Us District Court Judge Kiyo Matsumoto has ruled that Martin Shkreli is going to be held responsible for $10.4M in financial losses sustained by investors after he is sentenced for his crimes. Shkreli, who was found guilty of two counts of securities fraud and one count of conspiracy to commit securities fraud, had tried to argue that he wasn’t responsible for those losses, seeing as investors eventually profited when he partially paid them back with Retrophin stock while he was the CEO of that pharmaceutical company.
The fraud charges are related to his running of the investment funds MSMB Capital, Elea Capital, and MSMB Healthcare. Federal prosecutors accused him of bilking investors of more than $11M in a Ponzi scam. Shkreli also is accused of lying to investors, including failing to tell them when two of the hedge funds he operated failed. Prosecutors contend that Shkreli was the cause of somewhere between $9M and $20M in investor losses.
Judge Matsumoto’s ruling regarding Shkreli’s financial responsibility is more about determining the length of the recommended prison term he should get and not about how much he owes the government, along with his sentence. With this latest ruling, Shkreli could face up to 20 years behind bars. Previous to that, his defense attorneys were hoping to get him either no time in prison or under 16 months. However, the higher the loss involved in a crime, federal guidelines recommend the calculation of a longer prison term.