Before arrest, U.S. sought Shkreli's communications with lawyer

Wed Jan 27, 2016 3:11pm EST
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By Nate Raymond

NEW YORK (Reuters) - Days before Martin Shkreli's arrest for securities fraud, U.S. prosecutors obtained a secret court order ruling that communications between the former pharmaceutical executive and a corporate lawyer also under investigation were not protected by attorney-client privilege.

The order by U.S. District Judge Jack Weinstein in Brooklyn, New York, unsealed on Tuesday, provides a glimpse into how prosecutors built their case against Shkreli during his time as a hedge fund manager and CEO of drug company Retrophin Inc.

Shkreli, who until recently was Turing Pharmaceuticals' chief executive, was arrested Dec. 17, along with Retrophin's outside counsel, Evan Greebel. Both men have pleaded not guilty.

Prosecutors said Shkreli engaged in a Ponzi-like scheme, defrauding investors in his hedge fund MSMB Capital Management and misappropriating $11 million in assets from Retrophin to repay them.

Before being indicted, Shkreli, 32, had gained notoriety when, as Turing's CEO, the company raised the price of a drug used to treat a dangerous parasitic infection to $750 from $13.50.

According to the unsealed records, Retrophin in May 2014 and January 2015 received grand jury subpoenas in connection with the investigation that sought communications between Shkreli and Greebel.

Retrophin agreed to waive attorney-client privilege for those communications. But Shkreli argued Greebel was also his personal lawyer and that the company could not waive that protection, the records said.

As a result, Retrophin produced some documents with redactions, prompting prosecutors on Nov. 17 to seek their full disclosure.   Continued...

Martin Shkreli (C), chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc, departs U.S. Federal Court after an arraignment following his being charged in a federal indictment filed in Brooklyn relating to his management of hedge fund MSMB Capital Management and biopharmaceutical company Retrophin Inc. in New York in this December 17, 2015, file photo.  REUTERS/Lucas Jackson/Files