(Source: www.forbes.com)

Last week, attorney Ben Brafman proved why he is one of the top lawyers in the country when he got one of the most hated men in the country off of the most potentially damaging charges in a white collar case.  Martin Shkreli was found guilty on three counts (securities fraud and conspiracy to commit securities fraud), but he was found not guilty on five other related, and more severe, counts.  In Brafman’s mind, he thought all the heavy lifting was behind him but now he has to convince a federal judge to take it easy on his client at sentencing.  That part could prove to be the most difficult.

For hedge funds, lying to investors when they ask for redemption of the funds is a storied pastime.  A guy’s gotta have some cash to turn around the losses that most likely led to the redemption request!  So, maybe Shkreli just lied a little while keeping investors in his failing hedge funds at bay, or as he put it shortly after the jury’s conviction, perhaps during the witch hunt “they found one or two broomsticks.”  For the record, if I were hunting witches, uncovering a broomstick would be a good indicator that I had found one.

When it comes to sentencing a person to prison, or not, judges have more discretion than they did prior to a judicial decision known as Booker.  That Supreme Court decision in 2005 stated that the Federal Sentencing Guidelines, a point based system for determining a stated prison term range based on the criminal attributes, is not mandatory but advisory.  The original intent of the Federal Sentencing Guidelines was to establish a sentencing structure that was uniform throughout all the federal districts.  This meant that judges could depart from the harsh sentences that could be imposed as a result of a rigid guideline.  Some judges have embraced it and given sentences well below the guideline recommendation.  For instance, convicted insider trader Raj Rajaratnam’s guideline called for a prison term of over 20 years.  Instead, U.S. District Judge Richard Holwell “only” gave him 11 years.  In fact, it is not unusual for judges to use such discretion and sentence well below the guideline recommendation.  However, they can also go above the guideline.

Brafman indicated after the jury’s decision that his client had been acquitted of the charges associated with the highest dollar amounts (greater points under the Sentencing Guidelines) by saying of the verdict was good, “… especially since count seven, the main count that impacts on the loss in this case, that was the most important count in the case from our perspective,”  It may have been important from Brofman’s perspective, but maybe not for the U.S. District Judge Kiyo Matsumoto who will be sentencing Shkreli in the coming months (no date has been set).

“Judges have the ability to consider a number of factors at sentencing,” said attorney Ross Garber, a partner at Shipman & Goodwin LLP, who has no connection to the Shkreli case.   These factors include the need for the sentence imposed:

  • to reflect the seriousness of the offense

  • to promote respect for the law

  • to provide just punishment for the offense

  • to afford adequate deterrence to criminal conduct

  • to protect the public from further crimes of the defendant

So Shkreli’s past could come back to haunt him.  We all remember his testimony, or lack of it, in front of a congressional committee investigating the serious matter of rising prescription drugs.  Shkreli took the Fifth during those hearings but his body language and facial expressions about being there dominated the hearing.  As Congressman John Mica (FL) said of Shkreli’s appearance, “I don’t think I’ve ever seen the committee treated with such contempt.”   Shkreli had his own feelings about the congressmen and Tweeted after the hearing, “Hard to accept that these imbeciles represent the people in our government.”  If you do not respect the lawmakers, it can be assumed that you do not respect the law.

The judge must also consider a deterrence factor.  Garber said, “There are two considerations a judge must take into account on this point, one is a specific deterrent, related to the individual, and the second is a general deterrent related to the public.”  Shkreli has shown a disrespect for the law and a disdain for the “Junior Varsity” prosecutors who enforce it.  A specific deterrent might be to put this guy away for a few years to see if he gets his mind right (see Cool Hand Luke).  The judge must also consider the possibility that there are more Shkreli’s out there and that these antics will not be tolerated.

Protection of the public is also a consideration at sentencing.  If the Judge Matsumoto believes Shkreli is guilty of the crimes, as she likely does, she also might believe that he could perpetrate them again.  Shkreli has made it no secret that he is considering raising money from investors for new business ventures.  A longer prison term, or a long enough prison term, may make him think twice about taking money from investors.

More Info: www.forbes.com

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