[U] Is It Fair? Is It Constitutional? Maybe Not. But Might It Happen? Yes.

UPDATED, in the luminous but clear dawn of Saturday: I started this blog to (among other things) teach my own lil’ self more… about the ways in which the criminal law (about which I admittedly knew, and still know, very little) intersected with civil securities law (about which, frankly, I am deeply experienced), and civil frauds committed by mentally ill (or, if one prefers, “bad”) actors — like Martin Shkreli — another subject I know quite a fair bit about….

Have I made mistakes, as I have gone along?

Of course. Do I care? No.

That’s how we learn. So as to the fine point of what the base will be, for one count (of eight) — do I really care? No.

I fact, do I really care whether Mr. Shkreli serves 20 months or 72 months or 120 months? No.

He is now a convicted felon — likely barred from the securities industry for life. His shares in, and agreements with Turing (a private company) remain open questions. If Altd440 thinks less of me, or thinks me in any way impolite, for any of this — do I care? Again… the answer is no.

As to my regular readers (here, on this project — chiefly Billy, PathoPhilia, FTD, R West and John Galt), along with lots of other commenters, across several other life science and tech focused blogs now — I do deeply care… what they think. And I thank them for enlightening me, and helping me find my many, many mistakes. [Especially on the quiz, Billy — I had some really bone-headed ones!]

But they also know — when I am done with a project, I am done with it (ref. KaloBios). I think I have reached that point here. I am no longer fascinated by Mr. Shkreli — I just don’t care (that much). I’ll likely post a few more on sentencing, and such. But since I’ve stopped caring about the felon — I think this is essentially… a wrap. [End, update.]

As many know, I am no fan of Martin Shkreli. Today he became a thrice-convicted felon. And I did smile — but only for a few hours.

I do think he may get almost a ten year sentence. I am decidedly in the minority.

I am cool with that.

Because, as has been true for decades,  entirely uncharged conduct may be a factor in one’s sentence. Even (and especially) crimes one is acquitted of, may well be required to be factored in.

Consider this, from the ABA Journal:

No fact about federal criminal practice so consistently astounds and frequently disgusts the uninitiated, lawyers and non-lawyers alike, as the fact that you can be imprisoned for decades based on conduct that a jury finds you not guilty of committing. Such a seemingly unfair and incongruous outcome is possible and not uncommon thanks to the concept of acquitted conduct sentencing, which is codified in and, to a certain extent, required by the United States Sentencing Guidelines. While the Supreme Court has so far declined to directly address the constitutionality of acquitted conduct sentencing, courts of appeals have taken the Court’s silence as approval and uniformly affirmed the constitutionality of sentences based largely on acquitted conduct since the Supreme Court’s decision in United States v. Watts, 519 U.S. 148 (1997), which approved acquitted conduct sentencing but failed to adequately address the constitutional concerns….

In sum, while I do think there are clear fifth and sixth amendment problems with the above, it is still quite possible (likely even) that — based on his pre-sentence report — Mr. Shkreli will see a sentence of ten years.

[Confidential to Altd440 — would you like to make an actual, real-world, money bet? Five dollars — for every month that the loser is more distant from the actual sentence (in months of difference). Or multiply it by ten or by one hundred. I don’t care. But you are at under one year, right? What say you?] UPDATE: AltD440 has declined the wager. Okay.

And he will see it, because he created an abysmal and shockingly varied record of misanthropic behavior — in addition to the uncharged conduct that is still under investigation, and the conduct that was presented in the court room these last few weeks — even insofar as he was acquitted of the specific charges — on some parts of it.

I am simply saying it is so. And though I detest Mr. Shkreli, personally — I think he, along with perhaps tens of thousands of presently incarcerated felons — have seen their constitutional rights violated — by the federal sentencing guidelines. Additionally consider:

Based on the counts of conviction alone, Mr. Jones and his co-defendants would have faced advisory guidelines sentences ranging from 27 to 71 months. However, pursuant to United States Sentencing Guidelines Manual section 1B1.3-4, the district judge found that Mr. Jones and his codefendants had engaged in a much larger drug distribution conspiracy involving many kilograms of drugs, despite the fact that the jury had acquitted them of the exact same charges. Although the guidelines have been advisory and nonbinding since United States v. Booker, 543 U.S. 220 (2005), section 1B1.3 requires that courts take relevant conduct, and thus acquitted conduct, into account when calculating the guidelines. The Supreme Court has repeatedly held that an accurate guidelines calculation must be the starting point for a procedurally reasonable federal sentencing. So, while district courts are not required to sentence on acquitted conduct, they are required to consider it when determining the starting point for sentencing….

In Jones, the acquitted conduct found by the judge increased the defendants’ guidelines ranges dramatically. Based on these inflated guidelines ranges driven up by the acquitted conduct, the court sentenced the defendants to terms of 180, 194, and 225 months in prison….

That is why no one really knows what his sentence will be. And to say otherwise is… (what’s the word I’m looking for here, AltD440?)… silly.

We will wait and see what the able Judge Matsumoto does with the pre sentencing report. But if he gets a long, ten year or more sentence — he will have SOLELY himself to blame. His tweets and live streams will have become his chief tormentors.

Namaste, one and all.


19 thoughts on “[U] Is It Fair? Is It Constitutional? Maybe Not. But Might It Happen? Yes.

  1. billythekid9919 says:

    Count 8 was the parking scandal. No? Well that is going to be very difficult to calculate the losses. He manipulated the price of RTRX shares… He himself bragged about the market value of RTRX going from “a thought in his head to $500Million market cap.” What he’s too thick to realize or accept is: He was just moments before that brag convicted of manipulation of the RTRX shares and therefore: the market value which he was bragging about!

    Mind Blown!

    I just wish one of the reporters was sharp enough to fire back a question when he referenced the $500Mill market cap of RTRX: “Yes Martin but were you not just convicted of fraudulently manipulating the market value? How can you then use that market value to brag about your success?”

    Liked by 1 person

    • bmartinmd says:

      The Retrophin complaint lays out the contemporaneous market share value both for the Fearnow shares and the consulting agreements. Even if sentencing is just confined to the value of the Fearnow shares, the argued losses to Retrophin are in the millions of dollars (or so the complaint says). If that loss factors into the judge’s sentencing, Shkreli’s offense level could be jacked up 16 or more levels (from a base of 11). That’s more than 5 years minimum, according to Ms. Smythe’s sentencing chart. If the max for that offense (8) is 5 years (which actually seems pretty light, if you’re talking about the manipulation/parking of shares in a publicly traded company), then it appears that a strong case can be made for the maximum sentence on that offense alone.

      Liked by 1 person

  2. Mr Rhymes says:

    It’s amazing how followers emulate his stupidity in the cult of shkreli. They’re all collectively parroting the 12-24 month sentence that shkreli said on live stream as gospel. smh

    Liked by 2 people

  3. bmartinmd says:

    I had no idea that related crimes, of which a defendant is acquitted, could be used to inform the sentencing for those of which he is convicted. It does seem unfair.

    Nevertheless, the practice may have some utility and justice in the sentencing for more complicated crimes — such as securities fraud or money laundering — which a lay jury might not be able to fully appreciate. (That said, I’m not sure I’ll ever understand why Shkreli was acquitted on the other counts, when the evidence for conviction was so clear to me.)

    Yet…from my unlearned perspective, I can still see how Judge Matsumoto could use only the 3 felonies for which Shkreli is convicted to hand down significant jail time. Even if the judge finds that Shkreli inappropriately procured only $250K from each hedge fund for himself, that argument could get him about 4 years each for counts 3 and 6 (if I’m reading the sentencing guidelines correctly).

    The last count, count 8, seems like the most egregious; although it has a lower maximum sentence, according to news reports, than counts 3 and 6 (5 years vs 20 years maximum*). Count 8 involved the conspiratorial manipulation/parking of shares in a publicly traded (or soon-to-be publicly traded) company by its very own CEO. That exhibits seriously bad faith and leadership all around. The count is also part and parcel of Shkreli’s hedge fund schemes and losses in an effort to pay off his disgruntled investors. (In fact, I always thought that Retrophin was formed for the primary purpose of raising cash/equity for this very purpose — to pay off and shut up Shkreli’s hedge fund clients.) If the government can successfully argue to the judge, per Retrophin in its civil case, that Shkreli misappropriated millions of dollars ($54.1 million to be exact) in the form of company shares, then that could easily send his sentencing way over the top — if the max is not 5 years.

    So I could envision Shkreli getting serious jail time on his convictions alone (4 + 4 + 5 or more) and on the basis of monetary losses alone. Add to that any argument the government can make about his flagrant disregard for securities laws; his clear lack of and inability to even feign remorse; and his general and juvenile contempt for due process, the prosecutors, and especially the jury (last night, he reportedly called the jurors “presposterous” and “absurd” [http://time.com/4888561/martin-shkreli-fraud-case-conviction/]). Any or all of these factors could influence a judge who is already not inclined to be terribly lenient.

    And then we won’t know if Shkreli has to serve his sentences for his 3 felonies concurrently or consecutively.

    *I don’t know the original source for these reported maximum sentences.

    Liked by 1 person

    • bmartinmd says:

      To be fair, I might be conflating the value of the Fearnow shares with the value of the “sham consulting” shares with respect to the financial losses to Retrophin per counts 8 and 7 — if, in fact, there’s not overlap. But I’m not going to reread the Retrophin complaint and the federal indictment to tease that out. That’s for the judge to figure out, right, if she’s so inclined.

      A gif for condor:

      Liked by 2 people

      • condor says:

        Hope the AUSAs are watching!

        [And… hey you — at 7:24 am… smiling, now… and at 6:30 pm… and 10:41 pm… grin! Sunday morning at around 1 am as well…]

        Liked by 1 person

    • condor says:

      As ever, Dr. Martin… your take is… excellent, thorough and well balanced.

      We shall see… I’m headed out of country for a bit — vacationing. Will put up a new post — on post trial briefing schedule — in a bit. But that thread may be the sole open thread for a couple of weeks.

      I deeply appreciate your thoughtful commentary.

      All the best,


      Liked by 2 people

  4. R West says:

    “His tweets and live streams will have become his chief tormentors.”

    Actually, that’s true to an extent. The sentencing guidelines do talk about accepting responsibility for the crime.


  5. R West says:

    Judge can easily go higher in sentencing based on other crimes not convicted on, since she can go higher than normal and still stay within the guidelines for the conviction ,,, so given the Judge’s discretion in sentencing, that’s a hard thing to challenge!!

    Liked by 1 person

  6. aldt440 says:

    Yes, I understand that the Federal Rules of Evidence don’t apply to sentencing guidelines and that courts are given wide latitude as well as discretion when imposing a sentence. However, you’re conveniently overlooking 6th amendment due process rights, 5th amendment requirements of proof beyond reasonable doubt, and the fact that United States v. Watts, 519 U.S. 148 (1997) is now moot. It’s not customary to depart upward for securities violations either. I don’t understand why you cite US vs. Booker and then contradict yourself with with Jones? Where did Jones come from? Are you referring to Jones v. United States, 135 S. Ct. 8 (2014)? Jones et. al. was denied certiorari and, in my opinion, it’s unconstitutional. On second thought, the entire spirit of the constitution is up in limbo, so who really knows. You are correct about tens of thousands who have had their rights violated. In theory, part of US vs. Booker still supersedes Jones even though lower courts don’t always rule that way and the supreme court hasn’t decided the preponderance of evidence standard issues.

    In 2000, the court limited the effect of judicial fact-finding at sentencing when it held in Apprendi v. New Jersey, 530 U.S. 466 (2000) that any facts that increase a statutory maximum penalty are to be considered elements of the offense (regardless of how they are denominated in a statute) and therefore must be proved beyond a reasonable doubt by a jury, or admitted by the defendant. Where Apprendi made clear that factors increasing a statutory maximum penalty must be treated as elements of a crime, it would not be until Alleyne v. United States, 570 U.S. __, 133 S. Ct. 2151 (2013) that the court would hold Apprendi also applies to mandatory minimum penalties. In short, as the law now stands, a judge alone cannot make a finding that would increase the statutory maximum penalty, or mandatory minimum, to which a defendant is exposed without violating the Sixth Amendment’s notice requirement.

    Apprendi eventually was applied to the U.S. Sentencing Guidelines in United States v. Booker, 543 U.S. 220 (2005). Booker remains unique in the annals of Supreme Court jurisprudence because it was the only case ever to have two majority opinions, inasmuch as Justice Ruth Bader Ginsburg sided with both otherwise diametrically opposed factions. The first majority opinion — known as the “constitutional holding” — held that since the guidelines were mandatory, judge-found facts used to enhance sentences effectively made each “sentencing factor” an element of an offense and therefore, in light of Apprendi, must be found by a jury or admitted by the defendant. In other words, judge-found facts under the mandatory guidelines violated the Sixth Amendment. And that, many thought, including at least four of the justices in the majority, was the end of the story.

    But it was not. The second majority opinion — known as the “remedial holding” — held that since the guidelines violated the Sixth Amendment due to their mandatory nature, the guidelines would hereinafter be considered merely “advisory,” which effectively mooted the constitutional problem identified in the constitutional holding. The guidelines now are just one of many factors a judge considers when imposing a sentence, although they still must be correctly calculated inasmuch as they serve as a starting point and anchor a judge’s discretion. In light of Booker, federal sentences now are reviewed for procedural error: whether the guidelines are applied correctly; and substantive reasonableness: whether the ultimate sentence imposed constitutes an abuse of discretion even in the absence of procedural error. See Gall v. United States, 552 U.S. 38, 51 (2007).

    I could keep going, but let’s just agree Martin has made some very bad decisions and has assumed a tremendous amount of unnecessary risk. Again, I still think his biggest problem is how Matsumoto computes economic loss, and I seriously doubt his Tweeting is going to be a substantial part of her decision. Maybe there are some big uncharged crimes I don’t know about?



    [After proofreading and review] What a complete mess the Supreme Court made with U.S. vs. Booker. It’s really unfortunate that due process is so flagrantly violated.


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