The news keeps getting worse for the Pharma Bro.
A U.S. district judge ruled Monday that Martin Shkreli, the former drug company CEO who first gained notoriety after boosting the price of an antiviral drug from $13.50 to $750 a tablet, is legally responsible for $10.4 million his victims suffered in his stock fraud and conspiracy case.
The ruling could have far reaching effects on Shkreli, who has been held in a federal jail since September awaiting sentencing. That's because the total financial impact of his crimes is a key factor in how long his prison sentence likely will be.
In the same ruling, Judge Kiyo Matsumoto rejected Shkreli's bid to have his convictions overturned.
Under the federal sentencing guidelines, Shkreli could now easily get a decade or more behind bars. The charges technically carry a maximum sentence of 20 years.
A law professor and criminal law expert quoted by CNBC said the same kind of arrogance that earned Shkreli his reputation as the "most hated CEO in America," during his media appearances back in 2015, and that promoted her to revoke his bail and call him a "danger to society" could really come back to hurt him now.
That's because the sentencing guidelines are just that--guidelines--and the judge has great discretion as to how much time she gives him.
"She could recognize that he is a first offender and give him modest time. Or she could place more emphasis on the amount of the loss and his unrepentant attitude," a Columbia law school professor, John Coffee, told CNBC after the ruling. "This is why most defense counsel instruct their client to appear modest and humble at their trial. Shkreli was the opposite and may pay a high price for his arrogance."
Prosecutors sought to show at trial that Shkreli lied to his investors about two hedge funds he was running, both of which ultimately failed.
Rather than telling his investors, prosecutors said he used profits from his drug company to pay them back, and even make a profit. However, the argued he shouldn't get credit for that repayment--and that the calculation should stop with the between $9 and $20 million they said investors initially lost.
As CNBC reported, Judge Matsumoto rejected Shkreli's argument that his victims essentially lost nothing as a result.
Matsumoto noted, "By the time Mr. Shkreli began to funnel money from Retrophin to his MSMB Capital investors, many of those investors, as well as the Securities and Exchange Commission, had detected the fraud."
Because of that, the judge said, she refused to give Shkreli any credit for paying back the investors with assets from Retrophin. That credit would have reduced the amount of the loss for the purposes of sentencing.
If there is any bright side for Shkreli, it's that the judge's ruling does not necessarily mean he has to come up with a similar amount to pay in restitution or fines; that amount remains to be determined at sentencing.
One of Shkreli's lawyers told Reuters he is disappointed in the ruling, but "stil hopeful that the court will find it in her heart to impose a reasonably lenient sentence on March 9th."