Pharma, Policy

Martin Shkreli will be OK

Martin Shkreli looked uncharacteristically somber during his perp walk on Thursday morning. Begs the question: Is this the end of Shkreli's ludicrous, smug antics? Nah.

Pharma’s favorite whipping boy – or bad boy, depending on how you slice it – is facing quite the comeuppance. Turing Pharmaceuticals CEO Martin Shkreli just got arrested, on charges of securities fraud dating back to 2009. He could be handed up to 20 years behind bars for his “Ponzi-like” schemes, having defrauded investors at his two prior companies, MSMB Capital Management and Retrophin Pharmaceuticals.

And Shkreli looked uncharacteristically somber during his perp walk on Thursday morning. That begs the question: Is this the end of Shkreli’s ludicrous antics?

I defended him before, and I’ll do it again: Shkreli may be in a pickle right now, but he will be A-OK. As in, listening to his Wu Tang album with Taylor Swift on his arm, perhaps even running another erstwhile pharmaceutical company to the ground. Our system tends to lean in favor of the white collar criminal. As Chris Lehmann, a columnist at the Guardiancontends:

For all the short-term tabloid attention that Shkreli’s prosecution is likely to garner, the odds against a truly satisfying, Madoff-style turn in the hoosegow for our boy Shkreli are steep.

The case makes sense. He cites the book, Too Big to Jail, written by University of Virginia professor Brandon L. Garrett – which examines more than 2,000 criminal prosecutions of businesses between 2000 and 2012:

Less than half of the 273 publicly traded firms facing criminal charges went through the motions of an actual trial, Garrett found; the remaining 54% of such companies either entered into cushy “deferred prosecution” deals – generous, laxly enforced agreements to improve the “culture” of criminal malfeasance at the wayward firm in question – or simply skirted prosecution altogether.

Beyond that, 40 percent of the companies that achieved deferred prosecution deals paid no fines at all. So these publicly traded firms – which include Turing Pharmaceuticals and Retrophin – “make up 58% of all deferred prosecution deals, and just 6% of the already small pool of criminally prosecuted business concerns.”

Shkreli’s legal actions aren’t necessarily working against him. It’s his personality that indicts him more than the fraud – because innocent until proven guilty doesn’t seem to apply in the case of Shkreli, particularly in terms of the ire of the internet lynch mobs. There’s been an outpouring of schadenfreude since Shkreli’s arrest, lampooning the pharma douche’s every action. But even Bloomberg says the scope of Shkreli’s Wall Street wrongdoing is relatively minor:

Securities fraud is hardly unheard of on Wall Streeet and the amounts involved here are nowhere near on the scale of Bernie Madoff. But Shkreli’s case has drawn such attention because of his defiant price-gouging and his own up-by-the-bootstraps history.

He’s being sued by Retrophin for $65 million – but Shkreli has brazenly shrugged it off, thanks to the precedents set by his closeted, tight-lipped Wall Street compatriots.

“This $65 million Retrophin wants from me would not dent me,” Shkreli has said. “I feel great. I’m licking my chops over the suits I’m going to file against them.”

Sure, authorities may use Shkreli as an example – penalizing him more, perhaps, for his outlandish ways. But the guy has brains. There’s no doubt he could rope in a team of pitbull lawyers, and wriggle away.

And the suits of this world are, at core, a forgiving bunch. Take the case of KaloBios: The company was right at death’s door, yet Shkreli – much reviled at that point – went ahead and bought up the shares of the penny stock biotech. And shares shot up 800 percent. Granted, they’ve come down by half in the past day, but it speaks to the lenient nature of Wall Street that KaloBios was able to rebound so stunningly.

For now, Shkreli is out on a $5 million bond, and we have to wait until the formal arraignment to learn more. This case will be a long one, and it’ll be a wait and watch to see if that puckish grin returns to his face.

My wager: It will.

[Photo: Twitter]

 

Shares0
Shares0