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NEW YORK — A federal prosecutor told jurors in opening statements of a securities fraud trial that a former pharmaceutical company CEO built a bogus hedge fund empire on "lies upon lies."
Assistant U.S. Attorney Karthik Srinivasan accused Martin Shkreli on Wednesday of losing investors' money through bad trades, then looting a drug company for $10 million in a secret scheme to pay them back.
Though he portrayed himself as a Wall Street wizard, "In reality, he was just a con man," the prosecutor said.
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Defense attorney Benjamin Brafman said that Shkreli was innocent. He said people around his client sometimes viewed him as an "odd duck," but also relied on his genius to make them money.
"Is he strange? Yes," defense attorney Brafman told jurors. "Will you find him weird? Yes. But Martin Shkreli, despite all his flaws and dysfunctional personality, is brilliant beyond words."
The 34-year-old is best known for using another pharmaceutical company to raise the price of life-saving drug Daraprim by 5,000 percent and making no apologies about it on social media.
The spotlight intensified later that year with his arrest on charges — unrelated to Daraprim — focusing on a pair of failed hedge funds he founded.
After he lost investors' money through bad trades, he secretly looted Retrophin, another pharmaceutical company where he was CEO, for $10 million to pay back his disgruntled clients, Srinivasan said.
"Rather than owning up to his lies and admitting his investments were a failure, the defendant doubled down by engaging in an even bigger fraud," Srinivasan said.
The alleged victims in the case were high-rolling investors who were drawn to Shkreli's quirky personality and ended up getting their money back — and more — because Retrophin eventually became a successful startup worth $1 billion, Brafman said.
Among the headlines generated by the former CEO after the Daraprim controversy erupted, Shkreli famously bought a single-edition album by rap group Wu-Tang Clan in 2015 for a reported $2 million.
Shkreli is free on $5 million bond. If convicted, he faces up to 20 years in prison.