Ex-drug executive Shkreli wins separate fraud trial

By By Brendan Pierson Features Reuters

FILE PHOTO - Martin Shkreli, former chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc, departs after a hearing at U.S. Federal Court in Brooklyn, New York, U.S. on October 14, 2016. REUTERS/Lucas Jackson/File Photo (Copyright Reuters 2017)

Martin Shkreli, the former drug company executive who drew public outcry when he raised the price of a life-saving drug by 5,000 percent, will be tried for securities fraud separately from a lawyer charged alongside him, a Brooklyn federal judge ruled Wednesday.

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Both Shkreli and lawyer Evan Greebel, who worked for Shkreli's former company Retrophin Inc, had asked that their case be split. U.S. prosecutors had sought to try the two men together on charges that they schemed to defraud investors in a hedge fund Shkreli controlled.

Greebel's lawyer, Reed Brodsky, said at a hearing earlier this month before U.S. District Judge Kiyo Matsumoto that he aimed to prove that Shkreli was guilty and that he deceived Greebel. Brodsky said he would present evidence of wrongdoing by Shkreli even beyond what prosecutors claimed.

Shkreli's lawyer, Benjamin Brafman, said he would try to prove that Shkreli had no criminal intent and relied on Greebel's advice.

Brafman and other lawyers for Shkreli said in a joint statement that they were pleased with the decision. Brodsky and a spokesman for the prosecutors both declined to comment.

Matsumoto wrote in Wednesday's order that trying the two men together "would place on Shkreli an unfair and heavy burden in defending himself against both the government and Greebel."

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Shkreli is now set to go to trial on June 26. A trial date for Greebel has not been set, though Matsumoto earlier set aside Oct. 2 as a possible second trial date if the trial was split.

After leaving Retrophin, Shkreli ran Turing Pharmaceuticals, where he sparked outrage among patients and U.S. lawmakers by raising the price of a drug used to treat a dangerous parasitic infection by more than 5,000 percent, to $750 a pill.

The criminal charges, which are not related to Turing, involve Shkreli's management of Retrophin and the hedge fund MSMB Capital Management from 2009 to 2014.

Prosecutors claim that Shkreli engaged in a Ponzi-like scheme in which he defrauded investors in MSMB and took $11 million in assets from Retrophin to repay them.

Shkreli faces charges of securities fraud and conspiracy to commit wire fraud, while Greebel faces only conspiracy charges. Both have pleaded not guilty.

The case is U.S. v. Shkreli, U.S. District Court, Eastern District of New York, No. 15-cr-00637.

(Reporting By Brendan Pierson in New York; Editing by Bernard Orr)