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18-819-cr 

United States v. Shkreli

UNITED STATES COURT OF APPEALS 

FOR THE SECOND CIRCUIT 

SUMMARY ORDER 

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A 

SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED 

BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. 

WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY 

MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE 

NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A 

COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 

At a stated term of the United States Court of Appeals for the Second Circuit, held at the 

Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 

18th day of July, two thousand nineteen. 

Present: 

DENNIS JACOBS, 

DEBRA ANN LIVINGSTON,

JOSEPH F. BIANCO,

 Circuit Judges, 

_____________________________________ 

UNITED STATES OF AMERICA, 

 Appellee, 

v. 18-819-cr 

 

MARTIN SHKRELI, 

 Defendant-Appellant, 

EVAN GREEBEL, 

 Defendant. 

_____________________________________ 

For Appellee: JACQUELYN M. KASULIS (Alixandra E. Smith, on the 

brief), for Richard P. Donoghue, United States 

Attorney for the Eastern District of New York, 

Brooklyn, NY. 
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For Defendant-Appellant: MARK M. BAKER (Benjamin Brafman, Marc Agnifilo, 

Andrea Zellan, Jacob Kaplan, Teny R. Geragos, on the 

brief), Brafman & Associates, P.C., New York, NY. 

Appeal from a judgment of the United States District Court for the Eastern District of 

New York (Matsumoto, J.). 

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND 

DECREED that the judgment of the district court is AFFIRMED. 

Defendant-Appellant Martin Shkreli (“Shkreli”) appeals from an amended judgment of 

the United States District Court for the Eastern District of New York, dated April 11, 2018, 

sentencing him to 84 months’ imprisonment and ordering him to pay (1) a fine of $75,000; (2) 

restitution of $388,336.49; and (3) forfeiture in the amount of $7,360,450.00, following a jury 

verdict convicting him of two counts of securities fraud and one count of conspiracy to commit 

securities fraud, in violation of 15 U.S.C. § 78j(b) and 18 U.S.C. § 371, respectively. See 

Amended Judgment, No. 15-cr-637 (KAM) (E.D.N.Y. Filed April 17, 2018), ECF No. 583. We 

assume the parties’ familiarity with the underlying facts, the procedural history of the case, and 

the issues on appeal. 

Jury Instruction 

 Shkreli first argues that the district court incorrectly instructed the jury either (1) by 

including a “no ultimate harm” (“NUH”) instruction as to securities fraud, or (2) even if a NUH 

instruction could properly be included in some form as to securities fraud, by varying the 

wording of that NUH instruction between the securities fraud and wire fraud counts. He points 

to his convictions for securities fraud and acquittals for wire fraud as evidence that the 

instructions were incorrect and confusing to the jury. “We review a jury instruction challenge 

de novo, but we will reverse only where the charge, viewed as a whole, demonstrates prejudicial 
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error.” United States v. Coppola, 671 F.3d 220, 247 (2d Cir. 2012). “Where . . . a defendant 

requested a different jury instruction from the one actually given, the defendant bears the burden 

of showing that the requested instruction accurately represented the law in every respect and that, 

viewing as a whole the charge actually given, he was prejudiced.” United States v. Nektalov, 

461 F.3d 309, 313-14 (2d Cir. 2006) (internal quotation marks omitted). 

 At the outset, we see no error generally in the inclusion of a NUH instruction for a 

securities fraud charge. In fact, we have upheld such an instruction in securities fraud cases on 

multiple occasions. See, e.g., United States v. Lange, 834 F.3d 58, 79 (2d Cir. 2016); United 

States v. Leonard, 529 F.3d 83, 91-92 (2d Cir. 2008). We agree with the government that a 

securities fraud charge without the NUH instruction would actually have constituted a windfall 

for Shkreli, whose defense was “exactly the kind of improper argument that the NUH instruction 

was designed to address: that despite his many misrepresentations and omissions to the MSMB 

Capital and MSMB Healthcare investors, he did not have the requisite intent to defraud those 

investors because he believed that the investors would ultimately make money from their 

investments.” Appellee’s Brief 40; see also United States v. Ferguson, 676 F.3d 260, 280 (2d 

Cir. 2011) (upholding NUH instruction because it “ensured that jurors would not acquit if they 

found that the defendants knew the [transaction] was a sham but thought it beneficial for the 

stock price in the long run . . . [given that] the immediate harm in such a scenario is the denial of 

an investor’s right to control her assets by depriving her of the information necessary to make 

discretionary economic decisions” (internal quotation marks and brackets omitted)). 

 We also disagree with Shkreli that it was error for the terms of the NUH instructions to 

vary between the securities fraud and wire fraud counts. The two crimes have different 

elements—there is no basis for inclusion of language requiring the jury find that Shkreli acted 
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“for the purpose of causing some loss to another” in order to convict him of securities fraud

simply because such a finding is required to convict him of wire fraud. And given these 

differing elements, Shkreli’s repeated invocations of United States v. Rossomando, 144 F.3d 197 

(2d Cir. 1998), and United States v. Berkovich, 168 F.3d 64 (2d Cir. 1999)—cases dealing 

exclusively with wire fraud—are unavailing. The instruction given here correctly stated the 

law. As such, we disagree with Shkreli that exclusion of additional language describing an 

element not required for the charged crime constituted a prejudicial error. 

Forfeiture 

 Next, Shkreli argues that the district court erred when it ordered forfeiture in the amount 

of $6,400,450, representing the total amount invested by investors in his hedge funds (Counts 

Three and Six).1 He argues that the award of forfeiture was inappropriate for three reasons: (1) 

not all investors in the hedge funds testified, and thus the government did not prove that the 

funds associated with the non-testifying investors were acquired by fraud; (2) the amount should 

be reduced to account for losses he incurred by making trades for the funds; and (3) the large 

returns seen by investors in the funds should cause his forfeiture to be reduced to zero. 

 “When a forfeiture award is challenged on appeal, this Court reviews the district court’s 

legal conclusions de novo and its factual findings for clear error.” United States v. Treacy, 639 

F.3d 32, 47 (2d Cir. 2011). The government sought forfeiture under 18 U.S.C. § 981(a)(1)(C), 

which renders subject to forfeiture “[a]ny property, real or personal, which constitutes or is 

derived from proceeds traceable to” a number of offenses, including securities fraud. “In cases 

involving lawful goods or lawful services that are sold or provided in an illegal manner, the term 

 

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 Shkreli does not appeal the $960,000 in forfeiture ordered due to his conviction for conspiracy 

to commit securities fraud (Count Eight). See Def.-App. Brief 48 at n.18. 
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‘proceeds’ means the amount of money acquired through the illegal transactions resulting in the 

forfeiture, less the direct costs incurred in providing the goods or services.” Id. § 981(a)(2)(B);

see also United States v. Contorinis, 692 F.3d 136, 145 n.3 (2d Cir. 2012) (observing that cases 

involving the sale of securities falls under “lawful goods or lawful services that are sold or 

provided in an illegal manner,” as the “[t]erm unlawful activities in section 981(a)(2)(A) was 

meant to cover inherently unlawful activities such as robbery that are not captured by the words 

illegal goods and illegal services” (internal quotation marks omitted)). Defendants have the 

burden of establishing “direct costs,” which “shall not include any part of the overhead expenses 

of the entity providing the goods or services, or any part of the income taxes paid by the entity.” 

18 U.S.C. § 981(a)(2)(B). “Criminal forfeiture focuses on the disgorgement by a defendant of 

his ill-gotten gains.” Contorinis, 692 F.3d at 146 (internal quotation marks omitted); United 

States v. Torres, 703 F.3d 194, 203 (2d Cir. 2012) (“[F]orfeiture is gain based.” (internal 

quotation marks omitted)). 

 First, we disagree with Shkreli that the lack of testimony by every investor in his hedge 

funds requires reduction of the forfeiture amount. We rejected a similar argument in United 

States v. Kalish, 626 F.3d 165, 168 (2d Cir. 2010), where we declined to decrease the amount of 

forfeiture imposed based on the defendant’s argument that “only a few customers testified that 

false promises had been made to them.” As in Kalish, “false promises were routinely made” to 

Shkreli’s investors. Id.; see also Appellee’s Brief 56 (describing “the sheer breadth and depth 

of the material misrepresentations and omissions made by Shkreli to investors in the course of 

the two frauds to induce investment, which touched on every aspect of the operation of the 

MSMB Funds”). Moreover, we agree with the government that the continuing 

misrepresentations sent to all investors in the funds (in the form of false performance reports sent 
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out on a regular basis, for example) clearly link Shkreli’s ability to retain the invested money to 

his fraud. As such, we discern no clear error in the district court’s factual finding that the 

money associated with all the investors was traceable to Shkreli’s fraud irrespective whether or 

not the investors testified. 

 Next, we disagree with Shkreli that his forfeiture award should be decreased based on the 

trading activities of his hedge funds, which he argues should be deemed “direct costs.” As 

noted above, it was Shkreli’s burden to prove his direct costs. See 18 U.S.C. § 981(a)(2)(B). 

We, like the district court, conclude that Shkreli failed to meet such a burden. See Special 

Appendix (“SPA”) 123 (noting that Shkreli “provides only bare citations to various government 

exhibits, with minimal analysis”). For example, although Shkreli argues that for one hedge 

fund “[his] net gain, after the investment of the received funds are factored, is a significantly 

lesser amount” than the full amount originally invested in the fund, he does not explain what that 

net gain might be or how we should calculate it. Def.-App. Brief 66. Similarly, while for the 

other hedge fund Shkreli argues that the majority of the money originally invested was used to 

buy an interest in his pharmaceutical start-up Retrophin, he does not grapple with the finding that 

a large portion of that amount was actually diverted to pay his personal debts. A “cursory 

argument” is not enough. United States v. Mandell, 752 F.3d 544, 554 (2d Cir. 2014). As in 

Mandell, we conclude that Shkreli has failed to meet his burden as to trading losses. 

 Lastly, Shkreli argues that we should adopt the reasoning of United States v. Hollnagel, 

2013 WL 5348317 (N.D. Ill. Sept. 24, 2013)—a district court case from outside our circuit—in 

which the court concluded that the robust returns received by investors should reduce the 

forfeiture amount required of the defendant to zero. See id. at *4. However, as noted above, 

we have held that “forfeiture is gain based,” not based on the losses (or gains) to victims. 
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Torres, 703 F.3d at 203 (internal quotation marks omitted). And even if Shkreli argues that he, 

like the defendants in Hollnagel, “incurred the cost of paying [his] investors,” 2013 WL 

5348317, at *5, he makes no suggestion that he has not profited from the frauds. To the 

contrary, the district court found that he misappropriated large sums of the money invested in his 

funds for his own use. As such, we see no clear error in the district court’s conclusion that, at 

the very least, the gains to Shkreli include the money he caused his investors to invest via fraud. 

Cf. Appendix 376 (“[T]he proceeds [Shkreli] obtained as a result of his misrepresentations 

enabled him to control millions of dollars that were used to fund and enable the success of 

Retrophin, pay his personal debts and expenses, and perpetuate additional frauds.”) 

We have considered Shkreli’s remaining arguments and find them to be without merit. 

Accordingly, we AFFIRM the judgment of the district court. 

 FOR THE COURT: 

 Catherine O’Hagan Wolfe, Clerk