[U] BREAKING: Both Sides Due In Court In One Hour — Oral Argument On “Consulting/Settlement” Agreement Admissability (Dueling Motions Edition)…

UPDATED: 4 PM EDT — The able AUSAs just filed a reply/rejoinder, to Mr. Shkreli’s of this afternoon, below — as they walked into court, this afternoon. here it is (as a six page PDF file) — as well. [Their original motion is about four paragraphs below.]

The able Judge Matsumoto just ordered both sides to show up in Brooklyn in an hour, so that she may conduct some “from the bench” questioning, in real time, with no jury present — and hear oral argument — on the pending motions:

…SCHEDULING ORDER as to Martin Shkreli.

The court will hear argument on the government’s [273] motion and defendant’s [274] response at 4:00 p.m. on Thursday, July 20, 2017….

Ordered by Judge Kiyo A. Matsumoto on 7/20/2017….

And here is the 22 page PDF file of Mr. Shkreli’s opposition memo of law. It was filed an hour or so ago.

I still think the government has the better of the arguments ( as a refresher, the government’s motion to admit is here). The agreements (subject to limiting instructions) are clearly admissible in any way the government chooses to present its case.

It is not the obligation of the AUSAs to provide Mr. Shkreli with opportunities to take pot shots at the people who signed the agreements. And the reason they won’t agree to testify in Mr. Shkreli’s case is (wait for it!)… not due to government overreach, of any sort — but due to Mr. Shkreli’s very shabby treatment of all of them. [When people get spooked because they might have (at least arguably) conspired/colluded with a kingpin — in committing felonies, it is not the government’s duty to help the kingpin get these same people on the stand as “hostile” witnesses, for the defense. Of course, Mr. Shkreli will not be called, in a week or two — in the defense’s case, to “clear all this up” — as that would put him in the cross-hairs of some brutal cross-examination.]

Said another way, choosing to invoke one’s fifth amendment rights — is absolutely allowed, here in our system of ordered liberty — but no one ever said it was… free of all perils, Mr. Shkreli.

The government is not obligated to even arguably damage its own case, solely help you win your case, once you invoke your fifth amendment rights. No one is preventing these witnesses from being called by the defense, that is. But don’t hold your breath — they aren’t going to show up and be helpful to Mr. Shkreli’s cause. No chance, and that is what has the defense so addled, at bottom.

Something we’ve seen over and over and over, in these four weeks — Mr. Shkreli’s karma coming back to him.

Welcome to your karmic wheel, Mr. Shkreli.

Onward, and Namaste…

As I Said In Comments, Today — There Are Multiple Ways To Introduce The “Consulting” Agreements Into Evidence

The very astute AUSAs just filed their motion in federal court, in Brooklyn, to admit the “consulting & settlement” agreements, over Mr. Brafman’s apparently fierce objections, also today in court (all without Mr. Brafman citing any applicable case law, we’ve learned) and from the government’s perspective — without the actual “consultant” having to take the stand.

In fact, I posited that any agent of Retrophin could do that job. And that is precisely what the AUSAs plan on — using Standard Register employees (as Retrophin’s transfer agent).

No agent will offer opinion evidence, about why the agreements are mere shams.  Such an agent is not qualified to offer that sort of opinion evidence.

No — the government just seeks to show pattern criminal conduct, as charged in the indictment, by the accused. And as I said in comments, this afternoon — the government has chosen to charge the “low hanging fruit” of wire fraud — as part of its indictments (so it need not prove reliance — and thus need not elicit “reliance” testimony from the “consultants”). Quoting, then:

“…Shkreli is charged in Counts Two, Five and Seven with wire fraud conspiracy in relation to the MSMB Capital, MSMB Healthcare and Retrophin schemes. The essential elements of wire fraud, the object of those conspiracies, are: 1) a scheme to defraud; 2) money or property as the object of the scheme; and 3) use of the mails or wires to further the scheme. United States v. Greenberg, 835 F.3d 295, 305 (2d Cir. 2016). As set forth by the Supreme Court in Neder v. United States, “common-law requirements of ‘justifiable reliance’ and ‘damages’ . . . plainly have no place in the federal fraud statutes.” 527 U.S. 1, 24-25 (1999)….”

Once again, here is the 24 pager — in full, as a PDF — as a lil’ bedtime reading.

Condor’s take? This motion is likely to prevail in large part (if not entirely).

G’night — to all of good will.

In Which “Bush”… Became The Sole Holdings Of His [Consumer] “Hedge” Fund…

Forgive me, but later last night, the highly-hilarious comments from Billy inspired me to ponder whether the stated goal in this “consumer” hedge fund was actually to scorebush. That is, Mr. Shkreli eventually placed the entire (if waif-ish) “hedge” fund — in the stock of the company named at right. If nothing else, that was a stupid (non-diversified “consumer”) strategy.

[And why on Earth would giving the involved trader crazily discounted (nearly free) stock — in an unrelated life science company, be a meaningful “incentive” for him to work harder on the “consumer” (strip club) hedge fund? That was the defense’s contention, yesterday, on cross. But he was never an employee, nor had any duties, in the life science company’s management.] Puzzling, that.

At least semi-seriously, in the early light of a fine Wednesday morning here — this will be the open thread for all things trial related today.

Mr. Brafman recently lost a motion in another felony pre-trial — to delay that other trial — given how far over this one is running. I’d now expect more like seven weeks of testimony, minimum.

Mr. Brafman’s relentless objections — and the resulting lengthy sidebars are both stretching the timeline, and disrupting the prosecution’s narrative flow.

But there is no doubt that the jury is seeing a man who lies about essentially… everything.

And I don’t think it will matter too much to the jury, that the threatened ex-employee was also a Galleon-fund involved whistle-blower/employee/ trader.

I think Mr. Shkreli is highly likely to see a ten year sentence. Five — with day for day credit — if he behaves while locked up.

Onward — should be a[nother] sensational day!



Awaiting Judge’s Decision On FINRA Expert — Tuesday 7/18 Open Thread…

Hello all — I’m a little groggy here this morning, so forgive me if I didn’t yet like all the comments — I do “like” them all… just still catching up on my sleep, post travel. I am a believer in free and open marketplaces, for ideas — disagreements, even — as it all increases the spice of the conversation, and the likelihood that we learn from one another. So… have at it!

Now, since I have a busy week in the office (see view, in banner), on other matters — I’ll open this trial log thread for today in response to FTD’s question about the FINRA expert by simply saying we haven’t seen a ruling yet, from Judge Matsumoto, on PACER, as to how much of the SEC rules and laws she (the FINRA expert) will be able to explain in plain English for the jury — along with “the reasons for those rules“. But she will be allowed to testify, at some point, likely this week — perhaps even today.

[It is likely that the “feisty” exchanges — between Mr. Brafman and the ever able and level-tempered Judge Matsumoto — at day’s end yesterday, reported by Dan M. by tweet — relate to this sort of a dispute. That is, the dispute likely has to do with what evidence the prosecution may elicit from a witness — and how and/or whether Mr. Brafman may attack that testimony,  on cross. I would guess that the dispute was aired outside of the jury’s earshot.]

So do post here all the bits of Marty goodness (or badness, if you prefer!) you find scattered about on the inter-tubes.

I will try to catch up on the comment boxes later this week.

Namaste — and… onward!

FINRA Expert To Testify Monday…

With some spotty early morning wi-fi, and hot coffee — I’ll give this a try (please forgive me any formatting issues — typed and edited on an iPhone screen); while I await the end of some preliminary racing, by the waters.

We’ve caught wind of a new fraying — of the seams in the defense’s sails — revealed by the government’s six page letter, overnight. The defense is trying to prevent a well-qualified FINRA expert from simplifying, and explaining the SEC rules and disclosure forms we often talk about here.

I predict the able Judge Matsumoto will allow her — as an expert fact witness — to explain how “the rubber meets the road” — on Count Eight. [You’ll recall this is the one I say will get Mr. Shkreli his ten year minimum.]

She will explain the law applicable to the Fearnow shares “parkings” — and will allow the jury to understand why the threats made by Mr. Shkreli prove he was trying to “control” those shares, in secret (the central crime of Count Eight). That will be devastating.

Here’s a bit, overnight from the AUSAs’ letter — on PACER:

Ms. Oremland will give the jury the necessary context to understand why Schedule 13D requires the disclosure of beneficial ownership of more than 5% of a company’s voting common shares namely, that such a level of ownership could allow an individual to affect the share price upwards, downwards or not at all and thus the market should be aware of beneficial ownership issues….

I expect the defense will file an answer tonight or tomorrow — but this testimony will be allowed in. I’m sure of it.

She has some nice summary charts as visual aids for the jury’s understanding as well.

Monday will be a big day, in Brooklyn — as the defense will presumably be relegated (on this Count) to arguing that Mr. Greebel, of his own volition, “tricked” Mr. Shkreli into violating these criminal laws.

Ah, the old “faithless lawyer” defense. [A sensible juror might ask “What would Mr. Greebel have gained, by tricking Mr. Shkreli into manipulating the market for Retrophin stock?” He was never paid any of his in stock (in fact he was mostly slow-paid, or paid a fraction of what he was owed); and IIRC, he never owned any Retrophin shares.]

Good luck with that, Mr. Brafman.

Namaste, one and all…

Thursday-Friday Trial Log… Note: Author Off-Grid, Starting Tonight (Until Monday)

The wilds of the far northern reaches Wisconsin — on a crystal clear Lake Michigan bay — almost to the Canadian border, beckon me… to my youngest son’s Door County Half-Iron Man (a charity event, coupled to para-athletics fund-raisers), so this thread will have to hold the water, as it were, until Monday.

PathoPhilia, Billy and FTD — and yes, all of you, good people (be on your best behavior, here!) — you are each and all — in charge of keeping it spinning in good karma. [We expect to hear more rather dry forensic accounting testimony, at some point today.]

I’ll launch this — with just one comparatively bland quote, from yesterday’s testimony (cribbed from Bloomberg reporting):

“I’ll beat you guys to a new company and will get to a billion dollars before you will,” Steven Richardson, Retrophin’s former chairman, said Shkreli told him upon hearing the news that he was being removed from the post in 2014….

I guess he was right, if he meant a billion dollars… in losses, felony scams, frauds and conversions, and… independent public company shareholder value… destroyed. The two hedge funds (looted!), Merrill Lynch/via Lehman implosion (stiffed!), Retrophin shareholders (cheated; abused!)… and KaloBios (bankrupted!). Turing? His shareholdngs/scam may still be in play.

Even so, he probably hasn’t actually done a billion… of anything. Sort of insignificant, really.

Now you know — Onward; and Namaste! Now go load up that comment box!

Trial Log For Wednesday: How “Insulting, Contemptuous” Behavior Differs From “Remorse” Edition…

The good soul FTD stayed up late (my condolences!) to hear Mr. Shkreli claim in a YouTube live feed that he will (if convicted) only do three years or less. [I would encourage the able AUSAs to pin this to their cork boards, for a possible September sentencing date — this is… motivation. And my graphic is sincerely intended to suggest that she is… a “saint“, by comparison — to Mr. Shkreli, at least.]

Mr. Shkreli based that on CFTC v. Park — a recent CFTC regulatory case (i.e., not a DoJ/US Attorneys SEC one), stemming from “commodity pool operator” charges — not wire fraud, and “parking” charges, related to public company securities.

Ms. Park never “parked” public company securities — his on the other hand, is an eight count indictment (hers was only seven; some of which were not even felonies — all of Mr. Shkreli’s are), and she agreed to a guilty plea. She wept openly at sentencing, taking full responsibility for her crimes, and expressing genuine remorse — to her victims (mostly friends and family). Importantly, she is not the subject of a raft of securities class actions, spanning at least two public companies, as a control person — leaving one very ugly public company bankruptcy, in her wake. Oh — and she didn’t menace and threaten the wife and children of one of her employees — with whom she had sought to fraudulently “park” those same securities (essentially hiding her level of control of the involved public company — with the goal of manipulating the entire market for that public company’s shares). That’s all… Mr. Shkreli.

And she wasn’t charged with wire fraud — she didn’t act as the kingpin, in a series of schemes in which she allegedly co-opted a lawyer, for cover (my “allegedly” is out of respect for Mr. Greebel’s presumption of innocence).

Most importantly, hers is a CFTC case — not a case involving the market manipulation of an SEC-registered public company. That is, she never controlled a public company, and then defrauded the public shareholders of that ’34 Act company. That all matters quite a bit. Hers was in no respect an open market fraud on our system of capital raising — and secondary market trading. She was trading commodities which are by definition not… securities.

She didn’t force the government to spend enormous resources on a trial; she wasn’t contemptuous of the Judge — didn’t call the AUSAs the “junior varsity”… there is much more, but it all gets rather… redundant after a bit, no? So I’ll stop with factual analysis, here.

In sum, even if Mr. Shkreli were to plead guilty right now, he’d get a minimum of ten years. He may only do five, with day for day credit, but he’ll get ten.

That’s my guess. But we shall see…

Post your July 12, 2017 trial thoughts and updates here.