Former drug company executive Martin Shkreli and his lead attorney Benjamin Brafman arrive at U.S. District Court for the fourth day of jury deliberations in his securities fraud trial in the Brooklyn borough of New York City, U.S., August 3, 2017.
Amr Alfiky | Reuters
A federal judge temporarily barred notorious “pharma bro” Martin Shkreli from streaming or disseminating copies of a one-of-a-kind Wu-Tang Clan album he had forfeited as part of his criminal fraud conviction in 2017.
The order by Judge Pamela Chen on Tuesday night came a day after the company that had bought the album, “Once Upon a Time in Shaolin,” for $4.75 million sued Shkreli in U.S. District Court in Brooklyn.
The suit claims that Shkreli, who remains on supervised release in his criminal case, apparently retained copies of the hip-hop album after it was sold, and played it online as recently as Sunday in violation of his forfeiture order.
A spokesman for the U.S. Attorney’s Office in Brooklyn told CNBC “no comment” on Wednesday when asked if prosecutors were taking action against Shkreli in response to the claims in the civil suit by the Cayman Islands-based company PleasrDAO.
Chen in her order Tuesday wrote that PleasrDAO, “is likely to succeed on the merits” of the complaint, “or raise significantly serious questions going to the merits of the Forfeiture Order, violations of the Defend Trade Secrets Act,” and “misappropriation of trade secrets.”
The judge also scheduled a hearing for June 25 in the case, where she could continue the injunction on Shkreli, and order him to give the plaintiff an inventory of any copies of the album he retained.
Steven Cooper, a lawyer for PleasrDAO, said Wednesday that he could not comment on whether he has been in touch with prosecutors on Shkreli’s alleged violation of his forfeiture order.
“I wouldn’t be surprised based on that activity that prosecutors or the probation office would be interested in this matter,” Cooper told CNBC.
The attorney said his client had sued Shkreli because “his conduct ramped up dramatically” and because PleasrDAO plans to play some songs from the album at an exhibit at a museum in Tasmania, Australia, begining later this week.
The suit said that on Sunday, Shkreli wrote a post on his social media account on X that said, “well @pleasrdao blocked me from their account so I think I will play the album on spaces now.”
Less than an hour later, Shkreli’s X account hosted a Spaces session entitled “Wu tang official listening party” and tweeted “Never heard before wu tang stream,” according to the suit.
“During the Spaces session, Shkreli played music from the Album that any participant could hear. According to X, 4.9 thousand listeners ‘tuned in,'” the suit said.
Cooper said, “His pattern of bad behavior has gone on for a very long time, and a lot of it was directed against my client.
“”The fact that he retained copies [of the album] were violative of his forfeiture, and there could be consequences other than the civil complaint,” Cooper said.
A lawyer for Shkreli did not immediately respond to a request for comment.
Shkreli, 40, was convicted of securities fraud in 2017. Jurors found he had misled investors about the performance of two hedge funds he ran, and that conspired to fraudulently manipulate stock shares of a drug company he founded.
Before his conviction, Shkreli became nationally notorious in 2015 for hiking the price of the life-saving drug Daraprim overnight by more than 4,000% at another pharma firm he ran.
In January, a federal appeals court upheld a lifetime ban on Shkreli from working in the pharmaceuticals industry, and an order to pay more than $64 million in disgorged profits for blocking competition to Daraprim.
Shkreli was released from prison in May 2022 and is now serving a three-year term of supervised release.
As part of his criminal sentence, Shkreli was ordered to forfeit nearly $7.4 million to the U.S. government and to surrender a set of assets to satisfy that order.
The assets included “Once Upon a Time in Shaolin,” the Lil Wayne album “Tha Carter V,” an engraving on paper by Pablo Picasso, and $5 million held in an E-Trade brokerage account.
Shkreli bought the Wu-Tang Clan album in 2015 for $2 million, setting a Guinness world record for the most expensive musical work ever sold. The 31-track, two-disc Wu-Tang Clan album, came in a hand-carved, nickel-and-silver-cased box set, which itself was nestled in a larger leather box.
In July 2021, while Shkreli was still in prison, the album was sold by the government for an undisclosed price to a buyer who was not publicly identified. At the time of the sale, Shkreli owed almost $2.4 million on the forfeiture order.
In PleasrDAO’s lawsuit, the company said it bought “Once Upon a Time in Shaolin” in two separate transactions in 2021 and 2024, for about $4 million and $750,000 respectively. The second purchase, the suit says, was for “the copyrights in and exclusive right to exploit the recordings.”
PleasrDAO’s suit described the company as “an international entity that collects and publicly displays culturally significant media and materials with the intent of creating ecosystem experiences that encourage participation and interaction throughout the United States and other countries.”
The suit said the Wu-Tang Clan “Album was supposed to constitute the sole existing copy of the record, music, data and files, and packaging.”
“It now appears, however, that Shkreli improperly retained copies of the data and files at the time of the forfeiture and has released and/or intends to release them to the public,” the suit said.
“Such actions would cause PleasrDAO to incur significant monetary and irreparable harm, and give rise to numerous claims for relief under the forfeiture order and common law,” the suit said.
The suit notes that when Shkreli bought the album in September 2015, he and the album’s producers executed an agreement that barred Shkreli for 88 years from duplicating or exploiting the album “for any reason other than for ‘exhibition or playing’ in spaces not normally used as venues for large concerts.
The complaint also cites the forfeiture order imposed in Shkreli’s criminal case, which enjoins him from any act that would diminish, damage or dissipate the assets he surrendered and any act that would affect the availability or value of those assets.
PleasrDAO said in the suit that during live streams to followers on social media platforms beginning in June 2022, a month after his release from prison, Shkreli admitted he played the “Once Upon a Time in Shaolin” to followers on those streams.
“On June 22, 2022, during another live stream on YouTube, Shkreli was asked if he still has a copy of ‘Once Upon a Time in Shaolin.’ Shkreli said, ‘I do. I was playing it on YouTube the other night even though somebody paid $4 million for it,'” according to the suit.
Last month, the suit alleged, “Shkreli appeared on a video-recorded podcast posted on YouTube.”
“In the video, Shkreli stated that he ‘burned the album and sent it to like, 50 different chicks[.]’ He then asked the interviewer, ‘Do you know how many [expletive] that album got me? You think I didn’t make a f—ing copy of it? Are you joking?'” the suit said. “He also stated that ‘thousands of people have listened to it. I sent the mp3s to all these people.'”