HARRISBURG – Attorney General Dave Sunday joined the Federal Trade Commission (FTC) and six other states asking a federal judge to hold Martin Shkreli in contempt based on their allegations that he flagrantly and repeatedly violated a 2022 court order that banned him from the pharmaceutical industry.
In a motion and brief filed today, coalition alleges that Shkreli, since his release from prison in May 2022, has been violating the court order by publicly trading in pharmaceutical industry stocks and broadcasting his opinions about the business and management of many pharmaceutical industry companies.
Following a full trial in December 2021, the court found that Shkreli’s conduct increased prescription drug costs for American patients and blocked the entry of lower-cost generics.
“Martin Shkreli was held accountable for conduct that drove up the cost of a life-saving medication and blocked lower-cost alternatives for patients. A court-ordered industry ban is not a suggestion, it is a legal obligation.” Attorney General Sunday said. “We are asking the court to enforce that order and ensure Shkreli faces consequences if he has violated its terms.”
The office joined the FTC and six other states in an amended complaint in April 2020 against Shkreli, another individual executive and the companies they founded, Vyera Pharmaceuticals LLC and Phoenixus AG. In February 2022, the U.S. District Court for the Southern District of New York ruled that Shkreli organized an illegal anticompetitive scheme to maintain a monopoly overDaraprim, a life-saving treatment for toxoplasmosis, a rare and potentially fatal parasitic infection.
The court found that the scheme prevented generic competition and protected Shkreli and his codefendants’ ability to raise Daraprim’s price from $17.50 per tablet to $750 per tablet. The court further found that “Shkreli’s egregious, deliberate, repetitive, long-running and ultimately dangerous illegal conduct” warranted an industry ban, and the court ordered Shkreli to disgorge over $64 million.
Contempt Filing
The joint motion alleges numerous examples of Shkreli violating the order’s lifetime ban by publicly trading in pharmaceutical industry stocks of at least 60 companies and broadcasting online his opinions about the business and management of many pharmaceutical companies. These activities run afoul of the court’s 2022 permanent injunction, which banned Shkreli “from directly or indirectly participating in any manner in the pharmaceutical industry,” including by “[a]cquiring or holding an Ownership Interest in a Pharmaceutical Company” or “[t]aking any action to directly or indirectly influence or control the management or business of any Pharmaceutical Company,” according to the FTC and states’ joint motion.
Shkreli has publicized his order violations by livestreaming and posting on numerous social media platforms, including YouTube, X, and Reddit. The motion alleges that, while livestreaming his trades in pharmaceutical industry stocks, Shkreli told his viewers “I’m showing you how to trade and invest in biotech.” The motion further alleges that, in another livestream, Shkreli confessed his “magic trick”: “It doesn’t matter what trades I make because I can always find a couple of biotech stocks to smoke.” As alleged in the motion, Shkreli used his livestreams to wage multiple public campaigns to short certain pharmaceutical company stocks based on his prediction that their key clinical trials would fail.
The motion asks the court to issue an order requiring Shkreli to show cause why he should not be held in civil contempt for violating the lifetime ban. It also seeks civil sanctions to compel his compliance with the court’s 2022 injunction.
Sanctions sought in the contempt filing seek to require Shkreli to:
- Divest any pharmaceutical company stocks he currently owns;
- Pay a fine equal to his profits from any pharmaceutical company stock trading (plus prejudgment interest) without the ability to account for offsetting losses; and
- Face clear and escalating consequences for any future violations, including financial penalties and potential incarceration.
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