Court Hawk

Martin Shkreli Files Suit Against the Son of a Former Investor

Martin Shkreli is in jail for fraud, but that hasn’t stopped him from claiming that he was the victim of fraud. He is suing one of the witnesses against him in his 2017 trial and the son of a former investor.

Shkreli’s claims come from a civil judgement against him last December. In that New York state court case, it was determined that he owned George Yaffe $420,000 because Shkreli didn’t pay a $250,000 promissory note from 2012. The annual interest for the note was 8%.

Yaffe wants to collect on that judgement, but Shkreli claims that he has no legal obligation to pay the money.

Shkreli and the Yaffes’ Business Dealings

In Shkreli’s conspiracy and securities fraud trial, George Yaffe’s son, Lee Yaffe, testified that his father invested $100,000 in Elea Capital. George lost everything when the hedge fund collapsed. Lee testified that George spent the next five years trying to recuperate his money.

When George Yaffe wasn’t able to get his money back, Lee Yaffe and Shkreli made a deal to pay off George’s investment. Lee Yaffe would receive a $200,000 consulting deal with Retrophin and 15,000 shares of the business.

Lee did not do the consulting, which he claimed was a sham, and sold the shares in the company. He later arranged a deal with the government to pay back the money to avoid being prosecuted.

Shkreli’’s Claims

Shkreli is claiming that the Yaffes wronged him and he shouldn’t owe money.

The lawsuit alleges that Lee Yaffe pressured Shkreli to “man up” and repay George Yaffe after Elea failed and he did not get his money back. Yaffe allegedly forced Shkreli to sign the promissory note for $250,000, an amount more than double the original investment.

Shkreli claims that the Yaffes knew he did not owe anything from the failed business, saying that both Yaffes were familiar with the risks of hedge funds. He also claims that the amount of interest is not legal under New York law.

George Yaffe’s lawyer says that Shkreli’s claim is frivolous because Shkreli is complaining about a document that he drafted.

Shkreli is asking for monetary damages.