Ever since the news broke Thursday that Turing pharmaceuticals CEO Martin Shkreli had been arrested and charged with fraud, the Internet has been abuzz with the big question his arrest naturally raises: What will happen to the new Wu-Tang Clan album?
If Shkreli is ultimately found guilty, the next stop for the sole copy of the legendary hip-hop group’s Once Upon a Time in Shaolin is likely the Asset Forfeiture Unit of the U.S. Marshals Service – that is, assuming he hasn’t destroyed or hidden it.
Okay, backing up a bit: Shkreli is the 32-year-old “pharma bro” who came into the public eye this year when his company purchased the rights to a decades-old drug that treats a rare disease and jacked the price up by 5,000 percent. Under massive amounts of negative publicity and public opprobrium, he said he would consider lowering the price. Then, months later, he bragged that he wished he had raised the price even further.
Wu-Tang Clan -- the wildly influential, New York-based hip-hop group that launched the careers of many well-known rappers -- earlier this year announced that it was recording a new album and would make a single copy of it, which would be auctioned off to the highest bidder. The owner could do as he or she pleased with it, enjoying it privately or giving copies away for free, but would not be allowed to distribute it for money.
Naturally, the guy who bought it was Shkreli. He paid $2 million for the recording, and aside from his trolling Wu-Tang fans by bragging that he had it, that was the last anyone heard of it.
But with Shkreli facing a seven-count indictment for defrauding investors in his hedge fund, the status of the album may soon become a little clearer.
The final element in the 29-page indictment of Shkreli is what’s known as a “criminal forfeiture allegation.” It informs the accused that in the event of a conviction, the government will seek a court order forfeiting “any property, real or personal, which constitutes or is derived from proceeds traceable” to crimes committed by the defendant.
Unless Shkreli can somehow prove that the millions he spent on the money is unconnected to the funds named in the indictment, that property will probably include Once Upon a Time in Shaolin.
Assuming Shkreli is able to make bail, he will probably have time to listen to the album if he wants to. Under federal law, except in special cases, criminal asset forfeiture can only take place after someone is convicted of a crime and a judge declares the property forfeit. In addition, the indictment does not name specific things it means to seize in the event Shkreli is found guilty – something the government will have to do in advance of any action to take his property.
It’s possible that Shkreli’s assets could be frozen in advance of a conviction, but there is no indication in the indictment that the government is seeking an asset freeze.
If Shkreli is convicted, the U.S. Marshals Service would take control of the named property, presumably including the album, and would be put in charge of selling it off, most likely at auction, to the highest bidder. The Marshals Service manages more than $2 billion in seized assets at any given time, conducting auctions all around the country of everything from car to jewelry to furniture.
But Wu-Tang Clan fans hoping that a repentant Shkreli might get out on bail and release the album to generate some goodwill are probably out of luck. The album is only worth what it’s worth because of its rarity, and releasing it at this point would destroy that value.
The forfeiture count in the indictment notes that the government will go after other property, unrelated to the proceeds of criminal activity, if those proceeds are “substantially diminished in value.”
So until Shkreli gets locked up or acquitted, Once Upon a Time in Shaolin will probably remain figuratively locked up in his possession for the foreseeable future.