The devil wore sunglasses.
He wore them even though the finest fall in memory had taken a gloomy turn and the day had gone doubly dim with a chilly rain and the approach of night.
“Sunglasses!” cried one of the media mob waiting outside Brooklyn federal court on late Thursday afternoon.
Some of the camera folks had been grumbling about the downpour and a woman from CNBC had been shivering, but nobody was going to leave because the young man they awaited was not just another Wall Street wonder charged with conning investors.
The crimes that made 32-year-old Martin Shkreli truly the devil were not the multiple counts of securities fraud and wire fraud outlined in the 29-page indictment that had resulted in his arrest at his Manhattan home Thursday morning and his afternoon arraignment on the third floor at the Brooklyn courthouse.
His far more serious crime is a moral one not even listed in the penal code. The law makes it no crime at all to acquire the marketing rights of a pharmaceutical drug and then hike the price unconscionably beyond the bounds of decency at the expense of the desperately ill.
Back in May of 2013, when he was still CEO as well as founder of the pharmaceutical firm Retrophin, the firm acquired the rights to a decades-old drug called Thiola, which is used to treat a chronic and painful kidney disorder.
As was reported by Benjamin Davies of Fortune, Shkreli hiked the price of Thiola by more than 20 times. A pill that had been going for about $1.50 suddenly cost $30.
In early 2014, Retrophin acquired the rights to a second old drug, Chenodal, which among other things is used to treat a rare hereditary difficulty in metabolizing cholesterol. Those who suffer from this disabling and sometimes fatal condition are subject to chronic diarrhea as babies and can later develop cataracts, fatty deposits around the brain, and degeneration of the neurons.
The treatment was already expensive, $94 for a 250 milligram pill. Shkreli hiked it to $473 a pill, or more than a half-million dollars a year.
None of which appears to have greatly bothered the shareholders and directors of Retrophin, which Shkreli formed in 2011 and turned to a publicly traded company a year later.
Retrophin did go into a tizzy when it discovered that Shkreli appeared to have perpetrated various hustles to siphon money from the company to placate investors at a pair of failed hedge funds—one of which he had formed to keep investors from learning that the first one had gone bust as a result of a disastrous trade. The supposed whiz had gone short on a company producing a weight-loss drug whose immediate effect was to cause his fund to lose millions.
Shkreli had used cash from the second hedge fund as seed money for Retrophin, but had then allegedly sought to characterize this investment as a loan. He seems to have then used Retrophin funds to pay off this supposed loan with interest. He is also alleged to have sought to placate hedge fund investors by making them no-show consultants at Retrophin, awarding them stock and six-figure cash payments
All of which caused the Retrophin board to fire Shkreli. The company also filed a civil suit against him in Manhattan federal court seeking $65 million in damages.
“Shkreli was the paradigm faithless servant,” the suit charges.
The suit makes no mention of the outrageous price hikes on Chenodal and Thiola, as they seem to have been acceptable business moves. The issue was not how the company made its money, but what Shkreli did with it.
Shkreli founded a new firm, Turing Pharmaceuticals. He acquired yet another old drug, Daraprim, used to treat toxoplasmosis, an infection that can pose a particular threat to AIDS and cancer patients. He hiked the price from $13.50 a pill to $750 a pill.
“A great business decision,” he called it on Twitter.
This time, people noticed. He had made himself into an online personality with provocative tweets and a streaming-of-consciousness via a web cam. He now became the most hated man on the Internet, not to mention the offline world.
He seemed like the devil himself when he was asked at a Forbes symposium what he would do differently if he had a do-over.
“I would have raised prices higher,” he replied. “That’s my duty.”
And, as the devil is wont, he insisted that he was only doing what everybody else does.
“My shareholders expect me to make the most profit,” he said. “That’s the ugly, dirty truth.”
He summed up his mission.
“I’m going to maximize profits,” he said.
By showing no shame, he tapped into some of the same mojo that is powering Donald Trump. We have become so sickened by fake moralists and “political correctness” that we are liable to admire shamelessness, mistaking it for integrity.
As the devil is also wont, Shkreli made everybody forget their outrage by becoming outrageous, announcing that he was going to bail out jailed rapper Bobby Shmurda and that he was buying a rarer than rare Wu-Tang Clan album for $2 million.
Meanwhile, federal prosecutors seem to have used the Retrophin lawsuit as a kind of template for a criminal case again Shkreli. The result was Indictment CR 15-637.
“A securities fraud trifecta of lies, deceit, and greed,” FBI Assistant Director-in-Charge Diego Rodriguez said at a press conference in the U.S Attorney’s law library after Shkreli had been arrested on Thursday.
A reporter asked Brooklyn U.S. Attorney Robert Capers about the infamous drug price hike, suggesting it may have been a way to keep the business afloat.
“That’s not part of our investigation,” Capers replied. “I don’t want to speculate on his reason for the price of the drug.”
The law books on the shelves behind him stood in silent witness to the sorry fact that while the statutes prohibit stealing even from a public company you founded, there is nothing to prohibit hiking a drug for cancer and AIDS patients by more than 5,000 percent.
Capers then got the question he knew would come.
“I wondered how long it was going to take to get to that,” he said. “We’re not aware of where he got the funds he raised to buy the Wu-Tang Clan album.”
Capers did not say that the last page of the indictment concerns possible forfeiture.
“The United States hereby gives notice to the defendants that, upon their conviction of any of the offenses… the government will seek forfeiture… of any property, real or personal, which constitutes or is derived from proceeds traceable to any such offenses,” it reads.
In other words, Uncle Sam might end up owning the Wu-Tang Clan album.
Dance party at the prosecutor’s office!
At 3:15 p.m., Shkreli was led into the arraignment part on the second floor in Brooklyn federal court. He was wearing a black V-neck top and fashion jeans and shiny brown shoes.
To his left stood his co-defendant, attorney Evan Greebel. They had been preceded before Magistrate Robert Levy that afternoon by a FIFA official, an accused drug dealer, and an alleged Chinese gang member.
As their turn now came, Shkreli and Greebel were read their rights. They answered clearly in the affirmative as the magistrate asked if they had met with their lawyers and if they understood the charges. They gave the same reply when asked how they intended to plea.
“Not guilty, your honor.”
The judge set bail at $1 million for Greebel, $5 million for Shkreli, sums that would have driven the Chinese gang member to despair. He had only been able to offer the guarantees of two restaurant workers, who make $1,000 and $800 a month respectively.
Shkreli’s defense attorney, Marcus Asner, said an account was being set up with $5 million in cash and securities.
“We anticipate no trouble,” Asner reported.
Shkreli’s father and bother were in the courtroom and they stepped up to serve as signatories. The father had emigrated from the Balkans and settled in Brooklyn. He must have thought that his greatest hopes had been realized when Martin was admitted to Hunter College High School, one of the very finest in the city. The son did not make it through college, but he appeared to hit it bigger than big on Wall Street.
The father now had a hollowed look as he stood in a windbreaker and workingman’s dungarees. His other son was in a suit.
“Gentlemen, you are signing this bond?” the judge asked.
“Yes,” both men said.
“You’re liable to this bond for $5 million,” the judge reminded them.
“Yes,” they both said again.
“Sign your name and put your address on it,” they were told.
After a court date was set for Jan. 20, Martin Shkreli was allowed to leave. He stopped into pre-trial services and then went down to the lobby. Cameras are barred from the courthouse and a media mob was waiting outside in the rain.
Shkreli was suddenly not so enamored with the glare of attention. He had on a pair of sunglasses as he followed a burly bodyguard into the wet and dreary dusk. A gleaming black Suburban with tinted windows was waiting at the corner to whisk the devil away.