CEO accused of fraud and his lawyer no longer protected by attorney-client privilege, rules judge

The attorney-client privilege, deemed one of the sacred cornertones in the legal profession that protects the rights of the accused and his legal counsel, no longer apply to the case of former pharmaceutical CEO, Martin Shkreli, and his former lawyer, Evan Greebel. U.S. District Court Judge Jack Weinstein based his ruling on the rare exception that breaks through the privilege, namely that the counsel of the accused is himself complicit in the crime. Prosecutors built a case against Greebel by providing inarguable proof of his complicity and questionable conduct.

According to the Wall Street Journal Law Blog, Shkreli illegally obtained funds from the pharmaceutical company Retrophin Inc., where he was CEO, to pay off nivestors who had lost money in his hedge fund company, MSMB Capital Management. Greebel was legal counsel both for Retrophin, as well as for Shkreli personally; he was a partner in the law firm, Kaye Scholer LLP.  Greebel held powerful influence over his client, the prosecutors alleged.

The prosecutors were spurred into asking Weinstein to pierce through both men's attorney-client privilege by Retrophin's own move to waive its own privilege. Retrophin, who has not been accused of any illegal action, turned over documents and communications between itself and Greebel. However, it could not do the same to any documented interaction between Greebel and Shkreli while he was still CEO because of their attorney-client privilege, which extended outside the boundaries of Retrophin's legal matters.

A related Reuters piece reveals that Shkreli himself invoked attorney-client privileges. Retrophin, honoring their former CEO's wishes, gave the prosecutors document with heavy redactions. This was another factor that prompted the government to seek the lifting of the privilege between Shkreli and Greebel. The Reuters piece also states that Shkreli stands accused of siphoning off $11 million dollars from Retrophin to cover the losses of his hedge fund.

Both Shkreli and Greebel have pleaded not guilty to the charges.

Fierce Biotech says that Shkreli remains defiant and unrepentant to the end. He proclaims his innocence at the fraud charges while continuing to seek ways that what he says cannot be used by the U.S. prosecutors against him.

Tags

attorney-client privilege, Martin Shkreli, Evan Greebel, Retrophin, securities fraud

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