Executives Charged with Crimes Turn to Social Media Marketing

Executives charged with financial crimes traditionally offer a blunt “no comment” and refer media questions to their attorneys, on the advice of their legal and PR staff.

That’s changing. Executives under arrest might now take to social media to proclaim their innocence and offer their side of the story.

The New York Times cited three examples.

Pharmaceutical executive Martin Shkreli, accused of defrauding investors in his former hedge funds, was arraigned on securities fraud and wire fraud charges. Pictures of him in handcuffs on a “perp walk” appeared in many newspapers. He pleaded not guilty in court, and then quickly began defending himself on Twitter. “I am confident I will prevail,” he tweeted.

Shkreli also defended his previous actions on Twitter. He was already known for raising the price of a drug 5,000 percent while CEO of Turing Pharmaceuticals and buying the only known copy of an album by rap group Wu-Tang Clan for $2 million.

Shkreli also posted YouTube videos that portray him nonchalantly responding to social media comments, playing chess and playing a guitar.

Tweets from Prison

Charlie Shrem was placed under house arrest for aiding and abetting the operation of an unlicensed money transmitting business. That didn’t stop him from giving a speech to a Bitcoin conference via Skype. Pleading guilty, he began his prison term earlier this year but remained active on Twitter until at least this past September. “I’m Charlie Shrem, Bitcoin pioneer currently in federal prison, but you can ASK ME ANYTHING,” he tweeted.

His website shows an aerial photo of his new home, Lewisburg Federal Prison, and urges viewers to contact and support him.

Private Equity Executive

Lynn Tilton, CEO of private equity firm Patriarch Partners, was charged with defrauding investors. She defended herself against the charges in a video she posted online and attacked the Securities and Exchange Commission on Twitter.

“Social media has provided me the medium to best reflect my ideas, my business and me in my own words and images,” Tilton told the Times. The YouTube video of her defending her position has under 500 views.

The aggressive social media PR strategy is becoming more popular. The phenomenon may be at least partly due to the growth of social media platforms where business executives can develop online personas and grow large followings. Business executives active on social media, who may be narcissist attention seekers by nature, don’t quickly change their behavior even after being arrested.

Is it a Good Idea?

Opinions on their social media behavior vary. Lawyers and many communications consultants recommend against it. Anything defendants post on Twitter or otherwise state in public, they warn, can be used against them in court.

Social media can improve the perception, Christina Bertinelli, a senior partner at communications consultant Lumentus, told CNBC. However, possible legal ramifications may be more important, she said, citing Tilton’s frequent postings.

Although social media is a highly unusual avenue for private equity managers, it appears appropriate for Tilton, said Owen Blicksilver, president of Owen Blicksilver Public Relations.

“It is an appropriate conduit for delivering the broader job creation and job saving messages she espouses,” he told CNBC. “As long it doesn’t become a distraction for her, social media makes a lot of sense to create understanding and build a larger base of support.”

Bottom Line: In an emerging trend, more business executives charged with financial misdeeds are aggressively defending themselves on social media. While the tactics may bolster public perception of them and attract large numbers of followers, the tactic causes alarm among lawyers and some PR consultants.

What’s your opinion of the tactics? Please comment below.