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“Pharma Bro” Played Up LGBTQ Donation at Sentencing

Martin Shkreli testifying before the House Committee on Oversight and Government Reform in Washington in 2016. |
HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

BY DUNCAN OSBORNE | Seeking to counter allegations that he is anti-gay, a pharmaceutical executive who was convicted of securities fraud last year and earlier vilified for increasing the price of a drug used by people with compromised immune systems included, in his sentencing memorandum, a letter he received from the Lesbian, Gay, Bisexual & Transgender Community Center thanking him for a $30,000 donation.

“[D]espite the media’s claim that the Daraprim price hike has disparately damaged the gay community, Martin has used his resources to support LGBT charitable missions that help improve communities,” the defense wrote in its February 27 sentencing memorandum that was filed on behalf of Martin Shkreli. “In 2014, well before Martin acquired Daraprim, Martin contributed $30,000 to The Lesbian, Gay, Bisexual & Transgender Community Center.”

In 2015, Shkreli was indicted in Brooklyn federal court on eight counts of wire and securities fraud. He was convicted on three counts in 2017 and sentenced to seven years in federal prison on March 9 of this year. Shkreli was also required to forfeit more than $7.3 million in assets. The defense sought a sentence of 12 to 18 months and 2,000 hours of community service.

Martin Shkreli pointed to $30,000 gift to LGBT Community Center year before Daraprim gouge

Shkreli became infamous in 2015 when Turing Pharmaceuticals, a company he founded in 2014, purchased Daraprim, an anti-parasitic drug that is used to treat toxoplasmosis, which can harm people with HIV. Daraprim also treats malaria and it can prevent a form of pneumonia that affects people with HIV.

When Shkreli raised the price of Daraprim from $13.50 a pill to $750 a pill, it caused an immediate outcry among AIDS activists and others. Shkreli earned the nickname “pharma bro” on social media. He was seen as emblematic of a pharmaceutical industry that is greedy and less interested in the health of patients.

The defense argued that the price increase funded research into new treatments for diseases that get little attention from the pharmaceutical industry, including a better treatment for toxoplasmosis.

“[I]n 2015, Turing raised money for its research department by acquiring the drug Daraprim and raising its price from $13.50 a tablet to $750,” the defense wrote. “Overnight, this business decision made Martin ‘the most hated man in America.’ As a result, Martin was also labeled as ‘anti-gay.’ Since that time, as this Court well knows, Martin has been vilified in the press.”

The defense included a January 28, 2015 letter from Jeffrey Klein, then the Center’s chief development officer and now its chief strategy officer, among the 55 exhibits included in its sentencing memorandum. The letter thanked Shkreli for his $30,000 donation and noted that he had also purchased tickets to four Center events. Such letters are routinely provided to donors by non-profits for tax purposes. The letter was sent roughly seven months before the Daraprim controversy.

Shkreli may have made the donations to play on the emotions of one of his investors. During trial testimony, Steven Richardson, who is gay and chaired the board of a failed Shkreli venture, testified that Shkreli made comments about seducing men during conversations. He stopped only after Richardson confronted him about the comments.

In its sentencing memorandum, the government asserted that Shkreli was manipulative and played on investors’ emotions.

“Steven Richardson, for example, testified that Shkreli would say things about his personal life because ‘he thought [Richardson] would want to hear them rather than things he necessarily believed in,’” the government wrote. “Shkreli thus tried to cultivate Richardson by misrepresenting his personal life… In sum, Shkreli was adept at finding what he thought people wanted to hear. And he molded himself accordingly to deceive and defraud.”

The bulk of Shkreli’s ticket purchases and donations to the Center —$30,251 — were made prior to September 2014 when Richardson fired Shkreli from Retrophin, the company they were both involved in. In November 2014, Shkreli spent $75 on a ticket to the Women’s Event, a Center fundraiser, and $40 on a ticket to the Women’s Event After Party.

The Center confirmed the Shkreli donation, but otherwise declined to comment.

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