Martin Shkreli’s Prison Sentence: Fraud, Early Release, Pharma Ban

Martin Shkreli’s prison sentence was seven years in federal custody, imposed on March 9, 2018, after a Brooklyn jury convicted him of two counts of securities fraud and one count of securities fraud conspiracy. He served roughly four years at a low-security federal prison in Pennsylvania before the Bureau of Prisons transferred him to a New York halfway house on May 18, 2022, with a projected full release date of September 14, 2022.¹²

What He Was Actually Convicted Of

The conviction had nothing to do with the Daraprim price hike that made Shkreli famous. Federal prosecutors in the Eastern District of New York charged him in a sealed indictment on December 14, 2015, and a superseding indictment in June 2016 brought eight counts, including securities fraud, securities fraud conspiracy, and wire fraud conspiracy.³⁴

The case involved two schemes. First, prosecutors said Shkreli defrauded investors in his hedge funds, MSMB Capital Management and MSMB Healthcare, by lying about performance and assets to bring in roughly $8 million. According to the SEC, he told MSMB Capital investors in July 2010 that the fund had returned more than 35 percent when it had actually lost about 18 percent, and by December of that year he claimed the fund held $35 million in assets when the balance was under $1,000.⁵ Second, to cover the losses, Shkreli and outside attorney Evan Greebel funneled money out of Retrophin, the biopharmaceutical company Shkreli co-founded, through sham consulting agreements with the disgruntled investors. Retrophin’s losses exceeded $11 million.⁴

After a six-week trial before U.S. District Judge Kiyo Matsumoto, the jury convicted Shkreli on August 4, 2017, on three of the eight counts: one conspiracy count tied to the Retrophin scheme and two securities fraud counts tied to MSMB. He was acquitted on the other five, including three wire fraud conspiracy charges.⁶ Greebel was convicted separately in December 2017 after an 11-week trial.⁷

The Seven-Year Sentence, the Fine, and the Forfeiture

At sentencing on March 9, 2018, Judge Matsumoto acknowledged that Shkreli had shown remorse but described the case as defined by an “egregious multitude of lies.” She imposed seven years in prison, with credit for roughly six months already served, and a $75,000 fine.⁸⁹

The court also entered a separate forfeiture money judgment of $7,360,450, the calculated proceeds of the fraud.¹⁰ To satisfy that judgment, prosecutors identified $5 million in cash from a personal trading account, shares in Vyera Pharmaceuticals (formerly Turing), a Picasso painting, and the one-of-a-kind Wu-Tang Clan album Once Upon a Time in Shaolin, which Shkreli had bought in 2015 for $2 million.¹¹ After the album sale in July 2021, prosecutors announced “his payment of the forfeiture is now complete.”¹²

Where He Served and Why He Got Out Early

Shkreli served his sentence at Federal Correctional Institution Allenwood Low, a low-security facility in Allenwood, Pennsylvania.¹³¹²

The Bail Revocation That Preceded Sentencing

Shkreli had been free on a $5 million bond since his December 2015 arrest,¹⁴ but that ended about a month after the guilty verdict. In September 2017, he posted on Facebook offering $5,000 to anyone who could “grab a hair” from Hillary Clinton during her book tour. Judge Matsumoto revoked bail, rejecting the defense argument that the post was political satire. She called it a potential “solicitation of an assault” and noted that Secret Service agents protecting Clinton had been alarmed.¹⁵ He was jailed immediately and remained in custody through sentencing, which is how he earned the roughly six months of credit applied against the seven-year sentence.

What Daraprim Had to Do With It

Shkreli’s prison time was not for the 2015 Daraprim price hike, in which his company Turing Pharmaceuticals raised the price of the toxoplasmosis drug from $13.50 to $750 per pill, an increase of more than 5,000 percent.¹⁶ That episode drove his public notoriety, but the criminal case was about hedge fund investors and Retrophin. The Daraprim consequences came through a separate civil case brought years later.

The Lifetime Pharma Ban That Outlasted Prison

In January 2020, the Federal Trade Commission and seven states sued Shkreli, Vyera Pharmaceuticals, and other defendants, alleging an illegal scheme to monopolize Daraprim by blocking generic competitors.¹⁷¹⁸¹⁹

A three-judge panel of the Second Circuit unanimously upheld both the ban and the disgorgement in January 2024, calling Shkreli’s conduct “egregious, deliberate, repetitive, long-running, and ultimately dangerous.”²⁰ In October 2024, the U.S. Supreme Court declined to hear his appeal of the financial penalty. He did not challenge the lifetime ban at that stage, though his attorney, Thomas Huff, indicated Shkreli might renew the challenge if future rulings created more favorable precedent.¹⁹

Where Shkreli Is Now

As of early 2024, Shkreli was reported to be living with his sister in Queens, New York, doing consulting work for a law firm, and still owing approximately $24 million of the $64.6 million antitrust disgorgement.²¹²² He remains permanently barred from the pharmaceutical industry and from running a public company.²

1
NPR. Pharma Bro Martin Shkreli Has Been Released From Prison
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NBC News. Pharma Bro Martin Shkreli Released From Prison, Sent to Halfway House
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CourtListener. United States v. Shkreli
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Fenwick. Martin Shkreli Convicted on Three of Eight Counts of Securities Fraud
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SEC. SEC Charges Martin Shkreli With Defrauding Hedge Fund Investors
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U.S. Department of Justice. Former Hedge Fund Manager Convicted in Multi-Million Dollar Fraud Scheme
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U.S. Department of Justice. New York Attorney Convicted of Securities Fraud and Wire Fraud Conspiracies
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The Guardian. Martin Shkreli Sentenced to Seven Years in Prison for Fraud
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Fierce Pharma. Shkreli Sentenced to Seven Years in Prison on Federal Fraud Charges
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GovInfo. USCOURTS-nyed-1:24-cv-04126
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Time. Martin Shkreli Ordered to Forfeit Assets
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U.S. Department of Justice. United States Sells Unique Wu-Tang Clan Album Forfeited by Convicted Hedge Fund Manager
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Courthouse News Service. Pharma Bro Martin Shkreli Freed From Prison for Halfway House
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Bloomberg Law. USA v. Shkreli et al Docket
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NBC News. Pharma Bro Martin Shkreli Ordered Jailed Over Online Bounty on Hillary Clinton
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BBC News. Turing Pharmaceuticals Raises High Drug Prices
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FTC. Statement on Second Circuit Order Upholding Pharma Bro Martin Shkreli’s Lifetime Ban
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FTC. FTC v. Vyera Pharmaceuticals – Opinion and Order
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Reuters. U.S. Supreme Court Rejects Pharma Bro Martin Shkreli’s Appeal of Penalties
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CNBC. Appeals Court Upholds Pharma Bro Martin Shkreli Lifetime Ban From Drug Industry
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Courthouse News Service. Second Circuit Upholds Lifetime Industry Ban for Pharma Fraudster Martin Shkreli
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Pharmaphorum. Shkreli Claims Druglike Isn’t a Drug Company