Judge Orders Martin Shkreli to Surrender Unreleased Wu-Tang Clan Album

Judge Orders Martin Shkreli to Surrender Unreleased Wu-Tang Clan Album

A federal judge has issued an order compelling former pharmaceutical executive Martin Shkreli to hand over all copies of the unreleased Wu-Tang Clan album, “Once Upon a Time in Shaolin.” The ruling comes nearly three years after Shkreli purchased the sole copy of the album at auction for $2 million. In a 20-page decision, Judge Alison J. Nathan of the U.S. District Court for the Southern District of New York stated that Shkreli had “failed to demonstrate that he has a valid defense to the government’s forfeiture claim.” The Securities and Exchange Commission (SEC) had filed a lawsuit against Shkreli in 2015, alleging that he used proceeds from an illegal Ponzi scheme to finance the purchase of the album. In its complaint, the SEC argued that the album was “property involved in the offense” under the forfeiture statute. The agency claimed that Shkreli had violated the federal securities laws by deceiving investors in the hedge funds he managed. Shkreli’s attorney, Benjamin Brafman, had argued that the SEC’s forfeiture claim was “overreaching” and that the album was not directly related to the alleged Ponzi scheme. However, Judge Nathan found that Shkreli had “purchased the album with proceeds derived from his illegal conduct.” The judge’s order requires Shkreli to turn over all copies of the album to the SEC by November 1, 2022. Shkreli has 14 days to file an appeal.

Background on the Wu-Tang Clan Album

“Once Upon a Time in Shaolin” was conceived by Wu-Tang Clan’s RZA as a work of art that would challenge the traditional concept of album ownership. The album was recorded over seven years and featured collaborations with artists such as Cher and John Frusciante. The unique nature of the album was further emphasized by its exclusivity, with only one physical copy being produced. In 2015, the album was auctioned off in an attempt to raise funds for charity. Shkreli purchased the album for $2 million, igniting controversy due to his previous price gouging of a life-saving drug.

Shkreli’s Involvement and Legal Battle

Shkreli’s purchase of “Once Upon a Time in Shaolin” was met with widespread criticism. Some argued that Shkreli, who had been dubbed the “Pharma Bro” for his controversial business practices, had no right to own such a valuable piece of art. In 2018, as part of his securities fraud trial, Shkreli testified that he had purchased the album solely to listen to it and that he had no plans to sell or profit from it. However, prosecutors presented evidence suggesting that Shkreli had intended to use the album as collateral for a loan or to sell it for a higher price in the future.

Implications of the Judge’s Order

Judge Nathan’s order sends a clear message that individuals cannot use proceeds from illegal activities to purchase valuable assets. The ruling also reinforces the importance of protecting unique and culturally significant works of art. The SEC’s forfeiture claim against Shkreli highlights the agency’s ongoing efforts to recover ill-gotten gains from securities fraud schemes. The case serves as a reminder that financial wrongdoing can have consequences beyond the initial financial loss suffered by investors. The ultimate fate of “Once Upon a Time in Shaolin” remains uncertain. It is possible that the album will be sold at auction to raise funds for the government or used as an educational tool to prevent future securities fraud.