Ahead of Martin Shkreli's fraud trial which begins next week, the disgraced biopharma executive appeared in court Monday, asking the judge to cut his bail from $5 million to $2 million, citing a lack of funds and the need to pay for his defense and back taxes. He faced were two problems: as prosecutor Alixandra Smith countered, Shkreli has plenty of cash as per his own relentless twitter boasts, and also his self-disclosed net worth.
According to Reuters, Smith said at Monday's hearing that Shkreli had reported his net worth at $70 million when he was arrested in 2015, although as Shkreli's lawyer, Benjamin Brafman, conceded most of that is locked up in stock: while Shkreli still owned a share of Turing Pharma worth $30 to $50 million he could not sell it without the consent of the other partners in the company.
And then there are the tweets. In addition to his self-reported assets, Smith said that Shkreli has plenty of cash citing a recent series of boasts he’s made on social media.
Quoted by Bloomberg, Smith said that in a May 26 post, Shkreli offered a $100,000 bounty to find Seth Rich's killer. She also said he flaunting purchases like a $2 million Wu-Tang Clan album, an unreleased Lil Wayne album, a Picasso, a World War II-era Enigma code breaking machine and had recently promised a Princeton University student $40,000 for solving a mathematical proof.
Shkreli's legal team responded by saying that the former CEO fabricated much of his social media outbursts, with lawyer Brafman urging the judge to dismiss Shkreli’s proclamations.
"Some of these preposterous statements Mr. Shkreli made are his way to remain relevant," he said, adding that his client is "traveling to the beat of a very unique drummer."
"Tweeting has become, unfortunately so fashionable, but it’s not always true. When people tweet, they don’t always mean what they say." It wasn't immediately clear what exactly Shkreli had lied about.
Instead, Brafman said that the accused securities fraudster now "doesn't have any cash" and according to CNBC, Brafman suggested that "the one-of-a-kind Wu-Tang Clan album" that Shkreli paid $2 million for several years ago is "probably worthless."
Brafman argued that while "Shkreli is still worth a lot of money" he is drowning in debt and is cash poor, explaining that none of the $3 million being sought would go to Shkreli who "owes $6 million in taxes." But the lawyer said the Internal Revenue Service has agreed, for now, to accept just $1 million, and New York State tax officials to accept $1.25 million in acknowledgment that some of Shkreli's tax liability might be reduced by losses he has incurred. Once the tax authorities get their money, the balance of the $3 million could be paid out to two other entities.
The lawyer also said Shkreli owes $326,085 to his civil law firm, Fox Rothschild, to date, and owes another $50,000 to an accounting firm that has does forensic work for his defense, and helped clean up his tax issues.
That said, Shkreli has not had a problem paying millions to Brafman and his legal team.
Smith said Shkreli's company Retrophin has paid defense lawyers $4.8 million and Shkreli may try to use any returned bail funds to pay certain creditors who’ve sued him and won multi-million judgement against him. "Our concern is the defendant is using this as a mechanism to pick and choose which creditors he wants to pay," she said.
In denying the motion to reduce bail, District Judge Kiyo Matsumoto cited that last concern. She allowed Brafman to renew the motion in the future if some of the concerns could be alleviated, CNBC reported.
Both prosecutors and the defense told Matsumoto that they expected the trial to last between five to six weeks. That angered the judge, who had been told months ago to expect a three-week-long trial, and who had budgeted her trial schedule accordingly. Prosecutors as of now expect to call up to 57 witnesses.