The S&P Schadenfreude Index hit an all-time high yesterday when Martin Shkreli was arrested and indicted for securities fraud related to a hedge fund he used to run.  The SEC sued him, too.  Here’s how the Justice Department describes part of his alleged scheme:

Between September 2009 and January 2011, Shkreli and his co-conspirators falsely represented to potential investors, among other things, that: (i) MSMB Capital was a transparent investment vehicle for sophisticated investors with monthly liquidity; (ii) Shkreli would only receive a one percent management fee per year based on net assets of the partnership; (iii) Shkreli was entitled to receive twenty percent of the limited partners’ net profits for the year; and (iv) MSMB Capital had retained independent certified public accountants as auditors who would issue an audit report on the annual financial statements. Shkreli also failed to disclose to investors that he had lost all the money he managed in Elea Capital, his prior hedge fund, and that Lehman Brothers had a $2.3 million default judgment against him. Finally, Shkreli lied to his biggest investor telling him that MSMB Capital had $35 million in assets under management, when in fact MSMB Capital had less than $700 in its bank and brokerage accounts. Based on these and other false representations, Shkreli and his co-conspirators induced approximately $3 million in investments from eight investors.

Daraprim Price-Spike

You’ll remember, of course, that Shkreli is the enterprising child who entered public consciousness in September after executing a splendiferous price-raising plan with an immune system drug known as Daraprim.  As Bloomberg says, Shkreli’s company, Turing Pharmaceuticals AG, bought the drug, moved it to a closed distribution system, and instantly rasied the price over 5,000%.  Shkreli’s plan united Hillary Clinton, Donald Trump, and Bernie Sanders in their condemnation.

Once upon a Time in Shaolin

Meanwhile, earlier this year the Wu-Tang Clan published its seventh album, Once upon a Time in Shaolin.  I didn’t say “released” because they really didn’t release it.  They created a single copy, not to be further exploited commercially for 88 years, and auctioned it for what turned out to be $2 million.  The high bidder gloriously turned out to be Martin Shkreli.  Wu-Tang leader RZA was sad about that, saying, “The sale of Once Upon a Time in Shaolin was agreed upon in May, well before Martin Shkreli’s business practices came to light. We decided to give a significant portion of the proceeds to charity.”  That, in turn, saddened Shkreli, who said, among other things, “If I hand you $2 million, f***ing show me some respect. At least have the decency to say nothing or ‘no comment.’ ”

Will the album be forfeited?

So what happens to the album now?  Lots of other people wondered the same thing yesterday.  Did FBI agents seize it in their arrest of Shkreli on Thursday morning?  The FBI apparently heard enough of these questions that it felt compelled to release this tweet on Thursday afternoon:

#Breaking no seizure warrant at the arrest of Martin Shkreli today, which means we didn't seize the Wu-Tang Clan album.

— FBI New York (@NewYorkFBI) December 17, 2015

So the question is answered for now.  But Shkreli’s indictment does include a criminal forfeiture allegation.  Under 18 U.S.C. § 981, the government is seeking forfeiture of any property derived from proceeds traceable to Shkreli’s alleged offenses.  Now, many of the allegations relate to years-old conduct.  Maybe the proceeds of this conduct have been sent overseas, or have diminished in value, or commingled with other property such that the proceeds can’t be separated again.  In that case, the government can seek “substitute property” under 21 U.S.C. § 853(p).  All of which is to say: the album is in play!  If Shkreli is convicted, Once upon a Time in Shaolin might be subject to a criminal forfeiture order and handed over to the government.  And what then?  Will the contractual constraints that applied to Shkreli run to the government?  Will President Obama get to keep it in the White House?  Will the Attorney General get a turn with it?  We live in a glorious age.  Shimmy shimmy yah.