After completing the sale of the only copy of their newest album for $2 million, making it the most expensive record ever, the legendary rappers of the Wu-Tang Clan had a serious case of sellers' remorse. So did many of their fans. The one-of-a-kind rap album, “Once Upon A Time in Shaolin,” became the exclusive property of Martin Shkreli, the pharmaceutical industry executive who had become famous—and widely reviled—for purchasing drugs and inflating prices.
In the Bloomberg Businessweek story revealing Shkreli as the one-and-only owner of the Wu-Tang record, he relished the idea of maybe listening to it with Taylor Swift. Now he might not even get to keep the album.
Federal agents arrested Shkreli at his home Thursday morning on securities fraud related to Retrophin Inc., a biotechnology firm he started and from which he was eventually ousted as chief executive. Shkreli has acknowledged he was “asked to leave” by Retrophin, but insists he had done nothing at the company without the board’s approval.
With the indictment, Brooklyn U.S. Attorney Robert Capers is seeking the forfeiture of “any property, real or personal” acquired with the proceeds of his alleged securities fraud. The Securities and Exchange Commission has also filed a related lawsuit. The dual legal actions raise the possibility that the federal government could eventually take control of “Once Upon A Time in Shaolin” and perhaps put it up for a second auction. At a press conference on Thursday, Capers declined to comment on the record’s fate.
Shkreli couldn't be reached for comment following his arrest, and his lawyer declined to comment to Bloomberg. But in an interview in early December, Shkreli said he started collecting music-related memorabilia after selling shares of Retrophin, following his departure from the company last year. "I was sitting there with a lot of money for the first time in my life," he said in the interview. "I started to take more kind of open eye towards acquiring stuff. You know, I didn't want to buy the normal kind of stuff, any paintings or things like that that don't have a big emotional connection.
Unless the government seeks a formal asset freeze from the court, Shkreli remains free to dispose of the album as he sees fit. "Usually, freezes are sought when there's a risk assets will be transferred overseas and out of reach of authorities," said Jacob Frenkel, a former SEC enforcement attorney. "At the end of these cases, there's usually an understanding that money is fungible."
Even if federal prosecutors don't contend that Shkreli purchased the Wu-Tang album with tainted funds, he still might consider selling it to pay for what is surely to be a costly defense effort. It’s not entirely clear what his rights are under his deal with Wu-Tang, which stipulates that the owner can't release the album commercially for 88 years. Neither Tarik Azzougarh, a Clan “family member” and co-producer of the album, nor Paddle8, the online auction house that handed the sale would comment on Shkreli's arrests and what might mean for the album.
Shkreli would have to find other buyer who would agree to the Wu-Tang Clan’s terms. He would also have to find someone who loves the Wu-Tang Clan as much as he does. In an April 7 letter to Paddle8 obtained by Bloomberg Businessweek, Shkreli made an initial offer of $1.5 million for the record and called himself “a true fan of the Wu-Tang Clan.” The pharma exec even quoted a verse delivered by Wu-Tang luminary Inspectah Deck from “Da Mystery of Chessboxin,’” a song the group’s 1993 debut album:
“So if you wan t come sweating, stressing contesting/you’ll catch a sharp sword to the midsection/Don’t walk to talk, if you can’t talk the talk/Phony niggas are outlined in chalk.”
Other Wu-Tang fans were heartened by the news that the ownership of the album might once be in play. Russell Myer, one of the organizers of a failed Kickstarter campaign to buy the record and release it for free, said he was ready to try again. “If it was suddenly available for auction again, we could start a new Kickstarter project and try to capitalize on the momentum that we already built,” he said. “Maybe we can really get our hands on this thing and release it to the fans that most want to hear it.”
