Martin’s Counsel Wants Oral Argument — On Govt. “No Opposition” — To Dr. Koestler’s Turnover And Receiver Motion…

Well, it is clear that Martin’s lawyers are upset by the government’swho cares?” position. [No matter what, by law and by agreement, Uncle Sam gets first dibs, up to the remaining $3 million or so it is still owed, from Martin. So Uncle Sam really doesn’t… care.]

It is also clear that the able USDC Judge Nathan need not, of right, grant them an oral argument date, or a formal reply right — since the government simply exercised its prerogative… NOT to take a position as to Martin’s Phoenixus AG shares.

This letter is respectfully submitted to request the opportunity to respond to the government’s letter dated April 9, 2021. As the government’s letter indicates, this matter directly affects the matter of United States v. Shkreli, 15-CR-637 (E.D.N.Y.) (Matsumoto, J.).

If granted the opportunity to respond, we are prepared to file by April 23, 2021, so as to conform to the same schedule as your honor previously ordered. We would additionally request oral argument on this matter. The government takes no position on this request….

I bet the judge will allow a short letter response, but will not be inclined to hear any oral argument — there isn’t really any ambiguity in the law, insofar as the government may always decide to bow out of any given dispute, between parties — about property rights, inter se.

We shall see — pop the popcorn, folks.

[U] Tangent: Bernie Madoff Has Died In Federal Prison. And Coinbase… [Irony Alert!] Cannot Get Its Stock Opened, On The NASDAQ, This Morning.

Update: Coinbase finally opens, after 1 PM EDT, on the NASDAQ at $381/share. Hilarious. End update.

This is from another of my properties, but seems germane here — this morning. You’ll need to read the other property, to understand the backdrop for the Coinbase direct list NASDAQ attempt this morning. But Bernie’s story was repeatedly discussed in 2018, here. We wish his remaining family… peace. Most of them are gone now as well, though — in truth.

Here’s the story of Coinbase, then — it is all very much as irony might have it here:

The avarice of the executives and founding owners of Coinbase… has hamstrung them, rather directly.

At least thus far, this morning. You see, the NASDAQ market list group, in consultation with Goldman Sachs (heh!), has indicated an opening price of $250 per share, less than half of what the executives had hoped for — and about 40 per cent under the last few privately-placed transactions in the Coinbase equity.

So, one of the founders told a news outlet this “you won’t get MY shares, for $250 — think again!

We are now to believe that he is being put upon, in becoming a liquid multi-billionaire?


But this is exactly why an underwritten IPO serves a social utility. All this dirty linen would have been pre-washed, in private.

Now, the world sees that the stock is NOT opening, because the gap between willing buyers’-, and willing sellers’- expected prices… is more than fifty per cent.

And the already public company / “crypto-adjacent” issuers, Riot and Marathon — are falling like rocks, as there is now a non-trivial possibility this stock… never opens at a price the founders and executives are willing to accept. That would say that real buyers… don’t believe these hyped up sellers. That sober money wants… math backed valuations — not rainbows and unicorns.

Wouldn’t a failed direct list be… just the perfect epitaph, when all the history is written?

And, again as irony would have it — on the same morning that Bernie Madoff died in federal prison.

O N W A R D… grinning; ever grinning.

Whoa! The AUSAs Will NOT Oppose Dr. Koestler’s Seeking A Turnover Order, And A Sale/Receiver, For Martin’s Phoenixus AG Shares…

This Friday night development is of much greater significance… than my last entry (on his dying quail efforts to avoid a lifetime SEC banning order).

As of tonight, the federal government has decided not to oppose Dr. Koestler’s turnover motions (in a letter filed in both Manhattan and Brooklyn), as Dr. Koestler moves to get his hands on the Phoenixus shares — and sell them. The only proviso from Uncle Sam is that all cash proceeds from the sales first go to pay the remaining $3 million or so, that Martin owes various parts of the federal government.

After that, all the rest of the shares could then could be sold, and used to pay Dr. Koestler his $2.6 million (which, with unpaid interest, is now approaching $4 million).

If published reports are to be believed, Martin’s large shareholdings in this company may well be worth more than $15 million. So, it may be that not all the shares will be sold to pay Dr. Koestler and the government. Here’s the full three page letter, as just filed tonight — and the money quote (quite literally!):

“…Pursuant to the Forfeiture Order, Shkreli’s interest in Phoenixus AG is subject to forfeiture, and the certificate for his preferred shares is in the government’s custody. 2 While 21 U.S.C. § 853(k) bars the intervention of a third party asserting an interest in property subject to forfeiture, here the government has no objection to the Application provided that, in the event it is granted and a professional receiver is appointed, any proceeds from the liquidation of Shkreli’s interest in Phoenixus AG are first applied towards the Outstanding Balance of the Forfeiture Money Judgment.

The undersigned have discussed the government’s position with Richard J.J. Scarola, counsel for Petitioner [Dr. Koestler], who has advised that he has no objection to the payment of the Outstanding Balance first, before any proceeds are applied towards Petitioner’s judgment….”

And so, in Condor’s considered opinion, it is now very likely that Martin will no longer be the largest minority shareholder of Phoenixus AG — perhaps as early as mid-Summer 2021.

Karma, baby… pure karma.

Martin’s Final Word, On His Coming SEC Ban — Makes A Genuinely… Silly Argument.

Well… it is only two pages, and normally I would ignore it. But this is one letter that wasn’t worth writing, at all. I am certain Martin insisted on making this specious argument, because Ms. Zellan well-understands how factually problematic this suggestion below is.

And we do know they are clutching at straws, now. But, seriously… c’mon, man.

Ms. Zellan, for Martin argues that the SEC was wrong to mention the FACT that Ms. Holmes’ “only” ten year ban was agreed to — and was agreed to, during a time when she was acting as a cooperating witness, against Sunny Balwani.

So the SEC may have settled too soon, is the only learning we may glean from the Holmes matter, on the civil side there. But that doesn’t mean that Martin, who had never seriously offered to settle the civil SEC liability, and never offered to plead in the felony matters… should get the same “deference” that Elizabeth Holmes tricked the SEC into. Geez.

It seems Martin believes that he should be treated as well as someone who cooperated, handed back $500 million in cash, and agreed to testify against another defendant. No sensible jurist would agree that (as of the time of her ten year ban, at least) Ms. Holmes’ was a case “like Martin’s.”

Agreeing to return a half-billion dollars suggests an abiding awareness of the wrongfulness of her conduct. That she is now indicted, likely for backing out on the terms of her earlier deal — is to be expected. There must be a penalty for not helping the government, after promising to do so — in exchange for a relatively short ten year SEC ban.

In any event, here’s the truly silly argument — as made by/for Martin:

“…While the Commission enjoys discretionary authority to settle on a particular set of terms, the fact that the Commission agrees to certain terms does not remove the Court from the process entirely. SEC v. Citigroup Global Markets, Inc., 752 F.3d 285, 293 (2d Cir. 2014) (“To be sure, when the district judge is presented with a proposed consent judgment, he is not merely a ‘rubber stamp.’”).

Furthermore, as a practical matter, it is reasonable to conclude the Commission would not have agreed to a ten-year officer and director bar for Elizabeth Holmes, or a five-year bar for Edward DiMaria, if it deemed those bars of insufficient length in light of the relevant facts and circumstances…. [Ed. Note: This proves too much, by half. That is why, in Condor’s opinion, she is now going to trial for multiple felonies, facing a 20 year stint if convicted. She lied about helping. And wile she has the right to demand a trial, on the crimes, and put the state to its proof… she will get a very long sentence. It openly admits that Martin is — and was — different, and worse, than Holmes.]

And, as we demonstrated in detail, there are clear parallels to be drawn between this case and the facts and circumstances underlying those judgments. Similarly concerning is the emphasis the Commission places on the fact that Holmes and DiMaria were indicted after the Commission settled with them (Reply at 5-6.), as if the length of an officer and director bar should be determined by how much leverage the Commission has over the defendant.…”

Again, my editor’s note would be that they were subsequently indicted not due to any sort of illicit SEC or prosecutorial “leverage” — but due to… their OWN subsequent VERY BAD… conduct. For his part, recall that Martin (as we noted the other night) called the able AUSAs “the Girls’ JV,” and repeatedly said “Fc#k the Feds“, in his live streams commenting on his own trial, each evening. This was not a man who accepted he had done wrong, and was repenting of his evil ways.

No, he played the mobster — and even if it was all “an act,” it is now, only now... that he regrets that act — and only because he can’t rule the world by pushing a broom or a mop. In fact, he may end up as a janitor — like his father before him, when released, due to his otherwise unemployable status — not that honest janitor work… is any shame, at all. [In truth, I held many jobs that required me to wash my hair, scrub and shower — and cough up gray muck, at the end of every shift, all before I turned 22. Those were important, character building jobs. Marty will just do his, in the reverse order that I did mine, it seems.]

So, his ban should be for life — especially in view of the conduct egregiously violating his sentencing order, while locked up in FCI Ft. Dix.

Onward — and Judge Matsumoto will see through this charade by Martin, of that I am confident.

Have a sunny Spring weekend, now one and all — I know I will. Mountain biking is on tap… grin.

[U: Granted.] Mr. Brafman’s Office Seeks “One More Bite At The Apple” — On Martin’s Coming Lifetime SEC Banning Order…

UPDATED @ 2:30 PM EDT: USDC Judge Kiyo Matsumoto just granted the request, but bumped up the filing deadline — to by close of business, tomorrow. That suggests she’s ready to rule — maybe even by Monday night. End, update.

This is truly a small matter, but the able USDC Judge in Brooklyn need not grant Martin a surreply here.

Even so, Judge Matsumoto will want to be very, very fair, before imposing the ban — so I suspect Andrea Zellan, in Ben Brafman’s office, will get her wish: a three page last word, on whether Martin is done with public companies for life.

So, as ever — we shall see.

Separately, I should note that one of the most able AUSAs — one that Martin called the “girls junior varsity“, Jacquelyn Kasulis (when he was being prosecuted by them)… has been promoted to a lead AUSA in the Eastern District of New York (Brooklyn) US Attorneys’ offices.

Karma, baby… karma.

O/T: Will Kavanaugh (And The Supremes) Take The “Emergency Petition” — On Tennessee’s 48 Hour Waiting Period Law — For Abortions?

I expect the Supremes will (upon a referral from Justice Kavanaugh) take this one.

I doubt the court will rule immediately on the merits — but simply stay the Sixth Circuit’s injunction, during the balance of the appeals. But we shall see. The petition was filed by Tennessee, overnight — and Kavanaugh is assigned to review matters arising out of the Sixth Circuit — like this one.

We won’t outline the applicable federal law just yet — preferring to wait and see what the Supremes do, in the interim.

But to be certain, we will keep an eye on it.

And (for the moment) we will trust that Chief Justice Roberts, and the full court, when asked — will apply correctly what is about 45 years of binding precedent. Onward, to a warm sunny mountain bike hike. . . .


[U] O/T: In Which Justice Thomas Beclowns Himself, And His Robes… Yet Again.

UPDATED @ 3 PM EDT: Now, Josh Gerstein, writing at Politico… openly concedes what I suggested below: Clarence Thomas is far more a partisan, and not a jurist here. Yet he uses the Supreme Court’s printing press, from his seat on the highest bench — to pontificate about highly debated, and debatable theories… ones literally no one asked him about in the matter to which he appended his official concurring opinion. [Chief Justice Renquist… is spinning — at 400 RPM, in his grave, right now.] End, update.

Once again, Justice Thomas has beclowned himself — and the otherwise august bench upon which he sits. Today the Supremes unanimously dismissed as moot the case challenging Tangerine’s blocking of certain US Twitter users, from responding to his official pronouncements as POTUS (which also had the effect of preventing certain US citizens from even seeing T’s official statements, made there — astonishing, in a free society).

True, the issue is no longer live, but the strong suggestion at the Second Circuit was that Baby-T cannot have his cake and eat it too.

I seriously doubt there will be any other future POTUS who will use Twitter in the largely churlish way he did: wildly irresponsibly fanning the flames of intersectional hatred. But even so — his minion, Clarence Thomas, decided to publish a political speech — about what he preposterously regards as “censorship” by Twitter and others of “conservative” writers and speakers. In fact, it is hate speech, and racial hate speech, that is most often removed.

But for Thomas, rather than admitting his published concurring opinion has literally nothing, logically, to do with the case in front of him. . . he just goes off on an entirely political tangent. Here’s a link — it is buried at the bottom of a nearly 30 page set of micellaneous orders (on other matters) — I think the court was embarrassed by it, in truth. Here’s the bit:

. . .The Second Circuit feared that then-President Trump cut off speech by using the features that Twitter made available to him. But if the aim is to ensure that speech is not smothered, then the more glaring concern must perforce be the dominant digital platforms themselves. As Twitter made clear, the right to cut off speech lies most powerfully in the hands of private digital platforms. The extent to which that power matters for purposes of the First Amendment and the extent to which that power could lawfully be modified raise interesting and important questions. This petition, unfortunately, affords us no opportunity to confront them. . . .

Thomas has in recent years increasingly gone from at least pretending to follow Scalia’s path, and only decide cases as presented, and only on original language — to being an activist, openly looking for cases as pure political vehicles, to advance his (and his wife’s) agenda, wholly-apart from any actual live legal case or controversy.

It is an illogical non-sequitur that animates his second quoted sentence above, and all that follows after it. It analyzes no case — and simply repeats a far right talking point, that white supremacists among others are the victims of repression of their “views” by companies like Twitter. That a Supreme Court Justice would engage in such dishonest rhetoric, outside of any case or controversy — in an official publication of the highest court — is sad. Unsurprising, perhaps, but sad — for our system of ordered liberty.


SEC’s Reply, To Martin’s Objection — On Lifetime Public Company Ban… Cites Holmes(!): “Small World” Dept.

To defend Martin, and try vainly to prevent a life-time ban before the Commission, the Brafman firm had argued in its prior filing that since the SEC’s civil settlement in the Elizabeth Holmes case doesn’t set a lifetime ban — Martin ought not face one. Fascinating.

At the time of that settlement, Holmes was cooperating, and was set to testify against her co-fraudster Sunny Balwani. Moreover, she wasn’t already a convicted felon in jail, using a cell phone to violate her conditions of incarceration.

She now is also highly likely to serve a full twenty years in prison, since she is going to trial on the felonies (and apparently not coopering against Mr. Balwani) this fall. [But that hasn’t happened yet, so no one may say how it turns out.] And… it is very unlikely that any PUBLIC company would add her to the board, or have her as an officer, from inside a federal prison. So in Holmes case, the likely earliest she’d be both released from jail, and beyond her settled 10 year ban… will find her as an at least 55 year old, and deeply out of date on the medical technology front (as if she ever really understood the legitimate blood drop assay science tech, in the first place?!) former fraudster.

In sum — her ban is effectively… a lifetime ban.

But I note (and link) the full 15 pager of the new SEC filing, overnight — as it again cogently suggests that Martin will be so banned, for life — and that federal judges in Manhattan and Brooklyn regularly so order in egregious cases. Martin’s is certainly one of those:

“…In SEC v. Holmes, No. 18-cv-1602 (N.D. Cal. Mar. 27, 2018), as Shkreli acknowledges, Holmes had a significant economic stake in Theranos, Inc. (“Theranos”), which she gave up as part of the settlement. (Opp’n Br. at 7-8.) That is a significant difference from Shkreli’s case, where Retrophin had to remove him to prevent his further wrongdoing. Moreover, Theranos, of which Holmes was CEO and board chairman, was a private company. See Commission Press Release 2018-41 (Mar. 14, 2018) (describing Theranos as a “Silicon Valley-based private company”) (available at: Shkreli’s observation that nothing would “prevent [Holmes] from becoming an officer or director of Theranos — or any other company — when her ten-year officer and director bar expires” (Opp’n Br. at 10), is beside the point. The bar the Commission seeks as to Shkreli would only prevent him from serving as an officer or director of a public company, not a private one. Also, after the Commission settlement, Holmes (and another Theranos officer, Balwani) were charged criminally for the same conduct. United States v. Holmes, 18-cr-258 (LHK) (N.D. Cal.), Indictment, dated June 14, 2018, ECF No. 1.3….

Shkreli says SEC v. Gupta, No. 11-cv-7566 (JSR), 2013 WL 3784138 (S.D.N.Y. July 17, 2013), aff’d, 569 F. App’x 45 (2d Cir. 2014, ordering a permanent officer and director bar following defendant’s conviction, is not a fair comparison. (Opp’n Br. at 15-16.) Shkreli is wrong. In discussing injunctive relief, the court concluded Gupta’s profession was such that future violations could be anticipated because of “the risk that, notwithstanding his fall from grace, [defendant] remains well-placed to repeat his misconduct in the future.” 2013 WL 3784138, at *3. That reasoning applies equally to the determination of whether to order a permanent officer and director bar against Shkreli, who similarly made a unique name for himself, and is poised to repeat his misconduct upon release from prison. Given Shkreli’s relative youth as compared to Gupta (see Opp’n Br. at 16), only a permanent bar will protect investors….”

Again, I think it likely he gets a 20 or more year ban. But a life-timeban would be appropriate — as is the additional $1.4 million in penalties, since he won’t admit (or more accurately… prove — by showing all his bank accounts, and Bitcoin wallets!) that he did NOT squirrel away a whole bunch of that purloined investor money, stolen across at least four firms, three of them public companies.

It will be fascinating to watch, from here — but Holmes’ is actually a less egregious case than Martin’s in many ways. All her frauds were at one company — a private one.

Martin’s spanned three funds, and at least three public companies — over more than a decade. He was indeed, a career criminal by the time he was arrested in December of 2016. And we now know, that conduct continued in FCI Ft. Dix, by illicit cell-phone.

Will Holmes try to use a burner cellie in prison? We shall see… she has the narcissistic tendencies to try it, to be certain… but we won’t know for about two years, yet.

Onward, to a quiet holiday Sunday….