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Comment by gfosco | Hacker News Reader

Harsh sentence for a case where all the money was paid back.

"Your honor, I must protest this sentence! After all, my clients paid back all the money they stole from the bank!"

Not really a good analogy. They invested with him, he lost it but found another way to make that money back. There wasn't any theft.

If I give you money to invest in Alphabet stock and you instead invest it in lottery tickets, that seems like theft to me regardless of whether the lottery tickets pay off or not.

it surely does sound like people are looking for excuses for the guy. it was fraud, and he has only himself to blame.

I think it's just that so many people don't want to have to think about their intentions when they do things.

He not only lost it, he lied and said he did not lose it and that their money was safe and sound. Big difference. When you fabricate numbers and lie to people who have given you money, you're committing fraud, regardless of your ultimate intentions or if you manage to recover the money through other means.

He wasn't prosecuted for theft (or embezzlement). He was prosecuted for fraud.

Your sarcasm is showing your ignorance of the law. The level of monetary damages are absolutely considered when sentencing.

That is why Bernie Madoff, who caused billions in damages, got a very harsh sentence.

You're sentenced based on the severity of the illegal act, not based on the severity after you tried to smooth things over. So he would be sentenced based on the millions he defrauded, not based on the fact that the people were made whole in the long run.

Source: I just asked my girlfriend, a third year law student. Also, you know, the judge for Shkreli's case: https://www.reuters.com/article/us-usa-crime-shkreli/pharma-...

"[U.S. District Judge] Matsumoto said in Monday’s order that under federal law, all of the money that investors put in Shkreli’s funds as a result of his fraud, about $6.4 million, must be considered loss. She also said he should get no credit for paying investors back because he only did so after they became suspicious. "

Worded differently, it doesn't sound like that would be such an unreasonable sentencing argument?

That was his argument. The judge decided that payback after the loss was mostly irrelevant, and loss is loss, even if never realized.

Just because it didn't work for Shkreli doesn't make it any less of a reasonable argument in general.

In Shkrelis case the judge dismissed this argument specifically because he only paid his investors back after they had already became suspicious, had he done so before that his behavior would have almost certainly been viewed differently.

It is absolutely normal to take things like this into account during sentencing.

And since it seems to be terribly difficult for some people here to understand, I'm not defending Shkreli and nor do I think there's anything wrong with his sentence.

All comments here seem to be terribly difficult to understand.

illegal is illegal

of course, but 7 years is a very long time. It could have been shorter, considering the lack of actual damages.

Why do you believe there were no actual damages? Because investors eventually got their money back after years of fraud? (I would also argue the investors in Retrophin lost millions in returns due to Shkreli's paying off MSMB Capital investors, but that is not what he was convicted of)

How much longer than normal were investor funds locked up for?

They actually had their money tripled. Tripled. Tripled.

Were this a civil case for damages, that would be more relevant. The criminality of getting other people to give up their property with false representations is not eliminated by paying them back plus extra later, however.

Civil damages mostly addresses the harm caused, criminal punishment is less about the harm caused by a particular act and more about the risk to society of normalizing the behavior.

Yeah, they got lucky. Can you guarantee that the next set of investors he pulls this fraud with will be as lucky?

lesson one: don't play games with other people's money, unless they won't have any left when you're done. The second part is secret /s

It might be interesting to try to map this onto English law and see what he'd get over here.

https://www.sentencingcouncil.org.uk/wp-content/uploads/Frau...

Look at "Fraud by false representation", "fraud by failing to disclose information", "fraud by abuse of position", "Conspiracy to defraud", and "False accounting" (because some of these feel useful and the sentencing is similar).

When looking at culpability I'd say he matches all of these except targeting vulnerable people:

   A – High culpability
   A leading role where offending is part of a group activity
   Involvement of others through pressure, influence
   Abuse of position of power or trust or responsibility
   Sophisticated nature of offence/significant planning
   Fraudulent activity conducted over sustained period of time
   Large number of victims
   Deliberately targeting victim on basis of vulnerability

Even if these were not present he doesn't match the lower culpability section.

When looking at harm there are 2 categories: he probably meets the highest level for the first category:

    Category 1   £500,000 or more   Starting point based on £1

And if he repaid all the money he probably meets the lowest for the second.

With culpability level A and harm level 1 you'd start with a 7 year sentence. Then you'd look at aggravating factors (did he try to hide the crime; did he try to prevent people reporting it) and mitigating factors (did he show remorse; was it a doomed enterprise; did he have a serious medical condition requiring intensive imminent treatment; etc) to increase or decrease.

how many people get 7 years for less. time the finance jerks get treated like ordinary people.

Well if it's any consolation he'll probably be out in 3.

> Well if it's any consolation he'll probably be out in 3.

The US federal criminal justice system has no parole; other than Presidential pardon or commutation, or the sentence being overturned judicially, you stay in prison for the full term of your sentence, reduced by a maximum of 54 days per year of sentence by good conduct credits. So, best case for a seven year sentence is just under six years.

The judicial system doesn't work like that sadly

'illegal is illegal' is not at all how sentencing works.

Edit: Not sure if you guys are aware of this, but sentencing is actually completely separate from the part of the trial where they decide whether you're guilty or not.

Unfortunately it's how he got into the mess. Without illegal actions there are no sentencing procedures.

With all due respect, I fail to see how this is at all relevant. Could you help me out here?

It feels like you and others here are suggesting that we should not discuss sentencing policies in general because Shkreli was guilty, that seems insane to me.

It's not quite that easy, unfortunately. The vast majority of us, just by sheer ignorance of the contents of the enormous Federal Register, unknowingly commit at least a few federal felonies per year.

If the Feds want you in prison, they'll find a way.

> The vast majority of us, just by sheer ignorance of the contents of the enormous Federal Register, unknowingly commit at least a few federal felonies per year.

Federal felonies (and federal crimes more generally) are defined by the US Code, and almost entirely Title 18 of that Code, not the Federal Register.

The Federal Register is the regular publication of regulatory process documents, most of which is notices and procedural background information; the operational material from the Federal Register is codified in, for the most part, the Code of Federal Regulations (which is much smaller than the Federal Register; while not a perfect analogy, you could think of the Federal Register as the Git repository for the Code of Federal Regulations, with commit messages that usually far exceed the size of code changes.)

The CFR itself is occasionally relevant to defining the parameters of crimes (not all of which are felonies), in that in certain cases Congress has made violation of certain regulatory orders criminal. But it's only a very small share of the CFR (itself much smaller than the Federal Register) that is relevant to that.

This is absolutely correct. There are shelves and shelves of laws that no one really knows. If someone wants to go after you, it won't take much research.

He didn't accidentally defraud people. He knew exactly what he was doing.

Yes, but that's not the point. The point is the US government has many ways of throwing people in jail it doesn't like, including me or you. That's doesn't equate with a free society.

Neither does being perfectly free to defraud investors.

Did anyone actually suggest that anywhere here?

It doesn't seem relevant to the thread, where he knowingly and willingly engaged in a massive theft-related offence against large numbers of people.

That's not "the government is out to get you", that's "the government punishes crooks".

Especially given that the funnelling other money to cover the losses happened after some investors and the SEC were already on to the fraud.

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