Professional Documents
Culture Documents
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Plaintiff,
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-against)
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MARTIN SHKRELI,
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EVAN GREEBEL,
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MSMB CAPITAL MANAGEMENT LLC,
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and
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MSMB HEALTHCARE MANAGEMENT LLC, )
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Defendants.
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_________________________________________ )
SECURITIES AND EXCHANGE
COMMISSION,
15-CV-7175-KAM
ECF CASE
Shkreli does not appear to be asserting that he should be immune from discovery if the
governments motion is denied. Rather, we understand Shkrelis position to be that he will retain
the right to assert his Fifth Amendment privilege against self-incrimination in discovery. Such
an assertion would entitle the Commission to an adverse inference and may lay the foundation
for a motion for summary judgment. E.g., SEC v. Pittsford Capital Income Partners, L.L.C., No.
06 Civ. 6353, 2007 WL 2455124 (W.D.N.Y. Aug. 23, 2007) (granting summary judgment in part
based on assertion of Fifth Amendment privilege). Shkreli writes cryptically, however, about
legitimate government interests that may require postponing specific disclosures during the
discovery process. Shkreli Opp. at 7 (docket no. 22). To the extent Shkreli is implying he will
not have to make full disclosure in discovery in this case without asserting his Fifth Amendment
privilege, thus essentially seeking the same one-way street as Greebel, the Court should deny
such a request.
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In Shkrelis opposition to the motion to stay, he cites to Twenty First Century Corp. v.
LaBianca, 801 F. Supp. 1007 (E.D.N.Y. 1992), but he then flips it on its head. Shkreli Mem. in
Opposition to Motion for a Stay at 5-6. One factor that Twenty First Century says courts should
consider in deciding whether to stay a civil case pending a criminal case is prejudice to the
plaintiff. Shkreli argues that the plaintiff Commission cannot complain of prejudice if the stay is
denied. Shkreli Opp. at 6. That is clearly not the test articulated in Twenty First Century
indeed, it is the opposite. And, as the Commission does not oppose the stay request, there is
demonstrably no prejudice to the plaintiff Commission.
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such, it is simply (and grossly) unfair. See SEC v. Nicholas, 569 F. Supp. 2d 1065, 1070 (C.D.
Cal. 2008) (granting stay in SEC case and noting that proceeding with discovery would be onesided in favor of defendants).
Greebels contention that he needs discovery to commence because of the harm he will
suffer because of the unchallenged allegations in the Commissions complaint is baseless. The
allegations are just that: allegations. And Greebel can file an answer to the complaint to
challenge the allegations. Moreover, even if he were to conduct discovery, that would in no way
challenge the allegations discovery is not made public.
The Court should see Greebels request for what it is: a blatant attempt to obtain wideranging discovery to assist his defense of the criminal proceeding while Greebel provides no
discovery to the Commission (and simultaneously gains an advantage over the Commission in
preparing for trial). See, e.g., SEC v. Beacon Hill Asset Mgmt. LLC, No. 02 Civ. 8855, 2003 WL
554618 (S.D.N.Y. Feb. 27, 2003). If Greebel genuinely wishes to proceed with discovery in this
proceeding so he can go to trial promptly to seek to clear his name from the taint of the
Commissions allegations, then he and Shkreli must be willing to provide full discovery as well:
identify their witnesses, produce their documents, respond to interrogatories, respond to requests
for admissions, and testify at depositions; or alternately, they can assert their Fifth Amendment
privilege and accept the consequences of the negative inference against them flowing from that
assertion of the privilege. Absent full discovery on both sides, Greebels application for a
limited stay is patently unfair. The Court should therefore deny Greebels application.
CONCLUSION
The Court should deny Greebels Application for a Limited Stay.
Dated: February 18, 2016
New York, New York
Respectfully submitted,
/s/ Paul G. Gizzi
/s/ Eric M. Schmidt
Paul G. Gizzi (gizzip@sec.gov)
Eric M. Schmidt (schmidte@sec.gov)
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
200 Vesey Street, Suite 400
New York, NY 10281-1022
(212) 336-1100
CERTIFICATE OF SERVICE
I certify that on February 18, 2016, I electronically filed the foregoing PLAINTIFF
SECURITIES AND EXCHANGE COMMISSIONS REPLY TO DEFENDANTS
OPPOSITION TO THE GOVERNMENTS MOTION TO STAY with the Clerk of this Court
using the CM/ECF system, and I am relying upon the transmission of the Clerks Notice of
Electronic Filing for service upon all parties of record in these cases.