In one sense, it would have been hard to expect anything other than the narcissistic, antagonistic performance Martin Shkreli offered yesterday on Capitol Hill. The alleged drug profiteer and Ponzi schemer has demonstrated time and again that his ego comes first. He will do what he wants and say what he wants, consequences be damned.
But in another sense, one would expect Shkreli to at least understand what was on the line during the examination of his former company’s decision to hike the price of Daraprim 5,000 percent. Did Turing Pharmaceuticals break the law by setting the price at $750 a pill, and squeezing AIDS patients and pregnant women in the process? Probably not. No criminal charges have been filed as yet—so perhaps Shkreli thought he had nothing to lose by evading, smirking, and mocking members of the House Oversight Committee.
If so, he couldn’t have been more wrong.
In an unrelated matter, Shkreli is facing two counts of securities fraud, two counts of conspiracy to commit securities fraud, and three counts of conspiracy to commit wire fraud—allegations stemming from his management of a hedge fund and bio-tech company unconnected to Turing. He is facing millions in fines and the possibility of 20 years in prison. After yesterday’s debacle, what are the chances that federal prosecutors and the U.S. Securities and Exchange Commission (SEC) are going to pursue anything but the maximum penalties? If convicted, what are the chances that Shkreli can expect anything but the harshest possible sentence?
We’ve seen time and again that the SEC and Department of Justice (DOJ) are willing to work with defendants that show contrition, a willingness to cooperate, and a commitment to compliance moving forward. A settlement of any kind may have already been a longshot for Shkreli before yesterday’s hearing; but now it’s an impossibility. Capitol Hill will exert pressure on federal regulators to go for the jugular—and regulators will be in no position to deny them. They are still reeling from the perception that too many white collar criminals get off. As such, get ready for Madoff the Sequel.
Among his many alleged sins, perhaps the most damning is Shkreli’s failure to understand that what you do and say in one government venue will always have implications in another. As such, the only question remaining may be: Who’s the imbecile now?
Katherine McLane is a Senior Vice President at LEVICK and a contributing author to LEVICK Daily.