Imprisoned felon Martin Shkreli – nicknamed "Pharma Bro" – was busted for using a contraband phone to discuss pharmaceutical industry business matters with associates from behind bars.
U.S. District Judge Denise Cote made the ruling on Tuesday, saying the 38-year-old widely disdained ex-pharmaceutical executive used the contraband phone to communicate with former Vyera Pharmaceuticals colleagues.
Shkreli founded Phoenixus, the parent company of Vyera, which is the rebranded name of Turing Pharmaceuticals. It's the company behind the overnight price hike of the life-saving antiparasitic medication, Daraprim, whose cost Shkreli jacked up from $13.50 per tablet to over $500 per tablet in 2015.
"The plaintiffs have shown that Shkreli has used a prison phone to discuss highly relevant company business and that he knew in doing so that those communications should have been but would not be preserved," Cote's 11-page ruling states. "Shkreli's use of the prison phone to discuss business development constitutes intentional spoliation and warrants sanctions."
Two Vyera executives testified that they were in communication with Shkreli from 2017 to 2019 while the reputed Pharma Bro was incarcerated at a low-security prison in Allenwood, Pennsylvania.
Akeel Mithani said he communicated with Shkreli about business development from the end of 2018 through February 2019, sometimes using the encrypted messaging platform, WhatsApp, while Kevin Mulleady provided two text messages he received from Shkreli in October 2017.
When asked during a deposition earlier this year whether he had a contraband phone in his procession or had access to one in prison, Shkreli invoked his Fifth Amendment right.
"The plaintiffs have been prejudiced by Shkreli's conduct because they do not have access to messages about Vyera that Shkreli sent and received while in prison," Cote said. "In an exercise of discretion, however, this Court declines to impose the plaintiffs' proposed sanctions. As a result, Shkreli's proposed sanction that he be precluded from introducing any argument or evidence contrary to the presumption that he communicated with Mr. Mulleady and Mr. Mithani about company business from prison is adopted."
Cote did not find that Vyera as a company fell short in failing to preserve Shkreli's messages by wiping his company-issued iPhone during a factory reset, even after regulators implemented a preservation notice; however, she did order Vyera to file a letter stating whether it searched for the messages in the company's iCloud backup.
"Although it is undisputed that the Shkreli phone was subject to a factory reset in or around 2016-2017, Vyera has represented that it automatically backs up employee messages to iCloud," she said. "No party has suggested that that back up would not include text messages Shkreli sent and received using the Shkreli Phone. Counsel for Vyera will be required to confirm that an appropriate search has been conducted for these messages and that any relevant communications have been produced."
After a federal jury convicted Shkreli in 2017 of securities fraud for an unrelated "Ponzi-like scheme" involving investors in another drug company, Retrophin, he was slapped with additional civil antitrust charges in connection to the Daraprim scandal.
Those accusations, says Law & Crime, could lead to Shkreli's lifetime ban from the pharmaceutical industry.