4 ms·

Just because his investors made money doesn't excuse him. Suppose you lent 10,000 to a friend and the friend promised to return it within a year. A year later,

Just because his investors made money doesn't excuse him. Suppose you lent 10,000 to a friend and the friend promised to return it within a year. A year later, your friend doesn't pay you back and makes a bunch of excuses. Instead, he takes the 5,000 he has left to the casino, gambles it on the roulette wheel and by luck manages to turn that into 30,000 and pays you back 1.5 years later. I don't think you would be happy with that situation...

benesch 9y ago
You might find FedEx's origin story interesting. > “I asked Fred where the funds had come from, and he responded, ‘The meeting with the General Dynamics board was a bust and I knew we needed money for Monday, so I took a plane to Las Vegas and won $27,000.’ I said, ‘You mean you took our last $5,000— how could you do that?’ He shrugged his shoulders and said, ‘What difference does it make? Without the funds for the fuel companies, we couldn’t have flown anyway.’ Fred’s luck held again. It was not much, but it came at a critical time and kept us in business for another week.” [0] [0]: http://www.huffingtonpost.com/2012/10/15/fred-smith-blackjack-fedex_n_1966837.html http://www.huffingtonpost.com/2012/10/15/fred-smith-blackjac...
- pm90 9y ago
  Technically, Fred committed a fraud (actually I forget the technical term for the crime where you misuse funds). Its just that he wasn't prosecuted for it.
  - jetti 9y ago
    Could you be thinking of Misappropriation of funds? I'm not a lawyer and I haven't spent a lot of time looking it up but from the few places I looked it doesn't seem that it would fit.
  - deleted 9y ago
    [deleted]
Clubber 9y ago
Honestly, I would be thrilled to triple my money in 18 months. Using the gambling analogy is disingenuous though.
- singhrac 9y ago
  I don't see why it's disingenuous? Investing is extremely risky, and I'm not convinced that he didn't just get lucky on the second bet. This isn't ok because the original investor was paid off. That's also how Ponzi schemes work - the original investors are paid off (I know, here the money seems to be generated from Retrophin, but the behavior is the same). This gave me a perspective: https://www.bloomberg.com/view/articles/2015-12-17/martin-shkreli-accused-of-being-surprisingly-good-at-fraud https://www.bloomberg.com/view/articles/2015-12-17/martin-sh...
  - Clubber 9y ago
    Investing money with some knowledge and control of the outcome vs. gambling with house stakes are two completely different categories of risk.
- blahblah3 9y ago
  I think that's being too results driven and doesn't take into account the risk that was taken. As another example, suppose your uber driver drove you home while intoxicated. Even if the trip ended up being fine (no accidents, smooth ride), you would still have valid justification for complaining about this.
  - Clubber 9y ago
    I understand a risk was taken, but gambling has a less than 50% chance of return (by design) while buying a Pharma company that you control is conceivably less risk. Let me add to this: Buying a company you have a government mandated monopoly on (patent) that owns a product that people will die if they don't take (inelastic demand), and has a huge barrier to entry for new, competing entrants (FDA) is conceivably less risk than throwing chips on a roulette wheel.
savanaly 9y ago
What if he lied to you, but then went out and through a combination of talent, hard work, and luck somehow made the money to make you whole and then some?
- jsmthrowaway 9y ago
  Then he lied to me, our business concludes, and I testify that he lied to me when asked. Pretty simple.
lojack 9y ago
Your analogy is slightly off... suppose you lent $10,000 to an acquaintance known for being able to double it, and they promise to return it doubled in a year. A year later you ask for your money and he gives you $6,000 from someone else he convinced to do the same thing along with $6,000 from a different venture that was taking off and $8,000 work of equity for that startup. You didn't quite get what was promised, it seems a little shady, but at least he didn't rip you off.
- soundwave106 9y ago
  The problem is, in most cases, historically the type of actions Shkreli tried often ends in disaster (often done by someone intentionally being malicious, I might add). Shkreli may have been able to work his pseudo-Ponzi-ish scheme to investors' benefit. But it is pretty easy to look up the sordid history of the vast majority of Ponzi-type schemes, to see why this type of activity is generally illegal.
njharman 9y ago
I would be perfectly happy to get more than my 10,000 back (like his investors did) late vs getting less or none back ever. I'd be joyous if the return was better than I could expect to make otherwise, say > 10-20%. Investments are risky. They are not automatic. What I wouldn't be happy about is if I was lied to about the risk of an investment. That is closer to what this case is about. The money gained or lost doesn't really matter.
fastball 9y ago
You don't think intent and net harm should be considered in criminal cases? I'd like this sentencing to send a clear message to fraudsters that: A. If you get caught, you're going to prison But more importantly - B. If, however, you work hard to ensure the people you defrauded are not harmed by your fraud, your sentence will be lighter than if you were the type of fraudster to cut and run. I don't know about you, but in light of the fact that fraudsters are always going to exist, I'd like to incentivize the "benevolent fraudsters", rather than pretending (through equal sentencing) that there is no difference between the two.

benesch 9y ago

You might find FedEx's origin story interesting. > “I asked Fred where the funds had come from, and he responded, ‘The meeting with the General Dynamics board was a bust and I knew we needed money for Monday, so I took a plane to Las Vegas and won $27,000.’ I said, ‘You mean you took our last $5,000— how could you do that?’ He shrugged his shoulders and said, ‘What difference does it make? Without the funds for the fuel companies, we couldn’t have flown anyway.’ Fred’s luck held again. It was not much, but it came at a critical time and kept us in business for another week.” [0] [0]: http://www.huffingtonpost.com/2012/10/15/fred-smith-blackjack-fedex_n_1966837.html http://www.huffingtonpost.com/2012/10/15/fred-smith-blackjac...

pm90 9y ago
Technically, Fred committed a fraud (actually I forget the technical term for the crime where you misuse funds). Its just that he wasn't prosecuted for it.
- jetti 9y ago
  Could you be thinking of Misappropriation of funds? I'm not a lawyer and I haven't spent a lot of time looking it up but from the few places I looked it doesn't seem that it would fit.
- deleted 9y ago
  [deleted]

Clubber 9y ago

Honestly, I would be thrilled to triple my money in 18 months. Using the gambling analogy is disingenuous though.

singhrac 9y ago
I don't see why it's disingenuous? Investing is extremely risky, and I'm not convinced that he didn't just get lucky on the second bet. This isn't ok because the original investor was paid off. That's also how Ponzi schemes work - the original investors are paid off (I know, here the money seems to be generated from Retrophin, but the behavior is the same). This gave me a perspective: https://www.bloomberg.com/view/articles/2015-12-17/martin-shkreli-accused-of-being-surprisingly-good-at-fraud https://www.bloomberg.com/view/articles/2015-12-17/martin-sh...
- Clubber 9y ago
  Investing money with some knowledge and control of the outcome vs. gambling with house stakes are two completely different categories of risk.
blahblah3 9y ago
I think that's being too results driven and doesn't take into account the risk that was taken. As another example, suppose your uber driver drove you home while intoxicated. Even if the trip ended up being fine (no accidents, smooth ride), you would still have valid justification for complaining about this.
- Clubber 9y ago
  I understand a risk was taken, but gambling has a less than 50% chance of return (by design) while buying a Pharma company that you control is conceivably less risk. Let me add to this: Buying a company you have a government mandated monopoly on (patent) that owns a product that people will die if they don't take (inelastic demand), and has a huge barrier to entry for new, competing entrants (FDA) is conceivably less risk than throwing chips on a roulette wheel.

savanaly 9y ago

What if he lied to you, but then went out and through a combination of talent, hard work, and luck somehow made the money to make you whole and then some?

jsmthrowaway 9y ago
Then he lied to me, our business concludes, and I testify that he lied to me when asked. Pretty simple.

lojack 9y ago

Your analogy is slightly off... suppose you lent $10,000 to an acquaintance known for being able to double it, and they promise to return it doubled in a year. A year later you ask for your money and he gives you $6,000 from someone else he convinced to do the same thing along with $6,000 from a different venture that was taking off and $8,000 work of equity for that startup. You didn't quite get what was promised, it seems a little shady, but at least he didn't rip you off.

soundwave106 9y ago
The problem is, in most cases, historically the type of actions Shkreli tried often ends in disaster (often done by someone intentionally being malicious, I might add). Shkreli may have been able to work his pseudo-Ponzi-ish scheme to investors' benefit. But it is pretty easy to look up the sordid history of the vast majority of Ponzi-type schemes, to see why this type of activity is generally illegal.

njharman 9y ago

I would be perfectly happy to get more than my 10,000 back (like his investors did) late vs getting less or none back ever. I'd be joyous if the return was better than I could expect to make otherwise, say > 10-20%. Investments are risky. They are not automatic. What I wouldn't be happy about is if I was lied to about the risk of an investment. That is closer to what this case is about. The money gained or lost doesn't really matter.

fastball 9y ago

You don't think intent and net harm should be considered in criminal cases? I'd like this sentencing to send a clear message to fraudsters that: A. If you get caught, you're going to prison But more importantly - B. If, however, you work hard to ensure the people you defrauded are not harmed by your fraud, your sentence will be lighter than if you were the type of fraudster to cut and run. I don't know about you, but in light of the fact that fraudsters are always going to exist, I'd like to incentivize the "benevolent fraudsters", rather than pretending (through equal sentencing) that there is no difference between the two.