Suppose you lent 10,000 to a friend and the friend promised to return it within a year. A year later, your friend doesn't pay you back and makes a bunch of excuses. Instead, he takes the 5,000 he has left to the casino, gambles it on the roulette wheel and by luck manages to turn that into 30,000 and pays you back 1.5 years later. I don't think you would be happy with that situation...
> “I asked Fred where the funds had come from, and he responded, ‘The meeting with the General Dynamics board was a bust and I knew we needed money for Monday, so I took a plane to Las Vegas and won $27,000.’ I said, ‘You mean you took our last $5,000— how could you do that?’ He shrugged his shoulders and said, ‘What difference does it make? Without the funds for the fuel companies, we couldn’t have flown anyway.’ Fred’s luck held again. It was not much, but it came at a critical time and kept us in business for another week.” [0]
[0]: http://www.huffingtonpost.com/2012/10/15/fred-smith-blackjac...
Shkreli may have been able to work his pseudo-Ponzi-ish scheme to investors' benefit. But it is pretty easy to look up the sordid history of the vast majority of Ponzi-type schemes, to see why this type of activity is generally illegal.
A. If you get caught, you're going to prison
But more importantly -
B. If, however, you work hard to ensure the people you defrauded are not harmed by your fraud, your sentence will be lighter than if you were the type of fraudster to cut and run.
I don't know about you, but in light of the fact that fraudsters are always going to exist, I'd like to incentivize the "benevolent fraudsters", rather than pretending (through equal sentencing) that there is no difference between the two.
I'd be joyous if the return was better than I could expect to make otherwise, say > 10-20%.
Investments are risky. They are not automatic.
What I wouldn't be happy about is if I was lied to about the risk of an investment. That is closer to what this case is about. The money gained or lost doesn't really matter.
This isn't ok because the original investor was paid off. That's also how Ponzi schemes work - the original investors are paid off (I know, here the money seems to be generated from Retrophin, but the behavior is the same).
This gave me a perspective: https://www.bloomberg.com/view/articles/2015-12-17/martin-sh...
Let me add to this: Buying a company you have a government mandated monopoly on (patent) that owns a product that people will die if they don't take (inelastic demand), and has a huge barrier to entry for new, competing entrants (FDA) is conceivably less risk than throwing chips on a roulette wheel.