FTC Calls on Federal Court to Hold ‘Pharma Bro’ Martin Shkreli in Contempt | February 2023
February 2023 | Volume 14, Issue 7
Find the full video and article on CNN.
According to the article, the Federal Trade Commission recently called for a federal court to hold “Pharma Bro” Martin Shkreli in contempt after allegedly flouting a recent FTC investigation into his business dealings and failed to make a $64.6 million payment he owed for his prior wrongdoings.
The FTC’s contempt motion follows what the agency described as an unsuccessful attempt to verify whether Shkreli has violated a court order barring him from ever working in the pharmaceutical industry again.
Brianne Murphy, an attorney for Shkreli, called the issue with the FTC a misunderstanding that “can get resolved relatively quickly once we get additional information and context to them.” Murphy added that Shkreli’s new business does not run afoul of the court order because the new company “is a software company, rather than a drug company.”
Shkreli was released from federal prison last year after serving a shortened sentence. He was convicted of securities fraud in 2017 for mismanaging two investment funds.
Shkreli also infamously raised prices for the life-saving medication Daraprim by 4,000 percent while he was head of Turing Pharmaceuticals. His conduct earned him the title of “most hated man in America” by multiple publications. More recently, he was the subject a 134-page ruling in 2022 by the U.S. District Court for the Southern District of New York that banned him for life from participating in the pharmaceutical industry, as part of a separate FTC antitrust case against him.
That legally binding order triggered a new investigation into Shkreli’s activities in October, when public reports indicated he had co-founded a new “Web3 drug discovery software platform” known as Druglike, Inc.
When the FTC emailed Shkreli to get documents from him and to schedule an interview about the matter, Shkreli repeatedly missed deadlines and allegedly slow-walked his responses, according to a recent FTC court filing.
“Shkreli has not attempted—much less ‘diligently,’ as Second Circuit law requires—to comply with the Order in a reasonable manner,” the filing said.
The FTC also said Shkreli had been ordered to make his multimillion-dollar payment — representing a refund of his ill-gotten Daraprim gains — by March 6, 2022. But in fact, the FTC said, “to date he has paid nothing toward the judgment and has made no efforts to comply with this provision of the Order.”
As far as his involvement with Druglike, the FTC added: “Shkreli’s noncompliance is also clear and unambiguous: Shkreli has not submitted a supplemental Compliance Report, provided access to relevant documents, or made himself available for an interview.”
Discussion Questions
- Define contempt (of court).
Contempt of court, also referred to simply as “contempt,” is the disobedience of an order of a court. Additionally, conduct tending to obstruct or interfere with the orderly administration of justice also qualifies as contempt of court. Under the Federal Rules of Civil Procedure (FRCP) Rule 70, a party that fails to perform a specific act in accordance with a judgement by a court can be charged with contempt and subsequently penalized. The purpose of recognizing contempt of court is to secure the dignity of the courts and the uninterrupted and unimpeded administration of justice. - What is the potential punishment for contempt?
A judge who feels that someone is improperly challenging the court’s authority has the power to declare the defiant person in contempt of court. There are two types of contempt: criminal and civil.
Criminal contempt occurs when the defiant person interferes with the ability of the court to function properly (e.g., yelling at a judge). This is also called direct contempt because it occurs directly in front of the judge. The defiant person may be fined, jailed, or both as punishment for their act.
Civil contempt occurs when the defiant person willfully disobeys a court order. This is also called indirect contempt because it occurs outside the judge’s immediate realm, and evidence must be presented to the judge to prove the contempt. Civil contempt is relevant in the Martin Shkreli case, since the allegation against him is that he is defying the court order to never work in the pharmaceutical industry again. For civil contempt, the defiant person also may be fined, jailed, or both as punishment for their act. The fine or jailing is meant to coerce the person into obeying the court, not to punish them, and the person will be released from jail as soon as they comply (or indicate a clear intent to comply) with the court order. - Based on the information provided in this article, as well as the articles referenced in “Teaching Tip 1” and “Teaching Tip 2” of this newsletter (“Martin Shkreli Convicted of Securities Fraud, Conspiracy,” “Martin Shkreli Sentenced to 7 Years for Securities Fraud,” and “Judge Bans ‘Pharma Bro’ Martin Shkreli from Pharmaceutical Industry ‘for Life’”), should Mr. Shkreli be banned for life from working in the pharmaceutical industry? Why or why not?
This is an opinion question, so student responses may vary. As indicated in the article, Shkreli infamously raised prices for the life-saving medication Daraprim by 4,000 percent while he was head of Turing Pharmaceuticals, and the 2022 ruling by the U.S. District Court for the Southern District of New York banned him for life from participating in the pharmaceutical industry as part of an FTC antitrust case against him. Daraprim treats a rare parasitic disease that strikes pregnant women, cancer patients, and AIDs patients. Although it might be easy to understand why Mr. Shkreli has been referred to as the “most hated man in America,” reasonable minds might differ in terms of whether a lifetime ban from working in the pharmaceutical industry is a fitting punishment.