Martin Shkreli, the former pharmaceuticals entrepreneur awaiting a criminal sentence following a fraud conviction, has been forced to hand over the Wu-Tang Clan album he paid $2m for at auction in 2015.

The order comes after Shkreli was convicted for securities fraud in August 2017 – he was found to have lied to investors about how their money would be spent, though Shkreli defended himself by saying that none of the investors lost money, and some made substantial profits. He is facing a maximum of 20 years in jail, though his lawyers have recommended only 12 to 18 months, plus community service.

Following his conviction, Shkreli was released on $5m (£3.6m) bail, though this decision was later revoked and he was sent to jail, after he made a threatening Facebook post about Hillary Clinton, offering followers $5,000 if they could send him a strand of her hair.

‘I think he could have got more than what he paid.’ RZA of the Wu-Tang Clan. Photograph: Slaven Vlasic/Getty Images

The double Wu-Tang Clan album, Once Upon a Time in Shaolin, is part of a bundle of assets worth $7.36m seized by a federal court, which also include a Picasso painting and another rap record, the unreleased Lil Wayne album Tha Carter V.

The album was pressed in a single copy by the Staten Island rap group, and housed in an ornate silver box, before being auctioned by the company Paddle8. As the winning buyer, Shkreli was forbidden from releasing the album for 88 years, a stipulation that the Wu-Tang Clan’s Method Man described as “stupid”.

The purchase was another notorious move by Shkreli, who had already become infamous for aggressively hiking the price of the drug Thiola, used to treat the disease cystinuria. Later in 2015 he became widely despised for buying up the patent to the drug Daraprim, often used to treat Aids-related toxoplasmosis, and raising the price of each pill from $13.50 to $750.

Shkreli attempted to sell Once Upon a Time in Shaolin on eBay, with the winning bid passing $1m, though the sale was never completed. “I didn’t like the idea of him putting it on eBay,” the Wu-Tang producer, RZA, told the Guardian last year. “I think he could have got more than what he paid.” Shkreli’s lawyer Benjamin Brafman has claimed that the album is now “probably worthless”.

Shkreli’s sentencing is scheduled for 9 March.