follow it, here.
As often is true -- the longer you live -- the more history tends to rhyme, if not outright echo, at least in the canyons of public companies involved in the life-sciences. And that is why I'm cross-posting it here. You see, Dr. Thomas P. Koestler, of legacy Schering-Plough, is suing in federal court, in Manhattan, to enforce an arbitration award against Mr. Shkreli -- for shares he says he was owed. So, consider this -- as on topic here:
. . .I'm up a little early this perfect Sunday morning, and noticed that as of Friday night, in the federal District courthouse in Brooklyn, Mr. Shkreli's criminal defense attorney had requested a so-called "Bill of Particulars" from the US Attorneys prosecuting his client on eight felony fraud counts -- including criminal securities fraud and wire fraud.
This makes a nearly perfect springboard to (reasonably) speculate that -- in fact -- Dr. Koestler is one of the witnesses the AUSAs intend to call at trial -- about Mr. Shkreli's (allegedly criminal) securities "parking" schemes.
As of Friday, Mr. Brafman is essentially asking the able judge to order the government to "get specific" -- and identify particularly which specific pages (out of a supposed several million), and which people (as witnesses). . . and which transactions (likely including those with Dr. Koestler) are going to be the subject(s) of the US Attorneys' proof of the felony indictments, at trial. Here is that Friday motion in full (as a PDF file).
PathoPhilia is spot on, when she posits that Dr. Koestler was in fact an early investor in, and was personally promised shares by Mr. Shkreli, individually, in the pubic company that became Retrophin, when it began trading, by means of a complicated reverse merger.
Having practiced securities law for now over 30 years, I can say without reservation that I cannot imagine how (outside of a purely charitable gift -- to the NAACP, UNCF or a local AME church) Dr. Koestler's transactions, as described in this SEC filed Retrophin link at pages 30 and 31, and embodied initially in a "Transfer and Donee Representation Letter" ever represented a legitimate for profit commercial transaction. At least not as would be contemplated in a "Donee representation letter".
I have said openly here and elsewhere before that I am fairly suspicious of Dr. Koestler -- for good reason. In this case, I think his well-documented (but still largely alleged) greed allowed him to be used as a dupe. A dupe for Mr. Shkreli.
The "donee" here would have been Dr. Koestler -- and why Mr. Shkreli would "donate" shares to him, for actual "for profit" consulting work, at Retrophin -- is a complete mystery. In fact, I can state affirmatively that in my 30 plus years in the life sciences doing deals, as a securities lawyer, I have never seen -- nor would I allow -- my client, whether a company CEO, or a scientific consultant to be "gifted" equity -- for any actual services to be performed, for the company involved.
In which case, that fact was required to be disclosed under SEC Reg S-K, in the Shkreli era Retrophin SEC filings -- as a "related party" transaction (note pages 93, et seq.) -- and as a potentially conflicted interests transaction.
It was not so disclosed.
|So we are back to Square One: This whole transaction with Dr. Koestler smells to high heaven (in my opinion). And it very likely makes for some great proof, for the able US Attorneys, in Brooklyn. It will be entertaining to watch whether the US Attorneys try to paint Dr. Koestler as yet another in a long line of unwitting dupes of Mr. Shkreli's, or as something more sinister. Afterall, Dr. Koestler has held at least ten high ranking public and private life-sciences positions -- as our prior graphics here and at the legacy Schering-Plough site have documented.|
Now you know. Onward.