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Michael Kern

Michael Kern

Safehaven

Michael Kern is a newswriter and editor at Safehaven.com, Oilprice.com, and a writer at Crypto Insider. Michael has several years of experience covering cryptocurrencies, and…

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The Battle For Shkreli's $2 Million Wu-Tang Record

Wu

Martin Shkreli, who was convicted of securities fraud in March and is serving a seven-year prison sentence, may not be challenging the government any longer, at least not successfully—but the new game is who is going to get his money first.

As of last this week, two institutions are fighting are over everything from his Wu-Tang Clan album worth a reported $2 million, to his Picasso painting. All told, they’re fighting over the former drug company CEO’s $7.36 million in assets, and everyone wants to get paid first.

Shkreli owes the IRS more than $1.6 million, but the State of New York is also claiming first access to the $7.36 million in assets Martin Shkreli has been ordered to forfeit.

According to a document filed in a Brooklyn federal court on Monday, an IRS lawyer says that the feds have a “valid and first federal tax lien”.

Shkreli owes the IRS $1,695,397 after he "failed, neglected, or refused to pay in full the liability for the income tax year 2015," according to court papers.

Last month, the state of New York claimed $480,000 from a $1.2 million 2016 state tax bill, which he failed to pay in full. State’s Attorney General Eric Schneiderman said the state should be paid ahead of IRS because the state bill came first. Related: World's 'Most Hated CEO' Gets 7 Years In Prison

Now the IRS is using the same argument claiming the IRS’ November 2016 lien came before both the state tax.

Prior to sentencing, U.S. District Judge Kiyo Matsumoto of the Eastern District of New York found that the government could seize $7.36 million in Shkreli’s assets.

Those assets include the sole copy of a Wu-Tang Clan album, worth $2 million, Lil Wayne's "The Carter V" album, and an unspecified Picasso painting.

Shkreli was sentenced to seven years in prison in March after he was found guilty in August of committing securities fraud for lying to investors about the performance of his hedge funds, MSMB Capital and MSMB Healthcare. He also was found guilty of conspiring to manipulate the stock price of a drug company he founded called Retrophin Inc.

During the trial, prosecutors argued that from 2009, Shkreli lost money in two hedge funds he ran, hid that from his investors, and instead paid them back with money from a third company he owned, Retrophin.

Shkreli’s entire defense had been based on the fact that while he misled investors, they hadn’t really lost any money. And the fact that Shkreli had returned money to investors carried no weight with the judge, who said it was not out of good faith; rather investors had become suspicious.

He is currently appealing both his conviction and his sentence to the U.S. Court of Appeals for the Second Circuit.

Shkreli has been behind bars since September 2017, when a judge revoked his bail after Shkreli offered $5,000 to anyone who could get a lock of Hillary Clinton's hair during her book tour. Related: Nearly Half Of All Americans Are Struggling Financially

Also, in late April, the U.S. Securities and Exchange Commission (SEC) hit Shkreli with a sanction barring him from associating with brokers and ratings agencies.

He achieved public fame by acquiring a drug used to treat a disease fatal to HIV patients and bumping it with a 5,000-percent increase. Shkreli’s Turing Pharmaceuticals bought Daraprim, used to treat toxoplasmosis, and promptly raised its price from less than $13.50 per tablet to $750. Now, Shkreli is behind bars but Daraprim is still at its high price.

But the biggest $2-million question on everyone’s mind is who will get that Wu Tang Clan album?

By Michael Kern for Safehaven.com

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