Martin Shkreli apparently needed to vent as the first week of his criminal fraud trial in Brooklyn was nearing an end.
During a lunch break Friday, he walked into a sixth-floor courtroom set up for reporters to watch his trial on closed-circuit television and lambasted the media and the prosecutors — calling the U.S. attorneys in Brooklyn “the junior varsity” to those in Manhattan.
“They blame me for everything,” he said of the prosecutors. “They blame me for capitalism.”
It’s almost unheard of for a criminal defendant on trial to walk into what’s essentially a press room and speak so openly to reporters. But there’s nothing typical about Shkreli, who live-streamed for hours after his December 2015 arrest and is currently discussing his case on Facebook.
Shkreli’s five-minute-long tirade was finally interrupted by his lawyer, Benjamin Brafman, who came to the door of the courtroom and asked, “Martin, can I see you a minute?” Then, Shkreli was gone.
Earlier in court, prosecutors began laying out Shkreli’s entire business career, a more than decade-long stretch allegedly marked by zeal and deception.
Josiah T. Austin, managing member of El Coronado Holdings LLC, said he invested $4.8 million in Shkreli’s Elea Capital Management in 2006 and 2007 because he liked Shkreli. Austin told the jury he lost it all.
Austin, 70, was allowed to testify as prosecutors attempt to show a pattern in Shkreli’s behavior of deceiving investors from early in his career. He said he met Shkreli in about 2005 and was impressed with his intelligence. At the time, Shkreli was managing investments at UBS AG in New York.
"Martin was young, a little cocky, he knew biotech," Austin said. "I think Martin wanted to be successful, wanted to make a lot of money."
He wanted to be like “Stevie Cohen,” Austin said, referring to the multibillionaire whose SAC Capital Advisors hedge fund generated large returns before it pleaded guilty and was shuttered to settle an insider-trading probe.
Shkreli, 34, is fighting charges of operating two hedge funds — which he ran after Elea Capital — like a Ponzi scheme. Prosecutors claim he took clients’ money without permission and used it to start Retrophin Inc. Shkreli is also accused of looting $11 million of the drug company’s assets to pay off investors who’d lost money in the funds.
He faces as long as 20 years in prison if convicted of the most serious charges.
Shkreli seemed rankled by news headlines about the trial during his visit to the overflow courtroom and complained that reports suggested he made no money while running the hedge fund MSMB Capital. The government’s first witness, Sarah Hassan, an investor in the fund, wasn’t a victim because she made $2.7 million in profits, he said.
Hassan testified Thursday she got the impression from marketing materials Shkreli sent that her father was involved in the launch of Retrophin.
Fred Hassan took the stand Friday and said that wasn’t true.
The managing director of Warburg Pincus LLC and former chairman and chief executive officer of Schering Plough Corp. said he was never Shkreli’s mentor, business reference or adviser.
“There was no personal contact to the best of my knowledge,” Hassan said.
While speaking to the reporters, Shkreli said he had nothing to do with Fred Hassan’s name appearing in the materials his daughter received. He blamed that on “folks in marketing and accounting.”
When asked whether the government offered him a deal to resolve the case, Shkreli didn’t answer directly, saying only: “I wanted my day in court.”
Shkreli ran Elea Capital from 2005 to 2006 until it collapsed after a series of failed trades, Austin said. In the months before Shkreli shut the fund down, he asked for at least $1 million, saying he needed to meet margin calls, Austin testified.
“Markets go up, markets go down," Shkreli told his investors in an Aug. 16, 2007, email that was shown to jurors. "Sorry for all the inconvenience I cost you — I know sorry doesn’t cut it.”
Austin, who said El Coronado has $300 million in assets, told the jury that Shkreli continued to seek him out to invest in a new hedge fund he was starting — MSMB Capital — and later asked him to invest in Retrophin. Austin said he declined.
“I still thought Martin was an intelligent, smart guy,” Austin said. “But I didn’t particularly want to do any more business with him."
The trial is scheduled to resume Tuesday.
As he was leaving court ahead of the four-day weekend, Shkreli was asked by a reporter how he thought the afternoon session went.
“I have to be careful about who I talk to,” he replied. “I could get into trouble.”
The case is U.S. v. Shkreli, 15-cr-0637, U.S. District Court, Eastern District of New York (Brooklyn).