Brooklyn Boro

Shkreli conspirator gets 18 months for securities fraud and wire fraud

Ordered to pay more than $10 Million in restitution

August 22, 2018 Brooklyn Daily Eagle
In this courtroom sketch, entrepreneur and former hedge fund manager Martin Shkreli (second from left) appears in court for his arraignment on fraud charges in 2015. From left are defense attorney Baruch White, Martin Shkreli, defense attorney Jonathan Sack and co-defendant Evan Greebel, who was charged with conspiracy. Elizabeth Williams via AP
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Last week in Brooklyn federal court, Evan Greebel, a former partner at the New York office of Katten Muchin Rosenman LLP who served as outside counsel to Retrophin, Inc., a biopharmaceutical company, was sentenced by Judge Kiyo A. Matsumoto to 18 months in prison for conspiracy to commit wire fraud and conspiracy to commit securities fraud, to be followed by three years’ supervised release.  

The court also ordered Greebel to pay $116,462.03 in forfeiture and $10,447,979 in restitution.  Greebel was convicted by a federal jury in December 2017, following an 11-week trial, for his role in two interrelated fraud schemes with Retrophin CEO Martin Shkreli and others, in which Greebel, Shkreli and others stole millions of dollars in cash and stock from Retrophin and manipulated the price and trading volume of Retrophin stock.

Richard P. Donoghue, United States Attorney for the Eastern District of New York; and William F. Sweeney Jr.; assistant director-in-charge, FBI, New York Field Office, announced the sentence.

“[The] sentence reinforces our message that attorneys who facilitate crimes will be held accountable for their actions,” Donoghue said.  “Evan Greebel leveraged his legal training and the trust placed in him by Retrophin’s Board of Directors to commit serious crimes, including the theft of millions of dollars in cash and stock from the very company he was hired to represent.  In doing so, Greebel broke the law and violated the ethical duties he owed to his client.”

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Between 2011 and 2014, Greebel conspired with Shkreli and others to misappropriate Retrophin’s assets in order to pay off defrauded investors in Shkreli’s hedge funds, MSMB Capital Management LP (MSMB Capital) and MSMB Healthcare Management LP (MSMB Healthcare).  Specifically, Greebel negotiated and prepared so-called settlement agreements with various of the defrauded investors, causing Retrophin to reimburse them more than $2 million in cash and stock. Greebel also arranged for other defrauded investors to enter into sham consulting agreements with Retrophin as a means to settle liabilities owed by Shkreli and the hedge funds.

In addition, between 2012 and 2014, Greebel and Shkreli schemed to defraud investors in Retrophin by attempting to control illegally the price and trading volume of Retrophin’s stock.  As part of the scheme, they concealed Shkreli’s beneficial ownership and control of most of Retrophin’s free-trading shares, recruited associates of Shkreli to be nominee holders of those shares and prevented the nominees from selling the shares.  Some of the shares were used to settle liabilities owed by the MSMB hedge funds and Shkreli.

“As an attorney well-versed in the law, Greebel was expected to abide by it — not violate it,” Sweeney stated.  “Instead, he used his professional expertise to prepare illegitimate agreements, allowing him and others to carry out their illegal activity.  His sentencing today serves as a reminder to others that there are consequences for this type of behavior.”


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