was a total douche. He would still be out and doing his thing if he didn't commit a crime.


It was just a summary of my observations.

>He would still be out and doing his thing if he didn't commit a crime.

Yes, this is the biggest point I was trying to push. He would still be doing it because it's perfectly legal. Other companies continue to do this because it's perfectly legal. Nothing has been done to fix this.


Because the sentence was WAY harsher than normal because of 1,2 and 4.

It was a white collar crime. NO monetary damages. And 8 years?? Clearly they sentenced him for 8 years for political reasons


Sentences are largely set by the guidelines published by the United States Sentencing Commission and are based on a standard table[1], which assigns "points" based on the severity of the crime and level of involvement [0]. While it's plausible his sentence was harsh for "political reasons", it's more likely that's just the way the points added up based on the facts of the conviction.

[0] https://www.ussc.gov/guidelines

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


it was white collar crime, so you know, its like totally not a big deal. right?

speaks to me of a culture problem here.


the thing that he was sentenced for was a white collar crime with no monetary damages. If it were a white collar crime with damage done then sure, prison time might have been appropriate. 7 years seems too harsh, and was most likely the byproduct of Martin behaving like an asshole and the general public being "upset" about the drug price hike


Him being a chronic and flaming asshole throughout the whole thing makes it clear that if he isn't somehow taught a lesson, he will keep doing this stuff.

Like a lot of sociopaths, he has figured out that most people are nicer than him and he can get away with a lot of outrageous behavior because most people are simply better behaved than him, so he is unlikely to be crapped on to the degree that he is all too happy to crap on others.

Hopefully the long sentence will clue him that betting that way stops working if you push it far enough. No, you don't get to disregard social norms in how you treat others, then bank on them protecting you. Life is a two way street. Social contracts involve two parts. You don't get to endlessly abuse social norms because your wiring is outside the norm and being mean is perfectly comfortable to you.


I’m not fan of Shrekeli but the 7 years seems to be excessive relative to other similar cases. For example, Rajaratnam got 11 years in what was dubbed as the biggest trading scandal on Wall Street. (source: https://www.reuters.com/article/us-galleon-rajaratnam/rajara... )


For as much of a smug bastard he was, I did have a hearty laugh at his congressional questioning. He treated it with all the dignity and respect it deserved; exactly none. It was political theater performed so the political class could act like they were doing something while the company Shkreli worked for and the rest of their compatriots were, whilist he was humiliating Congress, making record profits doing exactly what he did.


It's a brilliant charade. Politicians were in trouble. They of course are paid to keep things nice for Pharma (including monopolistic practices on drugs) but people were angry and they after all have to get reelected every 2,4,6 years, so they had to make it look like they were doing something without actually doing something. The brought Shkrelli in so they could perform as politicians concerned about their constituents. He wasn't willing to play his part.

Shkrelli still made a perfect scapegoat. The news has seemed to move on from the monopolistic practices thing like it never happened.


The news may have moved on but the people are smarter than most give them credit for. They do remember this stuff, just gotta jog their memories a little bit.


In addition, I noticed that our system punished him for defrauding the wealthy and not for jacking up drug prices, which harms the average American.


He didn't even defraud the wealthy. He played fast and loose but he won for his investors.


defrauding isn't synonymous with stealing- he did take the money under false pretenses. if I come to you for investment in my cool new startup that does distributed crypto machine learning ai for entertaining bored housecats on the blockchain and come back a year later having sextupled your investment in money from illegal arms smuggling, you've still been defrauded.


Except derivatives that almost sank the country for a few decades in 2008. For some reason selling derivative where it's incredibly difficult or impossible to know what securities they are derived from isn't fraud.

https://www.thebalance.com/role-of-derivatives-in-creating-m...


No, he defrauded his investors and lost their money.

He later managed to come up with money from another source to pay them back, but that doesn't erase the fraud that he previously committed.


What you described is a perfect example of a hacky-fix vs well-engineered-solution. Treating the symptom instead of treating the problem. Our entire society is built on layers upon layers of hacky fixes. It's depressing, but look on the bright side. If you want to make a difference in the world, what a time to be alive!


bulls make money, bears make money, pigs get slaughtered


Unless you donate to politicians, the pigs and politicians get really fat.


[RETRACTED]


That got him kicked off Twitter but had nothing to do with the legality of this case.


It is why his bail was revoked and certainly played into the judge’s sentencing


He did some thing wrong on Twitter, so instead of government prosecuting him for that, he was prosecuted for an unrelated charge?


The best explanation of the drug price phenomenon: http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-dr...

Shkreli was the just the lowest hanging fruit who a) didn't have the backing of a major pharma company to mask him and b) he also happened to enjoy the attention he get from playing the "villain" character, ironically or not, in an outrage driven (social) media culture.

I also don't think it's possible to separate his identity within pharma nor his politics with the Clinton drama, from his sentencing in this case.

Nearly every single headline has started with "Pharmabro" and judges always consider external factors and personal behaviour during sentencing.


I'm sure there are some much more egregious and systematic violators of what we consider fair drug pricing and much worse, but they actually have the money and power that Shkreli thought he had to stay out of the limelight. Well.. he was also dumb enough to actually try to get famous on this.


This. There's a bigger problem we need to deal with. The system. The laws. The government. The banks. The Federal Reserve. If there was a Statist 101 course, this entire 300-year project would get a D, maybe a C. It's atrocious, and we all accept it because we are sheep who need protection from the big bad wolves of the world. Eventually, it will become clear that there is one big bad wolf we should really fear.

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