Oct 26 • 10M

Chapter 8, Part 4: Shkreli’s Biggest Victim

Who really was left in ruin by Martin Shkreli’s shenanigans? It might not be the people you first think of.

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Christie Smythe
My experiences uncovering the story of, and falling in love with, Martin Shkreli.
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Photo illustration of Martin Shkreli.
Photo illustration of Martin Shkreli.

Thousands of years before the internet, Twitter and TikTok, before the invention of the printing press, and before many cultures even had writing, information could still travel remarkably easily across long distances. It did so in the form of stories. Our brains are coded for them. 

Some of the oldest that we know of are flood myths where a divine being seeks retribution by drowning humanity, stories where people achieve wealth and power through deals with the Devil, and tales about women and beasts. You have Red Riding Hood, obviously, where the beast is a conniving and vicious wolf (the original Lifetime drama), and the Beauty and the Beast, where the savage creature is redeemed through love (the original Harlequin romance). 

The grooves of these narratives are worn so deeply into our collective consciousness that anything appearing to fit them is primed to go viral. Complicating details are either forgotten or are shorn off by opportunistic journalists trying to maximize their audiences. What matters are the archetypes: the hero, the villain, the victim, the damsel (because of entrenched racial biases in Western society, the “damsel” is usually white), the vixen or the crone (either of which is usually also a villain).

Once locked down, it’s incredibly difficult to break a real-life person out of whichever box they’ve been assigned — although plenty of PR representatives make good money trying. Clearly, Martin Shkreli, whose name became synonymous with greed, fraud, harassment and practically every other disreputable behavior imaginable, was assigned to a “Big Bad Wolf” type of box. (Or some might suggest Rumpelstiltskin, the baby-stealing imp from another very old fairy tale.) 

In fairy tale logic, a hero can’t be a hero without a villain; and a villain can’t be a villain without victims. Heroism and villainy are also proportionate. The more notorious the villain, the more misery he or she must have inflicted, so the thought process goes. Martin Shkreli, known as a poster boy for the evils of the pharmaceutical industry, and as a financial fraudster with a face as infamous as Ponzi schemer Bernie Madoff, should have left a trail of suffering and ruin behind him to deserve his monstrous reputation. But did he?

Not exactly, or at least not how people might assume.

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Yes, as a pharmaceutical executive, he jacked up the prices of drugs to startling heights, including increasing the price of toxoplasmosis medication Daraprim by 5,000 percent. But most of the sticker shock was borne by insurers. Although patients and doctors endured frustrations and frightening delays in obtaining the drug, or had to come up with less-expensive workarounds, only two deaths have ever been publicly attributed to the price increase.

One, disclosed in a lawsuit brought against Martin by the Federal Trade Commission, was actually from an unrelated infection a patient contracted during a hospital stay. The patient needed to be in the hospital in order to access Daraprim, according to the suit. Another account came from a doctor who wrote a letter to the judge in Martin’s criminal case. She referenced it during his sentencing hearing, but never filed the letter publicly, making the story impossible to investigate further. 

Presumably, Martin’s infamy and conviction on securities fraud charges would suggest he also cheated people out of millions of dollars. But that wasn’t completely right either. As a small-time hedge fund manager, he had puffed himself up to investors and lured them partly by lying about his success. But after losing most of their money on bad trades, Martin launched his pharmaceutical company Retrophin, and was able to use it to pay almost all of them back…with interest, in most instances.

A few exceptions included an investor named Richard Kocher, who got back the $200,000 he had sunk into Martin’s fund, but not in time to close an unrelated real estate deal he was planning. Martin eventually paid Kocher $388,000 in court-ordered restitution to make up for estimated lost profits. Another investor, Thomas Koestler, sued Martin over $2.3 million in consulting payments he was promised from Retrophin that never materialized. A receiver was appointed in the case, and Martin’s assets have been garnished to cover the debt.

A section of a ruling in which Martin Shkreli was ordered to pay Thomas Koestler $2.3 million plus interest.
A section of a ruling in which Martin Shkreli was ordered to pay Thomas Koestler $2.3 million plus interest.

And another associate, former healthcare investment banker Lee Yaffe, invested $100,000 in one of Martin’s hedge funds on behalf of his father, George Yaffe. Martin lost the money but was badgered by Lee into promising to pay his dad back $250,000 (Lee thought his dad should receive more than double the principal). After several years of back-and-forth, Martin paid Lee $355,000 through Retrophin, by way of hiring Lee as a consultant.

Lee got spooked, though, after a lawyer for Retrophin called him and asked him about whether the consulting contract was legit. And he was downright terrified when federal agents showed up one day at his house. He cooperated with the government, striking a non-prosecution deal with the feds, and agreed to pay back the $355,000. Notably, none of Martin’s other investors were asked by the government to return any money.

After all that, Lee and his father still pursued Martin in court and claimed that the $250,000 promissory note he got Martin to sign was never paid. A New York state court judge awarded George Yaffe $425,726 while Martin was still serving his prison sentence. I have no idea whether or not Martin has paid the judgment.

A court ruling where Martin Shkreli was ordered to pay the Yaffes $425,726.
A court ruling where Martin Shkreli was ordered to pay the Yaffes $425,726.

Then there was Josiah Austin, the self-made Arizona businessman worth $300 million, who lost $4.8 million in Martin’s hedge funds. But he never pleaded with Martin to pay him back or cast himself as a “victim.” The disappointed investor cut his losses, apparently attributing them to his own foolish faith in Martin’s brilliance, and walked away.

And there was Tim Pierotti, seen as a victim of Martin’s of a  more personalized sort. A former employee of Martin’s, he walked away with about $1.5 million in Retrophin stock that Martin needed to control in order to effectuate his complex and desperate business maneuvers. Angry over the stock, and also apparently irked by Pierotti’s disrespect for him, Martin sued and harassed Pierotti…and harassed his wife and children. In an often quoted letter to Pierotti’s wife, Martin threatened to make the family “homeless.” 

The episode ended with the Pierottis calling the police, a police officer telling a sullen and childish-sounding Martin to stop bothering the Pierottis, and with Tim selling the stock and keeping the proceeds.

While Martin did leave wreckage behind him, there weren’t many people lefted ruined or destitute. It might be tempting to say, after a closer inspection, that the most damaged victim of Martin Shkreli may well have been himself. 

After all, he made but then lost an entire fortune of somewhere around $200 million within a few years. He was thrown in prison, penalized for life with a felony conviction, banned from the pharmaceutical industry and from running any public company, kicked off of Twitter and dating apps, and broadly “canceled” by society at large. (It’s been suggested to me by people in the film and publishing worlds that he probably can’t even make money by selling his life rights for a book or a movie, over fears of reputational blowback.)

But that assumption wasn’t completely true either. There was one undisputed victim of Martin Shkreli’s who was left devastated by his dealings with the young executive. He was a family man, a devoted husband, and a respected legal professional. Sort of like me, he fell down a rabbit hole with Martin, finding him entertaining and energetic if also difficult to work with. And he appeared to mean well when trying to steer the willful CEO in productive directions. 

He ended up losing his job, his reputation, his law license, his freedom for 18 months, and every cent of hard-earned money he had made, and probably would make for quite some time. (He was ordered to pay $10.4 million in restitution to Retrophin.) His name was Evan Greebel.

During his sentencing, after he was tried and convicted of aiding in the securities fraud, he told the judge: “I will regret every day of my life the day that I met Martin Shkreli.”

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