While being indicted for securities fraud, Martin Shkreli responded with a campaign to persuade the public that he was being prosecuted for being a jerk and not for committing a crime.
The campaign wasn’t subtle. Shkreli toldThe New York Times “I feel like I’m being prosecuted for being a jerk.” The Wall Street Journal reported his claim that he was targeted for his infamous price hike of the drug Daraprim and for his flamboyant personality instead of the offenses cited in the indictment.
For anyone familiar with Shkreli’s antics before the indictment, it’s difficult to dismiss his complaint out of hand. He was the chief executive officer of Turing Pharmaceuticals, the company that in September 2015, three months before the indictment, raised the price of the life-saving HIV drug, Daraprim, to $750 per pill.
From then until the day of his sentencing, Shkreli seemed to revel in behavior that earned him the title of “most hated man in America.” After appearing before a Congressional committee that was investigating the price hike, he publicly branded the Congressmen as “imbeciles.”
Furthermore, Shkreli was seemingly smitten with Teen Vogue reporter Lauren Duca. He hounded her mercilessly on Twitter. One of his posts featured a photo of her with his face superimposed on a man sitting next to her on a couch. Twitter closed his account and banned him.
Shkreli was indicted for committing securities fraud during his pre-Turing career at MSMB Capital Management and Retrophin. Prosecutors alleged a Ponzi-like scheme. In his defense, Shkreli noted that none of his investors lost money, and some even made a profit.
If Shkreli thought that the indictment was a response to him being a jerk, that thought didn’t convince him to rein in his behavior. Instead, he ramped it up, even during his trial. He taunted the Eastern District of New York prosecution team by branding them as “the junior varsity” in comparison to the Southern District varsity. The judge had to issue a gag order prohibiting him from speaking to the press.
Perhaps his most outrageous act was his offer a $5,000 reward to anyone who would yank out and bring him strands of Hillary Clinton’s hair. That stunt resulted in the revocation of his bail on the grounds that he was a danger to public safety.
The jury convicted him on two counts of securities fraud and one of conspiracy to commit securities fraud while acquitting him on five other counts. The Boston Globe reported Shkreli claimed to be delighted with the outcome, characterizing it as the jury’s pronouncement, “Martin, here’s a slap on the wrist, God bless ya.”
While awaiting sentencing, he continued to express his disdain for the judicial process in a series of press conferences and emails. The prosecution included his more contemptuous statements in its sentencing memorandum.
The flamboyance and hijinks ended when he was sentenced to seven years in prison and ordered to pay $7.4 million in restitution. He cried.
Was Shkreli prosecuted for being a jerk, as he claimed? We can’t be sure of the answer. However, we can be sure that he was uncommonly successful in persuading the public that he was a jerk. It’s hard to believe that his title as “most hated man in America” played no role in bringing him to the attention of law enforcement.
We also know that the crimes he was indicted for were relatively modest when compared to other securities fraud prosecutions. The actual damage to investors was limited and in some cases nonexistent.
We certainly know that his bail was revoked because of an action qualifying him as a jerk by anyone’s standards: putting a bounty on hair yanked from Hillary Clinton’s head.
It may be instructive to compare Shkreli’s treatment to someone else in the national spotlight for investor fraud at about the same time. Elizabeth Holmes, the founder of Theranos, was charged by the Securities & Exchange Committee with defrauding investors of hundreds of millions of dollars. Her penalties were a fine of $500,000 and relinquishment of voting control of the company.
There are certainly differences between Shkreli and Holmes and their crimes. Though, no difference is more glaring than the contrast in their public images. Holmes successfully cultivated the image of a thoughtful, serious entrepreneur who was dedicated to promoting success in health and business. No one ever called her a jerk, even after her crimes were revealed.
What’s the lesson to be learned from Shkreli’s experimentation with the I-am-a-jerk defense? It’s that the defense not only fails to work, but it is also counter-productive. In the first place, it isn’t a legal defense by anyone’s definition. No defendant was ever acquitted because he was a jerk.
The gravest flaw in the defense is that it rests on the predicate that the defendant is a jerk. He must prove that he really is a jerk, and Shkreli was masterful in doing just that. The problem is that people don’t like jerks. To the extent of the effect that factor has on the public, prosecutors, judges, or juries, it’s not a mitigating factor. It’s an aggravating factor.
You might say that the fundamental problem with asserting the I-am-a-jerk defense is that people will believe you.