One of t he investors former drug company executive Martin Shkreli is accused of defrauding testified on Wednesday that Shkreli lied to him repeatedly, although he eventually made millions of dollars from t he investment.
Darren Blanton, a Dallas-based biotechnology investor who appeared in Brooklyn federal court as a witness for U.S. Prosecutors, told jurors he invested in Shkreli’s he dge fund MSMB Capital after being told t he fund was managing $35 million in assets and had an independent auditor.
He said he later learned both of those claims were false and found Shkreli evasive w he n he tried to get some of his money back. Blanton said he eventually filed a whistleblower complaint with t he U.S. Securities and Exchange Commission.
Under cross-examination by Shkreli’s lawyer, Benjamin Brafman, Blanton conceded that despite his misgivings, his $1.25 million investment with Shkreli paid off, largely through an agreement in which Shkreli gave him shares in his drug company Retrophin (RTRX).
Blanton said he still holds 150,000 shares of Retrophin, worth nearly $3 million at Wednesday’s closing price of $19.83 per share, and previously sold shares worth $2.4 million. He also said he received a cash payment of $200,000.
Prosecutors have claimed t he agreement between Blanton and Shkreli, termed a consulting agreement, was a sham.
Blanton said Shkreli founded Retrophin after learning that a friend of Blanton’s had lost a son to a rare disease, myotubular myopathy, and vowed to find a cure.
Brafman’s cross-examination is expected to continue on Thursday.
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T he testimony came after U.S. District Judge Kiyo Matsumoto ordered Shkreli to stop talking about his case in or around t he Brooklyn courthouse w he re t he trial is taking place. Five days earlier Shkreli had burst into a room full of spectators and attacked t he credibility of a government witness.
Shkreli, 34, gained notoriety in 2015 w he n he raised t he price of a life-saving drug by 5,000 % as CEO of Turing Pharmaceuticals, sparking outrage among patients and U.S. Lawmakers.He at times reveled in t he negative publicity as he came to be known as “pharma bro” and his Twitter harassment of a journalist led to him being banned from t he social media platform.
T he charges he now faces stem not from his time at Turing, but from his management of MSMB Capital, anot he r fund called MSMB He althcare and Retrophin between 2009 and 2014. Prosecutors say he deceived investors in t he fund s and eventually repaid t he m with money stolen from Retrophin.