There are only two reasons why anybody gives a damn about 32-year-old Martin Shkreli being perp walked early yesterday morning. One is that everybody hates him for raising the price for a pill of an AIDS drug, Daraprim, from $13.50 to $750, which flew past ordinary greed into the realm of life-crushing greed. The other is that Shkreli bought a one-off album from Wu-Tang Clan, Once Upon a Time in Shaolin.
The Schadenfreude of watching this hated Millennial, “pharma-bro” get busted was overwhelming. The jokes were flying, from Andy Borowitz’s satire that his lawyer raised his fee 5000 percent (I fell for this on the twitters, by the way) to Sarah Jeong’s options for the government getting its hands on the Wu-Tang Clan album (which I assume is parody, since it surely isn’t law). Funny stuff.
The indictment against Shkreli is neither particularly fascinating nor fodder for a joke. It’s a pretty pedestrian affair, charging him not with being a particularly offensive person, but eight counts of fraud:
But the criminal charges brought against him actually relate to something else entirely — his time as a hedge fund manager and when he ran his first biopharmaceutical company, Retrophin. Federal officials described his crimes as a quasi-Ponzi scheme in which he used money from his company to pay off money-losing investors in his hedge funds. An F.B.I. official called his business schemes a “securities fraud trifecta of lies, deceit and greed.”
See how “Federal officials” put the prefix “quasi” in front of Ponzi? They did that because it’s not a Ponzi scheme, but the public is familiar with the words Ponzi scheme, and know its bad, so they’ve used it as code for bad stuff like a Ponzi scheme, even though it’s not a Ponzi scheme, but by saying Ponzi scheme, it’s good enough to convey the impression without having to actually explain anything.
An unnamed Fibber, from the Office of Trite Yet Scary Phrases, added, a “securities fraud trifecta of lies, deceit and greed,” because that’s informative. Despite Shkreli’s early morning choice of hoodie attire, marketed as “perp walk perfect,” the conduct alleged to have been committed by Shhreli, with the alleged aid of his co-defendant, Kaye Scholar partner, Evan Greebel (rumor has it that David Lat at Above The Law will pay $32.79 and a really nice aggie marble for a nude selfie of Greebel), wasn’t exactly the worst thing anyone has ever done.
Shkreli started a hedge fund called MSMB Capital Management, and, by lying about its assets under management, scammed four investors to put $700,000 of their money in his hands. He made a huge bet on a naked short sale of Orexigen Therapeutics, selling 32 million shares he didn’t have, and got crushed. Some more lies to cover it up and bring in fresh capital followed.
Shkreli then started a company called “Retrophin,” whose putative purpose was to find “a cure for children who suffered from muscular dystrophy.” Aww. Nice, right? Somehow, he managed to bring the company public, then raided it to pay off the MSMB investors by creating phony consulting contracts. That got him ousted as CEO by the Board of Retrophin.
But Shkreli was not put off by this unappreciative treatment of his good intentions.
Once again, Mr. Shkreli didn’t let failure slow him down. In August of this year, he raised $90 million in a first round of financing for Turing, his new biopharmaceutical company.
Turing is the company that purchased the rights to Daraprim, a basically neglected old drug, for $55 million, and which Shkreli figured would pay off when he raised the per pill price. That was his public undoing. Had he not pushed the envelope on Daraprim, nobody would have known or cared that Shkreli existed, except perhaps a few feds and a defense lawyer or two.
But Shkreli put himself in the public crosshairs, and then doubled down with his purchase of the Wu-Tang Clan album. All of which raises a few questions about what he was thinking and what the hell is going on with us these days.
How did a business failure, a college drop-out, manage to get $90 million in funding? Are people who have $90 million to fund seriously that stupid, crazy or careless? Apparently so. And why would Shkreli, a guy with a track record of massive failure, have the hubris to make himself the poster boy for the greed of his generation, knowing that he lied through his teeth to get there and by raising his profile to the point of demonization, there was essentially no chance he was going to win a Humanitarian Award, but a damn good chance of attracting the feds’ attention.
Then, with this swirling in the background, Shkreli buys the Wu-Tang Clan album, which was as much a cry for attention as anything he could have possibly done?
Among the jokes following his arrest were questions about whether the feds had seized the Wu-Tang Clan album. Assuming Jeong’s post isn’t parody, but rather that adorable mix of snarkiness and unfamiliarity with law, there is a strong potential that the government can seize the album as substitute proceeds of the fraud (meaning, money is fungible, so the money used to buy the album is just as green as the money fraudulently obtained, and the album obtained in exchange of that money is close enough for government work) given the indictment’s inclusion of a forfeiture count. That they didn’t seize it already is, well, surprising.
So now that we’ve all had some fun at Martin Shkreli’s expense, not that his clownish public behavior didn’t demand it, it’s time to find out whether these allegations are true and provable. As hated as he may be, he’s entitled to due process.
And if the Wu-Tang Clan album eventually goes on the market at auction, it could well be the ballad of a generation. If so, it probably sucks, which would bring this absurd story full circle. Even so, it will probably be worth a fortune, and whoever the morons are that funded Shkreli’s Turing with $90 million, they will make it back if they manage to get their hands on it.