The AUSAs Answer This Morning — On Forfeitures, of About $8 Million…

I’ll try to keep it brief, as I am away in the middle of the Sonoran desert, on my regular “get out of negative wind chills and ten inches of snow” vacation — but I think the government has the better of the arguments here.

One cannot litigate all over again, on the question of guilt/intent, in the forfeiture hearing — which is what Mr. Brafman, on behalf of Marty wishes to do (forfeiture is mandatory, as to the felonies he’s been convicted on).

Here’s a bit of the full 12 pager, but it is significant that in the Second Circuit at least, even acquitted conduct and non-convicted crimes may also inform the forfeiture (sorry, see page 4, et seq., R. West!):

“… Shkreli argues that he has a number of other creditors, that his interest in Vyera Pharmaceuticals (formerly known as Turing Pharmaceuticals) should not be liquidated, and that he intends to file an appeal of his conviction and seek a stay of the forfeiture pending appeal. As set forth below, because none of these arguments has any bearing on Shkreli’s mandatory forfeiture obligations and the government consents to a stay with respect to the seizure of substitute assets, a Preliminary Order of Forfeiture (“POF”) should be entered….

The government does not oppose a stay with respect to that portion of a POF authorizing the seizure of substitute assets, including Shkreli’s interest in Vyera, until the completion of the appeal that Shkreli intends to file. Accordingly, the concerns raised about Shkreli’s interest in Vyera being liquidated may be premature. However, to preserve the government’s right to satisfy any forfeiture judgment, Shkreli should not be permitted to dissipate his interest in Vyera or any of the other substitute assets named in a POF while his appeal remains pending. In the event he intends to liquidate his interest in Vyera or any of the other substitute assets, the government requests that a POF require Shkreli to consult with the government in advance of any proposed sale to advise of its terms and demonstrate that the proposed sale is an arms-length transaction, place any proceeds up to the amount of any forfeiture money judgment in an escrow account so that they be made available for forfeiture, and provide an accounting of any proceeds (in any form including but not limited to monies, stock shares, etc.) derived from the proposed sale….”

So it will be years — in all probability — before the Vyera shares end up in anyone else’s hands (but it definitively will not be the US government running Vyera), and Marty will not be able to sell these shares, or otherwise unduly injure their value, without a court order. Perfect.

Okay — it is a dry sun-drenched 85 degrees here — I’m out! [Confidential to Billy — my puts are still hanging tough (in Riot)! Smile.]



9 thoughts on “The AUSAs Answer This Morning — On Forfeitures, of About $8 Million…

  1. R West says:

    According to my quick review, Gov’t. does not actually have a Second Circuit case on forfeiture and acquitted conduct. They have a E.D.N.Y. case and an Eleventh Circuit case. One can’t put too much stock in District Court opinions, and 11th Circuit is not considered an influential circuit … so Martin will battle on … until it becomes a Second Circuit case!

    Liked by 1 person

  2. R West says:

    I don’t understand the filing scenario here. The Gov’t is replying now to Brafman’s letter from way back in early Jan., and then the Judge set a briefing schedule for three more forfeiture briefs? I don’t know .. but doesn’t make much sense.


    • condor says:

      To add to the confusion, Mr. Brafman just asked to file a short surreply, by mid month.

      This is a fight to the death, for Mr. Brafman because his fee… is riding on it.

      I also expect that things are increasingly fluid (right before sentencing), because Marty is now settling (three to five years later) his liabilities for monetary damages, in the KaloBios suit in California — and I predict, shortly in the Retrophin cases in Manhattan.

      He is (as I said in the new post) finally trying to demonstrate he is taking responsibility even for the uncharged KaloBios conduct — come next month at sentencing, in Brooklyn.

      I predict it is all just a little... too little; too late.

      We shall see. Namaste….


      • condor says:

        And the able Judge Matsumoto has set February 12 as the due date for the defense’s “short sur-reply”, thus:

        ORDER as to Martin Shkreli. The court grants Mr. Shkreli’s request to file a short sur-reply concerning the pending motion for forfeiture. The sur-reply must be filed by February 12, 2018. Ordered by Judge Kiyo A. Matsumoto on 2/7/2018. ….



  3. aldt440 says:

    I.) C.) Moreover, it is well-settled in the Second Circuit that frauds which were not specifically proven during the guilt phase of the trial, but which arose out of the same schemes for which the defendant was convicted, can be considered by the court during the forfeiture phase of the trial. SeeUnited States v. Fruchter, 411 F.3d 377, 384 (2d Cir. 2005) (“Although we have not previously considered whether proceeds derived from conduct forming the basis of a charge for which the defendant was acquitted can be counted as ‘proceeds’ of racketeering activity, it seems plain that it can.”); United States v. Hatfield, 2010 WL 4177159, at * 6 (E.D.N.Y. Oct. 10, 2010) (“[T]he Government can also seek forfeiture of proceeds derived from ‘uncharged executions’ of Defendants’ fraud schemes”); United States v. Jafari, 85 F. Supp. 3d 679, 688 (W.D.N.Y. 2015) (“Considering uncharged conduct as part of a fraud scheme is consistent with the law as articulated by courts in the Second Circuit.”), aff’d, 663 Fed. Appx. 18, 24 (2d Cir. 2016). See also, United States v. Holland, 2018 WL 416459 at * 7 (11th Cir. Jan. 16, 2018) (per curiam) (holding with approval that district court’s forfeiture calculation can be based on both acquitted and uncharged conduct).

    Judging by the strong language in this paragraph and well established precedent, I think his chances of doing 6 months are slim. What a travesty the criminal justice system has become.

    Liked by 1 person

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