June 28, 2019 / 10:02 AM / 3 months ago

Federal court to hear 'Pharma Bro' Martin Shkreli's appeal

NEW YORK, June 28 (Reuters) - Lawyers for former pharmaceutical executive Martin Shkreli will urge a federal appeals court on Friday to overturn his criminal conviction for defrauding investors in hedge funds he founded.

Shkreli, 36, was found guilty of securities fraud and conspiracy in August 2017 by a federal jury in Brooklyn. His lawyers have argued in court filings that the verdict must be overturned because the jury received improper instructions.

They are expected to argue their case before a three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan shortly after 10 a.m. (1400 GMT)

Shkreli, who was sentenced to seven years in prison in March 2018 by U.S. District Judge Kiyo Matsumoto and is at a federal prison in Pennsylvania, is not expected to appear himself.

Shkreli, born in Brooklyn to Albanian immigrant parents, became nationally known after founding Turing Pharmaceuticals, buying the anti-parasitic drug Daraprim and raising its price by 5,000 percent, to $750 per pill. The move brought him the nickname “Pharma Bro” and drew criticism from activists and legislators.

Shkreli was indicted in December 2015 on fraud charges related to two hedge funds and a drug company he had founded years before Turing.

He was ultimately convicted of defrauding investors in the funds, MSMB Capital and MSMB Healthcare, by sending them fake account statements and concealing huge losses, and of scheming to prop up the stock price of the drug company, Retrophin Inc .

In addition to his prison sentence, Shkreli was ordered to forfeit more than $7 million.

Shkreli’s lawyers said at his trial that he never intended to take investors’ money, and in fact ultimately paid them back.

In papers filed with the 2nd Circuit, the lawyers argued that the jury should have been told that, for Shkreli to be guilty of securities fraud, he must have made false statements “for the purpose of causing some loss to another.”

Prosecutors countered in a filing that the securities law required no such instruction.

Retrophin fired Shkreli in 2014, and later filed a $65 million lawsuit accusing him of breaching his duty of loyalty to the company. Shkreli filed a $30 million lawsuit against three of his former Retrophin colleagues last month, accusing them of wrongfully forcing him out.

Retrophin announced earlier this month that both lawsuits had been settled. (Reporting by Brendan Pierson in New York; editing by Jonathan Oatis)

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