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Speaker 1: Martin Screlly was dubbed the most hated man in America

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Speaker 1: by the BBC and a spoiled brat by Donald Trump.

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Speaker 1: Now he's a convicted felon. On Friday, at jury found

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Speaker 1: Screlly guilty of defrauding investors and two hedge funds. Screlly

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Speaker 1: gained notoriety as a drug executive when he raised the

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Speaker 1: price of a of a potentially life saving HIV treatment

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Speaker 1: by five thousand percent. His smark filled congressional testimony only

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Speaker 1: enhanced his controversial reputation. The criminal trial dealt with a

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Speaker 1: separate matter. Prosecutor said Screlly ran a Ponzi scheme, using

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Speaker 1: investors money to start a drug company and siphoning off

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Speaker 1: the company's assets to pay investors. He was convicted of

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Speaker 1: three counts but acquitted of five others. Afterwards, Screlly declared victory.

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Speaker 1: This was a witch hunt of of APICs proportions and

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Speaker 1: maybe they've boald one or through broomsticks, but at the

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Speaker 1: end of the day, uh, we've been appointed of the

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Speaker 1: most important charge in this case. With us to talk

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Speaker 1: about the Martin Screlly verdict is Peter Henning. He's a

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Speaker 1: professor at Wayne State University Law School. And Robert Hockett,

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Speaker 1: he's professor at Cornell University Law School. Thanks for joining us,

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Speaker 1: both of you. Peter, let let me start with you.

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Speaker 1: Just let's start with the guilty counts. Tell us what

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Speaker 1: exactly Screlly was convicted of doing. Well, Uh, two counts

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Speaker 1: of securities fraud, and both of those related to a

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Speaker 1: hedge fund or two hedge funds that he ran. And

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Speaker 1: the core of the government's case was that he lied

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Speaker 1: to those investors that in fact the hedge funds were

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Speaker 1: almost completely wound down. And then that he took shares

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Speaker 1: from Retrofin, one of the pharmaceutical companies that he founded,

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Speaker 1: essentially to pay them off, and that he lied to

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Speaker 1: them about the risk that they were enduring. And then

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Speaker 1: one count of conspiracy related to fraud with regard to Retrofin,

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Speaker 1: so that he was using UH shares from Retrofin to

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Speaker 1: essentially pay off investors in the hedge fund when in

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Speaker 1: fact Retrofin had no interest in no need to pay them.

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Speaker 1: So that essentially was the fraud. And and Bob, what

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Speaker 1: what tell us about the other side of that? What

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Speaker 1: was UH Screlly acquitted of and what was the distinction

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Speaker 1: between those things he was convicted of in those things

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Speaker 1: he was acquitted of. Sure, so he was not guilty

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Speaker 1: of a number of additional conspiracy charges that have been

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Speaker 1: leveled against him. Right, So, there had been charges that

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Speaker 1: he had conspired to commit securities fraud in connection with

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Speaker 1: both of the hedge funds, and that he had conspired

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Speaker 1: to commit wire fraud with respect to both of the

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Speaker 1: hedge funds. Uh and then finally there was a charge

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Speaker 1: that he had conspired to commit wire fraud in connection

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Speaker 1: with Retroic and the pharmaceuticals company. So I think the

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Speaker 1: best way to sort of understand the relation between what

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Speaker 1: he was convicted of and what he wasn't is as follows. Essentially,

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Speaker 1: he was found guilty of having committed the predicate of

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Speaker 1: senses by reference to which conspiracy charges are usually defined.

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Speaker 1: In other words, we got the planet, so we didn't

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Speaker 1: really have to go after the satellite anyway. Um, they

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Speaker 1: did go after the satellite anyway, let's they went after

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Speaker 1: the conspiracy charges that related to the underlying predicate offense

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Speaker 1: charges he was Screwley was now not guilty on those,

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Speaker 1: But in a certain sense that doesn't really matter, because

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Speaker 1: he was found guilty on the underlying predicate offenses that

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Speaker 1: would have been the predicates to the conspiracies anyway, So

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Speaker 1: he really did, in my view, get convicted on what

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Speaker 1: counts on what matters most. Peter, do you agree with

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Speaker 1: that and and if if so, what do we make

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Speaker 1: of Screwley saying afterwards that he was acquitted of the

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Speaker 1: most important charges in the case. Well, you know, I

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Speaker 1: certainly agree with Bob then that you know, just for

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Speaker 1: the government, any guilty verdict here is going to be

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Speaker 1: a victory. Now, Screwley says, well, you know, we were

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Speaker 1: acquitted the most serious charges, the wire fraud charge uh

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Speaker 1: involved looting of red trofinn so or conspiracy elude retro Finn,

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Speaker 1: and that um carried the potential for a very substantial

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Speaker 1: loss figure And really, uh what is underlying this case, interestingly,

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Speaker 1: is that the hedge fund investors were at least it

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Speaker 1: appears were compensated and got all their money back plus

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Speaker 1: uh some because retrofin has turned out to be a

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Speaker 1: fairly successful company, and it's not clear that retrofin lost

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Speaker 1: anything from what Screlly did. In fact, he might have

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Speaker 1: set it up so that it was a success. So

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Speaker 1: he had this kind of odd situation of a fraud

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Speaker 1: without losses, and that may have an impact at sentencing

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Speaker 1: when that comes up down the road. Yes, so, Bob,

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Speaker 1: given given what Peter just said, Um, the fact that

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Speaker 1: investors didn't lose money, and in fact, that was I

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Speaker 1: think part of Screll's defense. Um, was there legitimate grounds

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Speaker 1: for a prosecution in this case? Um? I think there was.

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Speaker 1: I think Picker is quite right that the fact that

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Speaker 1: there wasn't a loss will have some possible effect on

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Speaker 1: the sentencing, because loss itself is a particularly important relevant

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Speaker 1: factor that a judge is meant to take into account

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Speaker 1: when sentencing. At the same time, however, it's worth keeping

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Speaker 1: in mind that it's not the only factor, but the

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Speaker 1: judge is meant to take account up for one thing.

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Speaker 1: There's a matter of the intention, right, What was the

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Speaker 1: guy actually trying to do? What was his aim? Uh?

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Speaker 1: If his victims ended up profiting in a kind of

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Speaker 1: accidental way, if it just so happened that they ended

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Speaker 1: up profiting anyway, But that's no thanks to Martin Screwley,

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Speaker 1: or at least no thanks to the offensive actions that

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Speaker 1: he took, then that's not really going to help him

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Speaker 1: very much at sentencing. In addition, the apparent sort of

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Speaker 1: moral turpitude or the apparent lack of contrition or even

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Speaker 1: any sense that he's done anything wrong that Mr Screwley

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Speaker 1: seems to be displaying every day in public is also

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Speaker 1: something that I suspect the sentencing judge is apt to

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Speaker 1: take account of, and it certainly warranted in taking account of.

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Speaker 1: And so you could end up seeing a pretty stiff

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Speaker 1: penalty being levied. I mean, there's some people talking about how, yeah,

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Speaker 1: he might only get a couple of months or suspended sentence.

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Speaker 1: I have a funny feeling that's just not true. I

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Speaker 1: expect he's going to get years. We're talking about the

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Speaker 1: guilty verdict of Martin Screlly, the pharmaceutical executive who was

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Speaker 1: convicted on Friday of the Friday hedge fund investors. Our

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Speaker 1: guests are Peter Heading and Robert Hockett, law professors at

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Speaker 1: Wayne State University and Cornell University, respectively. UM Peter Uh

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Speaker 1: Bob was talking about how UM Martin Screwlly may face

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Speaker 1: years in prison. His lawyer uh said last week that

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Speaker 1: he might actually ask for no prison time for Martin Screlly.

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Speaker 1: Does that effort have any chance of success in your mind. Well,

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Speaker 1: the starting point that his lawyer, Ben Brattman is talking

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Speaker 1: about is looking at the FED sentencing guidelines and the

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Speaker 1: recommended sentence, and the key driver there although not the

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Speaker 1: only one is Bob mentioned, But the key driver is

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Speaker 1: the amount of the loss. And if the loss is zero,

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Speaker 1: and certainly I would expect him to argue that the

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Speaker 1: investors didn't lose anything, Retroffin didn't lose anything, then that

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Speaker 1: would likely result in a recommended sentence of UM. It

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Speaker 1: could be as low as probation or home confinement or

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Speaker 1: perhaps a period short period in a federal prison and

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Speaker 1: then UM community corrections. So I could see him arguing

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Speaker 1: for probation. It's going to be tough, and of course

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Speaker 1: that judges are not bound by the sentencing guidelines and

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Speaker 1: haven't been for over a decade, And so what Judge

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Speaker 1: Matsumoto looks at is going to be everything that's related

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Speaker 1: to Mr Screlly. This is where his comments, his social

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Speaker 1: media statements and frankly some of his denigration of the

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Speaker 1: process could come into play, and she may decide that

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Speaker 1: a message has to be sent here. But certainly I

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Speaker 1: can see the defense asking for no time or a

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Speaker 1: very short prisoner. Bob Martin Scawley isn't lawyers did not

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Speaker 1: present any witnesses at trial. In retrospect, does it seem

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Speaker 1: as though that might have been a mistake? Um? I

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Speaker 1: mean that's a tough one to tell. I mean that

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Speaker 1: the witness that people talk most about as a prospective

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Speaker 1: testifier was Mr s Fairley himself. Right, there's a live

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Speaker 1: question up until the twenty four July whether he would

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Speaker 1: actually testify in his own behalf or not. Um. And

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Speaker 1: of course the risks were fairly obvious, right. I mean,

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Speaker 1: it's not a particularly sympathetic character. He seems to be

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Speaker 1: in effect unable to help himself and sort of can't

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Speaker 1: help but come across as boorish and arrogant and contemptful

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Speaker 1: or contemptuous and the like. Um. And so he ultimately decided,

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Speaker 1: presumably on that basis, not to testify in his own behalf. Um.

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Speaker 1: I don't know that it can be said that that

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Speaker 1: hurt him, right, unless had he actually testified, it would

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Speaker 1: have been clear that he had some kind of organic impairment, right,

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Speaker 1: some kind of problem that he has, I don't know,

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Speaker 1: Asperger's syndrome or something of that kind. Um that his

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Speaker 1: lawyer was sort of suggesting that he had my way

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Speaker 1: of sort of explaining his his his quirkiness, let's say,

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Speaker 1: to put it in a neutral way of behavior. Um.

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Speaker 1: As for other possible witnesses, Um, you know, it's it's

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Speaker 1: it's hard to tell whether that would hurt or or

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Speaker 1: or help. It would sort of depend on the witnesses themselves.

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Speaker 1: My understanding is that some people did, in fact to

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Speaker 1: say that, yeah, I ended up coming out ahead, I

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Speaker 1: ended up making money off of my investment, and so

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Speaker 1: in that since I wasn't harm um, more testimony to

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Speaker 1: that effect might have been helpful. But again it's kind

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Speaker 1: of unclear that it would have been, because he wasn't

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Speaker 1: found guilty on that ground anyway, Right, he wasn't found

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Speaker 1: guilty of having done anything that tax fly incurred serious

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Speaker 1: loss to say, Retroffen investors. It was rather that he

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Speaker 1: broke the rules, that he lied in a manner that

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Speaker 1: could have ended up incuring significant losses. And indeed, the

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Speaker 1: sentencing judges likely to look at that that very factor

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Speaker 1: as well. Right, Just what might very well have happened,

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Speaker 1: um had it not been for you know, just good luck?

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Speaker 1: Uh in light of what he had done and by

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Speaker 1: way of misleading investors. Peter, do you see any grounds

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Speaker 1: here from Martin Screwley's lawyers to successfully appeal? Um An

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Speaker 1: appeal is always tough in any criminal case, especially here.

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Speaker 1: The key focus was fraudulent intent, and in fact, the

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Speaker 1: defense said that, you know, can you find that Screwley

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Speaker 1: intended to defraud the hedge fund investors? A retro find

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Speaker 1: that that is a classic jury credibility determination, and so

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Speaker 1: appeals courts are very hesitant to interfere in that at

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Speaker 1: all all. And so I think that's going to make

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Speaker 1: a successful appeal here very tough, because I don't think

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Speaker 1: you're gonna want to hear appeals judges saying well, there

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Speaker 1: wasn't enough here. The jury came back with five not

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Speaker 1: guilty verdicts. So from the government's point of view, they

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Speaker 1: can say, look the jury wide the evidence. We won three,

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Speaker 1: we lost five. This was a jury that followed the instructions.

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Speaker 1: That's going to make it even more difficult to overturn

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Speaker 1: the verdict. I want to thank our guests Peter Henning,

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Speaker 1: who teaches at Wayne State University Law School, and Robert Hockett,

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Speaker 1: who teaches at Cornell University Law School talking about the

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Speaker 1: jury verdict in the case of Martin Screlly. UH. Screlly

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Speaker 1: is still facing sec charges and civil lawsuits, so even

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Speaker 1: after his criminal case, there will be more things to

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Speaker 1: talk about here on Bloomberg law coming up. Top Justice

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Speaker 1: Department official says Special Council Robert Mueller has a broad

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Speaker 1: mandate as he investigates possible crimes involving Russian meddling in

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Speaker 1: the election. UH also said Roder Rodenstein also said this

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Speaker 1: weekend that it's no fishing expedition that Robert Mueller is

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Speaker 1: UH is going about looking at