Shkreli Arrested On Fraud Charges
Martin Shkreli was arrested Thursday in New York on charges of securities fraud and wire fraud related to his time as a hedge fund manager and the years he spent as head of his first pharmaceuticals company, Retrophin.
Shkreli remained calm in the court room as he smiled and sometimes winked at family members who were present. In the press conference following the hearing, the U.S. Attorney’s office and the FBI stated that there are seven counts for which Shkreli was arrested. They stated that among the reasons for his arrest is evidence that he “Took an estimated $3 million from eight investors based upon lies that he told them about his prior performance as a portfolio manager, the amount of assets under the fund’s management, and the oversight of the fund by independent auditors. But when he lost the $3 million, that he had gotten through a series of bad trades, he didn’t tell his investors that he lost their money. Instead, Shkreli started a new hedge fund.”
The New York Times reports that federal officials describe his crime as a sort of Ponzi scheme, in which he used company money to pay off investors who were losing money in his hedge funds. Shkreli was asked to leave Retrophin amid many of the same accusations included in the federal indictment he now faces.
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The Washington Post reports that in an August 17 securities filing, Retrophin stated it had filed a suit against Shkreli.
“Shkreli was the paradigm faithless servant,” the filing stated. “Starting sometime in early 2012, and continuing until he left the Company, Shkreli used his control over Retrophin to enrich himself, and to pay off claims of MSMB investors (who he had defrauded).”
After he was arrested today, Retrophin issued this statement.
“Following his departure, the company authorized an independent investigation of Mr. Shkreli’s conduct, publicly disclosed its findings, and has fully cooperated with the government investigations into Mr. Shkreli. Until we have had the opportunity to review the charges against Mr. Shkreli, we cannot comment further.”
According to Bloomberg Business, Shkreli’s story began as one that embodies the American dream. The son of Albanian and Croatian immigrants, he grew up in working-class Brooklyn. He dropped out of high school and impressed co-workers with his ability to call stocks in his job as an intern for Jim Cramer’s hedge fund at the age of 17. He created hedge funds, educated himself on biology, earned a BA at a New York City college, and launched hedge funds that invested in biotech.
Shkreli came to the attention of the nation this year when, as head of Turing Pharmaceuticals AG, he acquired the drug Daraprim and raised the price from $13.50 a pill to $750 a pill. Daraprim is used to treat a parasitic condition known as toxoplasmosis, which can be deadly for unborn babies and patients with compromised immune systems including those with HIV or cancer. Shkreli has shown no remorse for the price hike, stating that, if he could have, “I probably would have raised the price higher… My investors expect me to maximize profits.”
CNBC reports that Shkreli was released on a $5 million bond, surrendered his passport, and was ordered not to leave New York or contact MSMB or Retrophin employees. Regarding his client’s arrest, Craig Stevens, one of Shkreli’s attorneys, stated, “Mr. Shkreli is confident that he will be cleared of all charges.”
He is due to appear in court again on January 20. He faces up to 20 years in prison if he is found guilty, according to CNN Money.
