Martin Shkreli Arrested, Charged With Fraud
Martin Shkreli was arrested by federal agents on Thursday morning amid accusations of securities fraud. Prior to his arrest, the 32-year-old man made headlines when he inexplicably raised the price of Daraprim from $13.50 to $750 — per pill. Although the September price hike thrust the Turing Pharmaceuticals CEO into the national spotlight, the investigation into the alleged fraud reportedly began in January.
Martin Shkreli, CEO charged with securities fraud, expected to be arraigned later today https://t.co/hRkfvO4n1k pic.twitter.com/C6PnWIvg5U
— CBS News (@CBSNews) December 17, 2015
A native of Brooklyn, New York, Shkreli displayed an early interest in learning and in the business world. After graduating from Hunter College High School at the age of 17, he attended Brauch College — where he earned a business degree at the age of 21.
BBC reports Martin founded his first hedge fund, Elea Capital Management, in 2006. However, as the fund was named in a $2.3 million lawsuit filed by Lehman Brothers, it was closed in 2007. The following year, Martin Shkreli created MSMB Capital Management — which launched his foray into biotechnology companies.
In 2011, the hedge fund manager founded his own biotechnology company. Financial Times reports Khkreli was inspired to create Retrophin after learning of “the plight of a 15-year-old boy who had succumbed to a rare, severe type of muscular dystrophy.”
Although his intentions appeared to be altruistic, Shkreli was later accused of losing interest in the patients and focusing on making money. Essentially, the CEO began purchasing older drugs, which are used to treat uncommon medical conditions, and raising the prices by as much as 5,500 percent.
Brent Saunders, who was an original investor, said he eventually sold his shares, as the founder “moved to a business model that was very different from where he started out.”
In 2014, Martin was ousted from the biotech company amid accusations that he used “company funds to reimburse investors who lost money in MSMB.” According to Forbes, MSMB lost an estimated $7 million in 2011 amid a “disastrous trade” — which was initiated by the CEO.
Twitter nearly drowns in schadenfreude at news of Martin Shkreli’s arrest this morning https://t.co/D2lCuko0vy pic.twitter.com/oaYmQoCVzJ
— Salon.com (@Salon) December 17, 2015
As stated in a lawsuit, which was filed in August, 2015, Retrophin, Inc. accuses the former CEO of “repeatedly breaching his duty of loyalty.” Therefore, the company is seeking $65 million in damages.
Despite the ongoing controversy, Martin Shkreli founded Turing Pharmaceuticals in early 2015. In September, the CEO gained national attention when he raised the price of Daraprim 5,500 percent overnight. The move was seen as specifically greedy, as the drug is used to treat devastating illness, and the increase appeared to be unfounded.
In recent weeks, Martin has gained more negative attention, as he paid an estimated $2 million for a highly-sought, and previously unreleased, Wu-Tang Clan album — which he later admitted he had no intention of listening to or releasing to the infamous band’s fans.
As reported by Vanity Fair, he also created controversy when he vowed to pay rapper Bobby Shmurda’s bail.In December, 2014, Shmurda was arrested on weapons charges and suspicion of gang-related activity. He remains incarcerated, as he was unable to raise the with $2 million in bail.
According to reports, Martin Shkreli said he planned to pay Bobby Shmurda’s bail, as the rapper “should not be sitting in jail right now.”
On Thursday morning, federal agents descended on Shkreli’s Midtown Manhattan apartment and arrested him on numerous charges — including securities fraud. Although the indictment is sealed, the New York Times reports the criminal charges are associated with the Turing CEO’s time with Retrophin.
In a September article about the federal investigation, Newsweek suggested the criminal charges are related to” insider trading, disguising the purpose of corporate payments for his benefit, defrauding shareholders by snatching business opportunities for himself, destruction of evidence, [and] failure to disclose material facts to shareholders and other potential crimes.”
Neither Martin Shkreli nor his representatives have commented on Thursday’s arrest. However, in a prior interview, the former Retrophin CEO said the allegations of impropriety were unfounded.
[Photo by AP Photo/Craig Ruttle, File]
