On this icy gray Sunday’s dawn, I am quoting and yet redacting parts of a nine page letter filed on Saturday, in Brooklyn’s federal District courthouse — by the very able AUSAs — as a result of a so-called Daubert hearing earlier in the week, outside the earshot of the jury (i.e., essentially a hearing about whether certain evidence may be admitted at Mr. Greebel’s trial). [To avoid any chance of tainting the jury, the actual PDF of all nine pages of the letter won’t appear here — until the jury is sequestered to deliberate, or more likely, a verdict is in.]
In this instance, the defense wants to offer opinion testimony by someone it claims is an expert, but whom it turns out handles only departing EXECUTIVE consulting agreements — in a criminal case where none of the agreements at issue involved any prior employment or even board of director duties.
This is important, because courts rightly give businesses pretty wide latitude to extract non-disclosure covenants, and covenants not to sue, from former executives — while paying them often very handsome sums, for very little (if any) actual work — precisely because the departing employees have at least arguable claims against a former employer. In a case (like Shkreli’s) where AN INVESTOR’s claim is solely against an entity entirely separate from the one putatively offering to pay the investor off, courts have good reason to be suspicious that a fraud is being committed against the otherwise uninvolved but paying entity — and its own shareholders. Here, that would be Retrophin (otherwise uninvolved) being caused to pay for losses to investors — ones suffered in the fraud laced MSMB entities (i.e., Marty’s prior criminal vehicles). All of that was established at Marty’s trial, now concluded.
Here’s the bit then, that may prevent an “expert” for Mr. Greebel saying on the stand that such agreements are common, and it was (impliedly) no crime for Mr. Greebel to draft such an agreement at Marty’s behest. The bit — then:
“…None of the consulting agreements at issue in this case involved a Retrophin employee, let alone a “departing senior executive.” Yet those are the only kinds of consulting agreements with which [the putative expert] has experience or expertise and the only kinds of consulting agreements his opinions address. [The putative expert’s] opinions therefore are irrelevant because they relate to facts that will not be established in this case, including that any consulting agreement at issue was given to a departing executive. Daubert, 509 U.S. at 591; Donnelly, 80 F.Supp.2d at 52 (excluding expert opinion under Daubert because the opinion “does not fit the facts of this case”).
Moreover, the reasons [the putative expert] provided for the use of the “departing executive consulting agreements” about which he claims to have expertise underscore the irrelevance of his proposed testimony to this case. For example, [the putative expert] explained that such “departing executive” agreements may be used to address litigation concerns, but also explained that the applicable litigation concerns were those that related to the departing executive’s employment. Tr. 50:33-5 (“Q. [Those claims] had some relationship to the employment status of the consultant at some point? A. Yes, I believe that’s true.”). [The putative expert] also testified that these “departing executive consulting agreements” are often used when a company is seeking to dismiss an executive — which [the putative expert] described as “usually a very emotional chaotic period” — but wants “to get the [departing executive] to leave in a reasonable state” or “may be concerned about trade secrets or business secrets. You don’t want to be sued.” Tr. 8:6-22. It is not surprising that [the putative expert] intends to opine on the factors that contribute to departing senior executive agreements — that is what he knows. But none of those circumstances apply in this case.
Even if the bar for “relevance” is low, [the putative expert’s] testimony does not clear it. [The putative expert’s] opinions about consulting agreements given to departing executives to resolve potential claims arising out of those executives’ employment do not make it any more or less likely that the defendant conspired to defraud Retrophin. See Fed. R. Evid. 401. Again, none of the recipients of the consulting agreements at issue was a departing Retrophin executive, and, as a result, no alleged claims that any of the recipients may have made against Retrophin (to the extent that any such claims were made at all) could have related to the recipients’ employment with Retrophin.
Nor does [the putative expert’s] view that the text of the consulting agreements at issue in this case is similar to the text of various “departing executive” agreements make it less likely that those agreements were used to conceal that the defendant, Shkreli, and others agreed to misappropriate Retrophin assets to pay defrauded MSMB Capital and Healthcare investors. The government has not argued that the consulting agreements themselves are not contracts that appear to be valid; rather, the government has argued that the agreements were the mechanism that made it possible for the defendant and Shkreli to steal money from Retrophin to buy off Shkreli’s disgruntled hedge fund investors. [The putative expert] has nothing to say about what actually happened in this case, and the jury should decide this case based on what happened, not an executive compensation expert’s opinions about common practices in the entirely irrelevant field of executive separation agreements….”
To be clear, here — I am offering no opinion about Mr. Greebel’s conduct — but I do offer this to suggest the court and jury got it right, when Marty was convicted on three separate felony counts.
To be sure, R. West has argued ably in comments, to the prior posts, that perhaps it is a brush too broad to allege conspiracy (as opposed to aiding and abetting) — as the theory upon which Mr. Greebel might be painted orange, by the government, here. I think there is much to that — as we have not yet seen what all the government has adduced — by way of emails — to, and from Mr. Greebel, to the various alleged co-conspirators.
So we will withhold any opinion on those matters — and let the jury do its work. But as to Mr. Shkreli — the jury is in: Guilty.
Now you know.