SEC Obtains Final Judgment Against Lawyer Who Assisted Fraud
Lit. Release No. 25065 / April 6, 2021
Securities and Exchange Commission v. Martin Shkreli, et al., 15-cv-7175 (KAM) (E.D.N.Y.)
On April 5, 2021, the United States District Court for the Eastern District of New York entered a final consent judgment against Evan Greebel, the former lawyer to Retrophin, Inc., a publicly traded pharmaceutical company founded by Martin Shkreli.
The SEC’s complaint, filed on December 17, 2015, alleged that Greebel assisted certain fraudulent conduct orchestrated by Shkreli. According to the SEC’s complaint, from September 2013 through March 2014, Shkreli, who was then Retrophin’s CEO and also controlled various hedge funds, fraudulently induced Retrophin to issue stock and make cash payments to certain disgruntled investors in Shkreli’s hedge funds. Specifically, the complaint alleged that Shkreli had investors enter into agreements with Retrophin that misleadingly stated that the payments were for consulting services, when in fact the payments were for the release of potential claims against Shkreli. This alleged misconduct was, according to the complaint, aided and abetted by Greebel, who was Retrophin’s outside counsel and served as corporate secretary. The complaint alleged that Greebel drafted sham consulting agreements and failed to disclose to Retrophin’s Board of Directors the true purpose of the agreements.
Greebel was convicted in a related criminal case. In the Commission’s action, Greebel consented to the entry of a final judgment enjoining him from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and barring Greebel from serving as an officer or director of a public company. The final judgment does not impose civil money penalties in light of Greebel’s conviction and sentence in the criminal case.
The SEC’s litigation against Shkreli is continuing.
The SEC’s investigation was conducted by Gerald Gross and Eric Schmidt, and the litigation is being led by Paul Gizzi and Mr. Schmidt. The case is being supervised by Sanjay Wadhwa.