Martin Shkreli’s former attorney, Evan Greebel, was convicted Wednesday by a federal jury of two counts of conspiracy to commit securities fraud and conspiracy to commit wire fraud. According to court records, Greebel helped Shkreli steal $11 million to pay back investors after the controversial CEO lost their money in risky trades.
In 2014, Shkreli’s first startup biotech company, Retrophin, ousted him amid accusations of stock impropriety. Shortly after founding Turing Pharmaceuticals, Shkreli secured the exclusive rights to sell Daraprim (pyrimethamine) and drastically increased the price of the lifesaving drug by nearly 5,500 percent.
According to the seven-count indictment, between September 2009 and September 2014, Shkreli and his co-conspirators orchestrated three multimillion-dollar schemes to defraud investors and potential investors in MSMB Capital, MSMB Healthcare, and Retrophin. Between September 2009 and January 2011, Shkreli failed to disclose to investors that he had lost all the money he managed in Elea Capital, his prior hedge fund, and that Lehman Brothers had a $2.3 million default judgment against him. Shkreli lied to his largest investor telling him that MSMB Capital had $35 million in assets under management, when in fact it had less than $700 in its bank and brokerage accounts.
Between March 2011 and September 2014, Shkreli and Greebel engaged in a scheme to defraud Retrophin by misappropriating the company’s assets in an effort to pay off Shkreli’s personal and unrelated professional debts and obligations. In December 2012, despite the fact that Retrophin’s books and records did not reflect any investments by MSMB Capital, Shkreli and Greebel engaged in a series of fraudulent and backdated transactions to create the appearance of an investment by MSMB Capital in Retrophin.
“As alleged, Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit,” stated former U.S. Attorney Robert Capers. “His plots were matched only by efforts to conceal the fraud, which led him to operate his companies, including a publicly traded company, as a Ponzi scheme, where he used the assets of the new entity to pay off debts from the old entity. When regulators and auditors questioned Shkreli’s decisions, he joined forces with Evan Greebel, who used his law license and training to conceal and further the scheme.”
“As charged, Martin Shkreli targeted investors and retained their business by making several misrepresentations and omissions about key facts of the funds he managed,” stated former FBI Assistant Director-in-Charge Rodriguez. “He continued to lie about the success of the investments and used assets from Retrophin to payoff MSMB investors. In the end, Shkreli and Greebel used a series of settlement and sham consulting agreements that resulted in Retrophin and its investors suffering a loss in excess of $11 million.”
As a former partner at the New York office of Katten Muchin Rosenman LLP, Greebel served as outside counsel to Retrophin while conspiring with Shkreli to misappropriate Retrophin’s assets in order to pay off defrauded investors in Shkreli’s hedge funds, MSMB Capital and MSMB Healthcare. Besides defrauding investors, Greebel and Shkreli filed false documents in order to deceive the U.S. Securities and Exchange Commission.
In August 2017, Shkreli was convicted of securities fraud and securities fraud conspiracy by a federal jury. Shkreli remains in prison while awaiting sentencing.
Convicted on Wednesday of conspiracy to commit securities fraud and conspiracy to commit wire fraud, Greebel faces a maximum of 20 years in prison on the top count of conviction.
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