WEBVTT - Martin Shkreli Struts to Prison (Audio)

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<v Speaker 1>Martin Screlly was dubbed the most hated man in America

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<v Speaker 1>by the BBC and a spoiled brat by Donald Trump.

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

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<v Speaker 1>Screlly guilty of defrauding investors and two hedge funds. Screlly

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<v Speaker 1>gained notoriety as a drug executive when he raised the

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<v Speaker 1>price of a of a potentially life saving HIV treatment

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<v Speaker 1>by five thousand percent. His smark filled congressional testimony only

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<v Speaker 1>enhanced his controversial reputation. The criminal trial dealt with a

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<v Speaker 1>separate matter. Prosecutor said Screlly ran a Ponzi scheme, using

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<v Speaker 1>investors money to start a drug company and siphoning off

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<v Speaker 1>the company's assets to pay investors. He was convicted of

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<v Speaker 1>three counts but acquitted of five others. Afterwards, Screlly declared victory.

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<v Speaker 1>This was a witch hunt of of APICs proportions and

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<v Speaker 1>maybe they've boald one or through broomsticks, but at the

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<v Speaker 1>end of the day, uh, we've been appointed of the

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<v Speaker 1>most important charge in this case. With us to talk

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<v Speaker 1>about the Martin Screlly verdict is Peter Henning. He's a

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<v Speaker 1>professor at Wayne State University Law School. And Robert Hockett,

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

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<v Speaker 1>both of you. Peter, let let me start with you.

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<v Speaker 1>Just let's start with the guilty counts. Tell us what

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<v Speaker 1>exactly Screlly was convicted of doing. Well, Uh, two counts

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<v Speaker 1>of securities fraud, and both of those related to a

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<v Speaker 1>hedge fund or two hedge funds that he ran. And

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<v Speaker 1>the core of the government's case was that he lied

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<v Speaker 1>to those investors that in fact the hedge funds were

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<v Speaker 1>almost completely wound down. And then that he took shares

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<v Speaker 1>from Retrofin, one of the pharmaceutical companies that he founded,

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<v Speaker 1>essentially to pay them off, and that he lied to

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<v Speaker 1>them about the risk that they were enduring. And then

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<v Speaker 1>one count of conspiracy related to fraud with regard to Retrofin,

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<v Speaker 1>so that he was using UH shares from Retrofin to

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<v Speaker 1>essentially pay off investors in the hedge fund when in

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<v Speaker 1>fact Retrofin had no interest in no need to pay them.

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<v Speaker 1>So that essentially was the fraud. And and Bob, what

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<v Speaker 1>what tell us about the other side of that? What

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<v Speaker 1>was UH Screlly acquitted of and what was the distinction

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<v Speaker 1>between those things he was convicted of in those things

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<v Speaker 1>he was acquitted of. Sure, so he was not guilty

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<v Speaker 1>of a number of additional conspiracy charges that have been

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<v Speaker 1>leveled against him. Right, So, there had been charges that

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<v Speaker 1>he had conspired to commit securities fraud in connection with

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<v Speaker 1>both of the hedge funds, and that he had conspired

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<v Speaker 1>to commit wire fraud with respect to both of the

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<v Speaker 1>hedge funds. Uh and then finally there was a charge

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<v Speaker 1>that he had conspired to commit wire fraud in connection

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<v Speaker 1>with Retroic and the pharmaceuticals company. So I think the

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<v Speaker 1>best way to sort of understand the relation between what

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

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<v Speaker 1>he was found guilty of having committed the predicate of

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<v Speaker 1>senses by reference to which conspiracy charges are usually defined.

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<v Speaker 1>In other words, we got the planet, so we didn't

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<v Speaker 1>really have to go after the satellite anyway. Um, they

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<v Speaker 1>did go after the satellite anyway, let's they went after

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<v Speaker 1>the conspiracy charges that related to the underlying predicate offense

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<v Speaker 1>charges he was Screwley was now not guilty on those,

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<v Speaker 1>But in a certain sense that doesn't really matter, because

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<v Speaker 1>he was found guilty on the underlying predicate offenses that

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<v Speaker 1>would have been the predicates to the conspiracies anyway, So

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<v Speaker 1>he really did, in my view, get convicted on what

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<v Speaker 1>counts on what matters most. Peter, do you agree with

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<v Speaker 1>that and and if if so, what do we make

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<v Speaker 1>of Screwley saying afterwards that he was acquitted of the

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<v Speaker 1>most important charges in the case. Well, you know, I

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<v Speaker 1>certainly agree with Bob then that you know, just for

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<v Speaker 1>the government, any guilty verdict here is going to be

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<v Speaker 1>a victory. Now, Screwley says, well, you know, we were

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<v Speaker 1>acquitted the most serious charges, the wire fraud charge uh

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<v Speaker 1>involved looting of red trofinn so or conspiracy elude retro Finn,

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<v Speaker 1>and that um carried the potential for a very substantial

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<v Speaker 1>loss figure And really, uh what is underlying this case, interestingly,

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<v Speaker 1>is that the hedge fund investors were at least it

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<v Speaker 1>appears were compensated and got all their money back plus

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<v Speaker 1>uh some because retrofin has turned out to be a

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<v Speaker 1>fairly successful company, and it's not clear that retrofin lost

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<v Speaker 1>anything from what Screlly did. In fact, he might have

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<v Speaker 1>set it up so that it was a success. So

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<v Speaker 1>he had this kind of odd situation of a fraud

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<v Speaker 1>without losses, and that may have an impact at sentencing

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<v Speaker 1>when that comes up down the road. Yes, so, Bob,

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<v Speaker 1>given given what Peter just said, Um, the fact that

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<v Speaker 1>investors didn't lose money, and in fact, that was I

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

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<v Speaker 1>for a prosecution in this case? Um? I think there was.

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<v Speaker 1>I think Picker is quite right that the fact that

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<v Speaker 1>there wasn't a loss will have some possible effect on

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<v Speaker 1>the sentencing, because loss itself is a particularly important relevant

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<v Speaker 1>factor that a judge is meant to take into account

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

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<v Speaker 1>in mind that it's not the only factor, but the

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<v Speaker 1>judge is meant to take account up for one thing.

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<v Speaker 1>There's a matter of the intention, right, What was the

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<v Speaker 1>guy actually trying to do? What was his aim? Uh?

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<v Speaker 1>If his victims ended up profiting in a kind of

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<v Speaker 1>accidental way, if it just so happened that they ended

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<v Speaker 1>up profiting anyway, But that's no thanks to Martin Screwley,

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<v Speaker 1>or at least no thanks to the offensive actions that

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<v Speaker 1>he took, then that's not really going to help him

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<v Speaker 1>very much at sentencing. In addition, the apparent sort of

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<v Speaker 1>moral turpitude or the apparent lack of contrition or even

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<v Speaker 1>any sense that he's done anything wrong that Mr Screwley

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<v Speaker 1>seems to be displaying every day in public is also

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<v Speaker 1>something that I suspect the sentencing judge is apt to

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<v Speaker 1>take account of, and it certainly warranted in taking account of.

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<v Speaker 1>And so you could end up seeing a pretty stiff

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

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<v Speaker 1>he might only get a couple of months or suspended sentence.

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<v Speaker 1>I have a funny feeling that's just not true. I

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

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<v Speaker 1>guilty verdict of Martin Screlly, the pharmaceutical executive who was

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<v Speaker 1>convicted on Friday of the Friday hedge fund investors. Our

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<v Speaker 1>guests are Peter Heading and Robert Hockett, law professors at

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<v Speaker 1>Wayne State University and Cornell University, respectively. UM Peter Uh

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<v Speaker 1>Bob was talking about how UM Martin Screwlly may face

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<v Speaker 1>years in prison. His lawyer uh said last week that

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<v Speaker 1>he might actually ask for no prison time for Martin Screlly.

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

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<v Speaker 1>the starting point that his lawyer, Ben Brattman is talking

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<v Speaker 1>about is looking at the FED sentencing guidelines and the

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<v Speaker 1>recommended sentence, and the key driver there although not the

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<v Speaker 1>only one is Bob mentioned, But the key driver is

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<v Speaker 1>the amount of the loss. And if the loss is zero,

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<v Speaker 1>and certainly I would expect him to argue that the

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<v Speaker 1>investors didn't lose anything, Retroffin didn't lose anything, then that

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<v Speaker 1>would likely result in a recommended sentence of UM. It

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<v Speaker 1>could be as low as probation or home confinement or

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<v Speaker 1>perhaps a period short period in a federal prison and

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<v Speaker 1>then UM community corrections. So I could see him arguing

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

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<v Speaker 1>that judges are not bound by the sentencing guidelines and

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<v Speaker 1>haven't been for over a decade, And so what Judge

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<v Speaker 1>Matsumoto looks at is going to be everything that's related

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<v Speaker 1>to Mr Screlly. This is where his comments, his social

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<v Speaker 1>media statements and frankly some of his denigration of the

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<v Speaker 1>process could come into play, and she may decide that

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<v Speaker 1>a message has to be sent here. But certainly I

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<v Speaker 1>can see the defense asking for no time or a

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<v Speaker 1>very short prisoner. Bob Martin Scawley isn't lawyers did not

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<v Speaker 1>present any witnesses at trial. In retrospect, does it seem

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<v Speaker 1>as though that might have been a mistake? Um? I

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<v Speaker 1>mean that's a tough one to tell. I mean that

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<v Speaker 1>the witness that people talk most about as a prospective

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<v Speaker 1>testifier was Mr s Fairley himself. Right, there's a live

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<v Speaker 1>question up until the twenty four July whether he would

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<v Speaker 1>actually testify in his own behalf or not. Um. And

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<v Speaker 1>of course the risks were fairly obvious, right. I mean,

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<v Speaker 1>it's not a particularly sympathetic character. He seems to be

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<v Speaker 1>in effect unable to help himself and sort of can't

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<v Speaker 1>help but come across as boorish and arrogant and contemptful

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<v Speaker 1>or contemptuous and the like. Um. And so he ultimately decided,

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

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<v Speaker 1>I don't know that it can be said that that

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<v Speaker 1>hurt him, right, unless had he actually testified, it would

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<v Speaker 1>have been clear that he had some kind of organic impairment, right,

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<v Speaker 1>some kind of problem that he has, I don't know,

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<v Speaker 1>Asperger's syndrome or something of that kind. Um that his

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<v Speaker 1>lawyer was sort of suggesting that he had my way

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<v Speaker 1>of sort of explaining his his his quirkiness, let's say,

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<v Speaker 1>to put it in a neutral way of behavior. Um.

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<v Speaker 1>As for other possible witnesses, Um, you know, it's it's

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<v Speaker 1>it's hard to tell whether that would hurt or or

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<v Speaker 1>or help. It would sort of depend on the witnesses themselves.

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<v Speaker 1>My understanding is that some people did, in fact to

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<v Speaker 1>say that, yeah, I ended up coming out ahead, I

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<v Speaker 1>ended up making money off of my investment, and so

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<v Speaker 1>in that since I wasn't harm um, more testimony to

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<v Speaker 1>that effect might have been helpful. But again it's kind

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<v Speaker 1>of unclear that it would have been, because he wasn't

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<v Speaker 1>found guilty on that ground anyway, Right, he wasn't found

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<v Speaker 1>guilty of having done anything that tax fly incurred serious

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<v Speaker 1>loss to say, Retroffen investors. It was rather that he

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<v Speaker 1>broke the rules, that he lied in a manner that

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<v Speaker 1>could have ended up incuring significant losses. And indeed, the

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<v Speaker 1>sentencing judges likely to look at that that very factor

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<v Speaker 1>as well. Right, Just what might very well have happened,

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<v Speaker 1>um had it not been for you know, just good luck?

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<v Speaker 1>Uh in light of what he had done and by

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<v Speaker 1>way of misleading investors. Peter, do you see any grounds

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<v Speaker 1>here from Martin Screwley's lawyers to successfully appeal? Um An

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<v Speaker 1>appeal is always tough in any criminal case, especially here.

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<v Speaker 1>The key focus was fraudulent intent, and in fact, the

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<v Speaker 1>defense said that, you know, can you find that Screwley

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<v Speaker 1>intended to defraud the hedge fund investors? A retro find

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<v Speaker 1>that that is a classic jury credibility determination, and so

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<v Speaker 1>appeals courts are very hesitant to interfere in that at

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<v Speaker 1>all all. And so I think that's going to make

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<v Speaker 1>a successful appeal here very tough, because I don't think

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<v Speaker 1>you're gonna want to hear appeals judges saying well, there

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<v Speaker 1>wasn't enough here. The jury came back with five not

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

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<v Speaker 1>can say, look the jury wide the evidence. We won three,

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<v Speaker 1>we lost five. This was a jury that followed the instructions.

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<v Speaker 1>That's going to make it even more difficult to overturn

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<v Speaker 1>the verdict. I want to thank our guests Peter Henning,

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<v Speaker 1>who teaches at Wayne State University Law School, and Robert Hockett,

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<v Speaker 1>who teaches at Cornell University Law School talking about the

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<v Speaker 1>jury verdict in the case of Martin Screlly. UH. Screlly

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<v Speaker 1>is still facing sec charges and civil lawsuits, so even

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<v Speaker 1>after his criminal case, there will be more things to

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<v Speaker 1>talk about here on Bloomberg law coming up. Top Justice

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<v Speaker 1>Department official says Special Council Robert Mueller has a broad

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<v Speaker 1>mandate as he investigates possible crimes involving Russian meddling in

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<v Speaker 1>the election. UH also said Roder Rodenstein also said this

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<v Speaker 1>weekend that it's no fishing expedition that Robert Mueller is

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<v Speaker 1>UH is going about looking at