By Patricia Hurtado, Bloomberg News
Martin Shkreli, the brash former pharmaceutical executive who faces federal charges that he defrauded investors in hedge funds he ran, won a tactical victory as a federal judge ruled that he would be tried separately from his former lawyer.
Shkreli will be able to blame Evan Greebel, his former lawyer and co-defendant, for engineering a securities fraud that cost investors millions of dollars, based on the ruling Wednesday by U.S. District Judge Kiyo Matsumoto in Brooklyn, New York.
Shkreli, who’s drawn condemnation for raising the price of a potentially life-saving drug by 5,000 percent, argued that he acted in good faith and without criminal intent when he managed the hedge funds and says he relied on Greebel’s advice when he made business decisions relating to the funds.
“While severance is very rarely granted, we believe that Judge Matsumoto did exactly what the law required in this very unique prosecution, where Mr. Shkreli was to be tried together with the lawyer whose advice he relied on during the period charged in the indictment,” defense lawyers Benjamin Brafman and Marc Agnifilo said in a written statement. “A severance is the only way Martin Shkreli could receive a fair trial.”
‘Tornado of Chaos’
The judge’s decision was also a victory for Greebel, a former lawyer with Katten Muchin Rosenman LLP, who also asked to be tried separately from Shkreli. He argued that Shkreli, the founder of Turing Pharmaceuticals LLC, had created a “tornado of chaos” with his behavior on social media and in public and had lied repeatedly to him and other lawyers at the firm, using them as “pawns in fraudulent schemes” they didn’t know about.
Both Shkreli and Greebel deny wrongdoing, but they agree on little else. At a hearing this month about their request for separate trials, Reed Brodsky, a lawyer for Greebel, said that the defendants’ plans to mount “mutually antagonistic” defenses would result in both men aiding the prosecution.
Matsumoto, the judge, said Wednesday that “the unique circumstances” of the case and those attacks by Greebel’s defense team warranted separate trials because jurors could be confused.
“The underlying theme of Greebel’s defense, that Shkreli lied, committed fraud and is guilty, will permeate a joint trial to the substantial prejudice of Shkreli,” she said. “Through such double prosecution of Shkreli by the government and Greebel, there is a serious risk that the jury would be prevented from making a reliable judgment about guilt or innocence.”
Loss for Prosecution
The ruling was a setback for prosecutors who argued there would be no prejudice to either man if they were tried together.
John Marzulli, a spokesman for acting Brooklyn U.S. Attorney Bridget Rohde, declined to comment on the ruling. Brodsky, Shkreli’s current lawyer, declined to comment.
In a November interview with the Financial Times, Shkreli said he believed his notoriety would help sway a jury to acquit, likening himself to O.J. Simpson.
Federal prosecutors say Shkreli defrauded investors in his hedge funds by using $11 million in assets from Retrophin Inc., another drug company he founded, to pay them off. Greebel is charged with one count of conspiracy for allegedly helping Shkreli hide the money and pay off investors.
Since his arrest in December 2015, Shkreli has feuded with rapper Ghostface Killah, was banned from Twitter for harassing a female journalist, made sexist comments about Taylor Swift and claimed during the U.S. election campaign that Hillary Clinton had Parkinson’s disease.
Shkreli’s trial is scheduled to begin June 26. The judge said Greebel could be tried as early as October.
The case is U.S. v. Shkreli, 15-cr-00637, U.S. District Court, Eastern District of New York (Brooklyn).
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