Condor Says: Mr. Painter Will Be Able To Remain In Federal Court, As He Sues Marty (For Money!), Re The Chagas/Benz Program Lies…

Right around New Year’s Day 2018, Malncka alerted us to a suit filed by Edward Painter, the former head of Investor Relations for what was then Turing (now Vyera), in federal court, against Marty personally, and Vyera — as a company.

As that link suggests (do go read it for the backgrounder, here), the defense was likely going to invoke the arbitration clause in the employment agreement, between Mr. Painter and Vyera, to (it hoped) shove this dispute out of the public eye….

Well, overnight, that is exactly what Fox Rothschild has done — in a four page letter brief filing, with the able judge in the Eastern District of New York (Brooklyn). Personally, I might not have approached it in just this way.

You see, the Fox firm makes absolutely no peep — not a syllable, even — about the central gravamen of Mr. Painter’s complaint at law. It is more than a simple employment complaint. Much more.

It is (in the main) a securities fraud complaint. And the supposed arbitration clauses Fox talks about so passionately, cover only employment related matters, not not not investments in securities, of the company then called Turing, now called Vyera.

As I’ve long said (across a decade, and several blog properties), applicable and settled black letter law holds that those federal securities fraud claims radiate beyond the boundaries of the arbitration clauses, in almost any employment agreement (other than ones between SEC-registered broker/dealers and their employees) — and thus cannot be kept out of the federal courts. [Those claims by Mr. Painter include allegations that ole’ Marty was supposed to pay Mr. Painter a five per cent royalty on all Chagas drug program sales (confidential to Mr. Painter’s able counsel: that royalty payment arrangement is itself very-likely another, separate ’33 Act private securities offering, to him), and Marty was supposed to transfer all his KaloBios shares to Vyera (then called Turing), in order to make sure that Mr. Painter’s efforts in connecting Marty to the people at Savant were appropriately rewarded.] Instead, Marty ended up selling his shares in KaloBios for several million dollars in late summer 2016 — to an unaffiliated private investment company, to thus allow KaloBios to exit bankruptcy, free of his stink. If Mr. Painter has good evidence to back this up (and he says he has witnesses who heard Marty make all these promises), he may have a nice recovery in the offing.

Finally, while Vyera is also a “named party” here in the litigation, I strongly suspect it is Marty himself that Mr. Painter is gunning for. Marty does still have some $27 million, we are told. And even as Vyera lays off staff, it, like Marty, likely still has some real wherewithal. And based on my visitor traffic those days in early January 2018, I’d say some of the OTHER private investors in Vyera reside (or at least holiday) in and around… the Matterhorn. In sum, there is other money here — beyond Marty’s — to go after.

And so — this ought to be highly amusing.

G’night, all!

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59 thoughts on “Condor Says: Mr. Painter Will Be Able To Remain In Federal Court, As He Sues Marty (For Money!), Re The Chagas/Benz Program Lies…

  1. mscatherinahorowitz says:

    I’ve had a bit of a think and I’ve realised my posts are slightly ridiculous all things considered. In all truth, Shkreli probably does deserve the actual sentence he got. (I need to get real).

    A lot of my discontentment with the powers that be arose after the Iraq War. That disillusioned me and since then I’ve tended to be quite sceptical about things relating to power and justice. Just the other day, there were two news items about fatal attacks in supermarkets. In one of the cases, a life sentence was delivered and in the other case, only 11 years. In these situations I tend to scatch my chin and wonder who it is that comes up with these numbers and whether anyone is really justified in casting judgement on others. I often wonder why a single homicide can result in a life sentence and yet soldiers might kill multiple people.

    Any thoughts?

    Liked by 1 person

    • aldt440 says:

      The problem isn’t that Shkreli deserves jail, it’s that everyone else is getting away with the same stuff. He was tried in the media too. It’s a complicated problem.

      Liked by 1 person

      • aldt440 says:

        I’ve posted tons of stuff on this blog in the last year. You might find some solace in reviewing old posts. We’ve had some great discussions and arguments here.

        Liked by 2 people

  2. condor says:

    Being locked away — on a mental/medical hold is (I admit) far more excruciating — as in many cases, you’ve done nothing “wrong” other than fail to conform to a majority notion of “normal”… so I am deeply sympathetic to you personal former circumstances…

    Keep getting healthy — and healthier, for you — and you alone! No one else will do it for you…

    Namaste…

    Liked by 1 person

    • mscatherinahorowitz says:

      It’s best if I don’t share all my thoughts on the current state of affairs of psychiatry. I’ll just say, personally I experienced it as a form of prison really. I think its quite unjust that in our day and age, you can be put away for having worn a hat on a warm day, and saying a few things that don’t add up. But I won’t say any more than that. Because, I don’t wish to get on my hobby horse or go into the abstract philosophy of what I think wellness of mind is.

      Liked by 1 person

  3. mscatherinahorowitz says:

    I know a lot of people would say 5 years or 7 years in prison is manageable, and that it could be a lot worse, but if you’ve never been woken up to gray walls, displaced from your home, on a hard uncomfortable bed, you’re probably going to underestimate how bad it is. Little things, like having to ask a member of staff any time you need something, having to queue for unappetising food….showering in a shared facility….walking in the yard of a prison….all these things, repeated day after day, week after week, in the most hostily boring place ever….is certainly a “sentence” as mildly removes some of your sense of normality, your ordinary feelings of being human….not to mention exacerbate any anxiety/depression one might have. Even if life outside is often the illusion of control, its nice to have your own privacy and not have people breathing down your neck all the time, feeling oneself to be the subject of people’s wrath. I’m so glad Shkreli’s sentence wasn’t worse than it is.

    Liked by 1 person

    • condor says:

      I know in my heart what that is like (amendment 5 as to the rest).

      And I am very empathetic… to your feelings and position — you will be okay… and so will he. Try to trust that….

      Namaste

      Like

      • mscatherinahorowitz says:

        Really what I attempted to convey in the post above is, even though its the criminal in the wrong, prison is nevertheless a victimising feeling experience all the same. No matter how professional/facilitative the staff are, you’re the subject of their ongoing monitoring. And being lumped in a box, the keys of which are held by others doing their day job, is like a special form of objectificiation. Having things revolve around you, but in this sort of negative way, is such a horrible feeling. Such a terrible departure even from the normal spectrum of high and low emotions. Pressure, I suppose is the correct word. Its a pressurising environment. You always have to watch your words and behaviour. And all the empathy in the world can’t change the fact the door is locked on you.

        Liked by 1 person

      • mscatherinahorowitz says:

        …just want to add. Even though I’m a bit of a hardliner when it comes to the belief in leniency, given the sums of money involved and distress caused, I think it was just for Martin to have to serve SOME time. Just a little less than what he got.

        Liked by 1 person

    • Yellow Butterfly says:

      I’m very sorry you had to go through that. I too have been inpatient for depression and yes it is awful, but don’t forget that people are incredibly resilient. He will find a way to cope, to adjust. Your experience was also more difficult because you were dealing with a terrible psychic burden in addition to the environment. Even then, you got better enough to be discharged, right? They wouldn’t have let you go with zero progress. However bad it was, you got through it. He will find a way to deal with it, and hopefully he will come out of it better.

      Liked by 2 people

      • mscatherinahorowitz says:

        Well obviously I wrote that I hope he gets the min-security placement and his live streams will be missed. Not knowing how to comfort him re: the depression he’s likely to be feeling, I put some bizarre thing I read on the internet garnered Out-of-Body Experience research. Something to do with life not being the primary field, and life in 3D being unwinnable. I’m not sure that will comfort him much. But it was worth a shot. I’ve been feeling quite low myself recently, and I’m quite moved by the Shkreli case. Even if its all his fault, I can’t help but feel for him. Some of us are just born flawed and are our own worst enemies. He deserves compassion. For anyone whose never been arrested, on the wrong side of the law, or put away, its very unpleasant to be displaced from your home. I’ve been under lock and key in a mental hospital. 2 weeks locked away, is like 10 weeks in the outside world. You’ve nothing to look forward to but your dinner. And in those sorts of places, you’re typically surrounded by people who are suffering a lot, and who have lots of problems. It makes you feel life is out of your control. And it only adds to the weight of your experience that it was your own fault. Making one feel very heavy. He’s probably very down right now.

        Liked by 1 person

      • condor says:

        Yes… I hear you — on all of that. I have a brother doing natural life without hope of parole. When Marty gets his final placement, he will have one 15 minute phone call per day.

        I talk for 15 minutes every day to my brother — to try to keep him filled with science news, and things that will keep his mind working for the other 23-3/4 hours….

        I like the idea that life is not a contest… it is a journey — and the smallest things we do, by the side of that footpath… make all the difference.

        Namaste… stay well!

        Like

      • mscatherinahorowitz says:

        Aww, well you sound like an excellent person, Condor. Sorry to hear about your brother.

        There’s a Buddhist quotation which goes: things which are harmful or damaging are easy to do, and that which is beneficial or good is difficult to do.

        I added something similar on the end of the postcard. From the outside it’s hard to understand the trail of destruction Marty has left, through all these companies. But, given its easier to make mistakes or tell lies, than own one’s responsibilities I feel he can be somewhat forgiven. Or requires the support of some of his fans to affirm he’s still a human being, he’s just been a bit reckless.

        Liked by 1 person

      • condor says:

        Thanks, truly…

        And here is where we may differ a little: I understand that my brother will never be outside the walls again — until he’s in a pine box. And I know that is… justice.

        So too with Marty — I do not deny him his humanity, by insisting that he (too) pay his debt to society — he will in all likelihood be out before he turns 40.

        He will survive. And I need to keep in mind the victims of each of those crimes. They earned the right to see him do his time behind real bars and concrete walls.

        You know I’ll always listen, here…

        Namaste — hopping a plane! Two hours off grid.

        Like

      • mscatherinahorowitz says:

        No, my apologies. I didn’t mean to be ranting about the injustice of people having to pay their debts to society. There does need to be a system of justice. And all being well, those who are likely to cause disturbance to others will be caught early on and rehabilitated with as much of their lives left as possible. As a general rule I think it is merciful if things stay out of courts. And if leniency is rule. But if the damage done is too great, unfortunately there’s no much than can be done other than sentence people.

        Liked by 1 person

  4. R West says:

    “civil securities fraud claims may start reappearing… in the state courts as well.”
    ______________

    I’m not sure that’s a good thing. Most of the class action suits are a joke … one time as a stockholder I got a token stock warrant and the attorneys made millions … it’s a racket! I think Congress will fix it and make it clear that such cases need to go to federal court!

    Liked by 1 person

  5. R West says:

    Martin Shkreli sitting on a fortune if he could get back online … he received so many queries on his livestream: what kind of beer are you drinking, what kind of pizza are you eating, what kind of computer do you have, what broker do you use? If he endorsed products for pay … it’s endless!

    Liked by 1 person

      • condor says:

        I kind of think the 94,000 followers on Facebook and Twitter were as much idle curiosities, as anything else.

        I do think (if he can find true humility in reflection, while in prison)… he could teach — someday, in the future…

        Namaste — and Go Ramblers!

        Like

      • R West says:

        People like to watch rudeness because they can’t do it themselves. There’s been a few times this week I wanted to tell someone, “you don’t know what you’re talking about!” But normal people can’t do that … so they like to watch it anyway for the vicarious satisfaction!

        Liked by 1 person

  6. Newbie1 says:

    Hello from a newcomer! After having recently found your site, I’ve spent the better part of two days going through as much as I can, and am still only on page 19 of your extensive notes!

    For the past year I’ve considered myself a Shkreli fan, and appreciated his quirky personality and insights demonstrated on his livestreams… and I largely believed his assertions that he was being unfairly targeted for the securities fraud investigation due to his social media persona and the Daraprim pricing. I “bought” his defense that there was no fraud because his investors did not lose money. I am floored and completely surprised by reading the actual court documents you’ve posted here related to Retrophin and MSMB. I’m also astonished to discover his highly questionable history with other ventures such as KaloBios and the Chagas drug, of which I was completely unaware (like probably all of his fans on his Discord chat and Facebook, who do not know of your site). Thank you for this extensive work and providing the original sources!!

    I have two questions, and completely understand and respect if you cannot answer either:
    1. Were you personally wronged by Shkreli, and did that motivate this page, or were you merely interested in his case as an outside observer? Given your access to these documents it seems like you are an insider on this case.
    2. Do you have, or know of, any source that gives a timeline of Shkreli-related events relating to all his various frauds, bankruptcies, etc., even beyond those relating to Retrophin? I’m having difficulty piecing together all of these different schemes, and a timeline would be helpful and instructive!

    Many thanks, and I admire your diligent work here at sharing the facts.

    Like

    • condor says:

      Gosh… thanks Newbie!

      No — I have no connection (at all) to old Marty. I am a life sciences M&A lawyer (with a background in SEC lore)… so his particular brand of chicanery… fascinates me.

      And I am, bit by bit, doing an integrated timeline… though I’ve now completed one focused on KaloBios — in comments last week.

      It takes time (and to be clear, this is a “moonlighting gig” for me) — because Marty’s frauds span about a decade, and perhaps seven separate companies.

      I’ll post it here when I’m happy with it.

      Welcome to the pool party; dive right in!

      Namaste!

      Liked by 2 people

    • R West says:

      “I’ve spent the better part of two days going through as much as I can, and am still only on page 19 of your extensive notes!”
      ______________

      Read Condor’s whole blog and one gets 30 hours of MCLE … for credits, just list the “Marty Course” … probably no PR hours though!

      Liked by 1 person

  7. mscatherinahorowitz says:

    This is all very complicated. I’m now confused what the difference is between the three pharma companies. What does Turing/Vyera have to do with benz? It was going to “buy” it?

    So Martin is set to lose more money. But not gain extra time in jail. Before long he’ll be bankrupt.

    Liked by 1 person

    • condor says:

      Yes — he will be destitute. He lied to people at Turing — telling them THEY would get the Benz Chagas rights — and then kept them for himself (in KaloBios)… but he got arrested before he could finish that Ponzi scheme.

      And so far, the government hasn’t charged him with any new crimes — on these facts. But in my experienced opinion, they could.

      So we shall see.

      [R.West — a fine lawyer — expects the government is working on that right now.]

      Namaste…

      Liked by 1 person

      • condor says:

        Hmmm. He is a gifted communicator/teacher…

        He might teach … undergrad (or private high school level, more likely) business ethics: “what I did wrong; what I learned from it”… if he’s lucky enough to become… self-aware, during his incarceration.

        Namaste…

        Like

      • mscatherinahorowitz says:

        “He might teach … undergrad (or private high school level, more likely) business ethics: “what I did wrong; what I learned from it”… if he’s lucky enough to become… self-aware, during his incarceration”

        I’m sure he’ll claim to have changed, and he probably will change.
        If he has any money left, I suppose he’d invest that. But if he has no money left, he might have to start on the bottom rung.

        Liked by 1 person

      • aldt440 says:

        Your assessment in this matter has a lot of weight Condor. Their motion for dismissal will absolutely fail because it doesn’t address the merits. If I was Shkreli, I would fire Fox Rothschild faster than they could blurt out quantum meruit! Perhaps Wait, the name of the attorney Marty hired, plans on dragging the thing out as long as possible until Painter runs out of money or some other misfortune derails his complaint? I wonder what kind of fee arrangement Painter has with his attorney? I would think Painter is pretty far down the line of creditors looking for payouts too. The way things are going, even if the Feds don’t indict him for KaloBios or the SEC doesn’t fine him for everything left, it looks like Shkreli’s attorneys plan on billing him right down to his last penny. Yes MSCATHERINAHORWITZ, Martin is probably going to loose all of his money.

        On a side note, who the hell would enter into an agreement like this? You would think both parties are sophisticated enough to avoid unsophisticated disputes….. hmmm Shkreli consistently boggles my mind.

        This is extremely odd, but I personally schooled him about minors lacking the capacity to contract in an argument he was having with a high school kid. For me, this was a rather large clue early on that all was not well behind the curtains. I just don’t understand how one can expect to excel at business without understanding the intricacies of contract law.

        Liked by 1 person

      • condor says:

        Thanks! We shall see… but Mr. Painter incorrectly assumed Marty was trustworthy.

        The best agreements in the world are very little help against truly malevolent people.

        So I always advise — if you do not sense you can trust the integrity of your counter-party…

        Probably best to walk away, as all my best drafting will mostly only “buy” you a long, expensive… but winning lawsuit.

        And when we are done, the counter-party is likely as not to be … bankrupt, in jail… or both (i.e., Marty!)….

        Namaste

        Like

      • R West says:

        “The best agreements in the world are very little help against truly malevolent people.”
        ______________

        People have a hard time understanding that, but that’s really good advice! Only ever heard a couple of people ever talk about it. Typical clients think a good agreement solves everything!

        Liked by 1 person

  8. R West says:

    Condor obviously very knowledgeable about securities law, but here’s the problem …

    Painter admits in his Complaint that he invested after his employment commenced, he was pressured into it, and he felt the investment was connected to his employment.

    The arbitration clause applies to all matters “arising out of” his employment.

    So, the investment wasn’t separate from his employment, it was connected. That “arising out of” language has a lot of power … probably not a slam dunk, but he’s going to lose.

    So now he’s saying, “I’ll see you in c… uh … arbitration!”

    Liked by 1 person

    • R West says:

      Oh,wait … I didn’t address the Release … so what do you expect for free? You can upgrade to Condor’s premium version for that analysis. (Seems like a closer issue, because it came after the employment and investment, so it should have been more precise.)

      So … no Release … but probably arbitration!

      Liked by 1 person

    • condor says:

      This will make for a fun bet: I’ll take the other side of that wager.

      In my defense, I know that Mr. Painter’s relationship with Marty — and the promises (lies actually) predate Mr. Painter’s arrival at Turing — and they are “in connection with” (magic words in the ‘33 and ‘34 Acts) at least three separate securities, across two or three companies (depending on how big a liar Marty proves to be).

      They are not due to his employment at Turing — if that were so, all the Retrophin “consultants” (whose losses arose from lies at MSMB) would have been in the same boat (out of luck). And they won — in Manhattan, Dr. Koestler in particular.

      This is so, even though federal courts give some substantial deference to arbitration clauses.

      And, we all know — from our experiences here — it is hard to overestimate The size and variety of Marty’s lies.

      Those lies predate his time at Turing — and are in connection with the sale of (about) investment securities — so we stay in federal court.

      Wager: one root beer!

      Namaste, man!

      Liked by 1 person

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