Martin Shkreli is in prison. So things aren't great to begin with. And yet his life is about to get a lot worse.

It's all in the wake of news this week about what he's actually been doing in prison--allegedly, anyway.

Known as the "Pharma Bro," and the "most hated CEO in America," Shkreli rose to infamy after he increased the cost of a drug used to treat malaria, cancer, and AIDS by 5,455 percent (from $13.50 to $750 a tablet).

He's serving seven years for securities fraud in an unrelated case. When he was originally locked up, I predicted he was going to have a hard time inside, based on the fact that "he has a really difficult time controlling his ego and his mouth."

It turns out I didn't know the half of it.  

'Little more than a contraband smartphone'

He's now squarely in the cross hairs of the U.S. Bureau of Prisons, after The Wall Street Journal reported this week that Shkreli has been brazenly leading his multimillion dollar pharmaceutical company from jail.

More specifically, he's been running it "from a top bunk in a 12-person prison cell," while using "little more than a contraband smartphone" along with the prison email system to give orders.

Oh good Lord. The Journal listed a long series of infractions that seem destined to lead to much more trouble for the 35-year-old former CEO:

  • using a cell phone in prison (contraband, and potentially a new criminal charge)
  • running a business ("Conducting a business, in any way, is a prohibited act," according to a prison handbook)
  • paying off other inmates' gambling debts (as described in the Journal article)

Bad enough to get caught doing things like this in prison. You'd have to imagine it's exponentially worse when the prison learns about it from a 2,500-word article in a major American newspaper.

'Grab a hair'

"He's in serious trouble," Larry Levine, who served 10 years in federal prison and now runs a company called Wall Street Prison Consultants, told me. "They will move him in custody. He'll lose privileges. He'll spend time in the hole, which is the SHU. Telephone, visiting, commissary, for sure."

And on top of that a bigger risk is looming: that the prison authorities will pack him up and move him to a more secure prison.

The one he's in is designated "low security." That's already unusual, because white collar criminals wind up in federal prison camps, which don't even have fences in many cases.

But the judge in Shkreli's case had revoked his bail for--insanely, let's just say it--trying to get followers to go to a Hillary Clinton book signing, and somehow "grab a hair" from her. And that apparently led to him being held in a more secure "low" facility.

That also means moving him to something more restrictive means at least medium security, which sounds a lot more like a 21st century version of the prison in The Shawshank Redemption, if you're looking for a cinematic metaphor. 

'He's a moron'

"He's a moron ... They will move him in custody," Levine predicted. "He'll be moved to medium where there's people doing life sentences, people who do some really violent stuff. I was in a medium where someone got killed in a TV room for changing the channel."

Most immediately, Levine said, he'd predict Shkreli could spend 180 days in solitary confinement while prison officials find his cell phone, pull the SIM card, track down every number it's called, and figure out what other inmates might have used it, too.

"Cell phones are a big deal," Levine continued. "'He breached the security and good orderly running of the institution.' That's their language. If I could read his incident report that's what it would say. 'He exposed the public to danger. He could have used the phone to coordinate an escape.' I know the mindset."

In fact, it's possible that an inmate caught with a phone could face an additional criminal charge and more jail time as a result -- to say nothing of losing credit for "good time" he'd already received.

Sure enough, the government confirmed Friday that it's opened an investigation into Shkreli's conduct in prison in the wake of the article.

Who's the source?

It's well worth reading the full Journal article--full of details about the names of his friends in prison, and how Shkreli was invited to play in a prison band with a group of child molesters, and lots of narrative about his company and power struggle.

There's some speculation that Shkreli himself might be one of the Journal's sources.

For anyone else, you'd say that's crazy, given how much he has to lose as a result. Another possibility, maybe more likely, is that others involved in his power struggle over the company, now called Phoenixus, might have been the first to talk to the Journal.

And Shkreli apparently has been blogging and posting to a Facebook account via an intermediary since he's been locked up. The Facebook account seems like it might have been deactivated after the Journal article, but the blog is still up. 

The lead item right now?

"In this Wall Street Journal article, who do you think is trying to get Your Boy in trouble? Name them in the comments below who you think did it."

I suspect we'll find out the answer to that eventually. But the brutal truth is that no matter who talked, Shkreli only has himself to blame. 

Published on: Mar 9, 2019
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