FBI Arrests Turing Pharmaceuticals CEO Martin Shkreli On Fraud Charges
Martin Shkreli, the drug executive who was widely criticized for sharply raising the price of a drug used by HIV patients, was arrested Thursday by federal agents on charges that he misused funds at the company he founded.
Shkreli entered a not guilty plea and was released on a $5 million bond, according to the Associated Press. His travel is restricted to parts of New York and he surrendered his passport, CNBC reports. Shkreli's next court appearance is scheduled for Jan. 20.
The charges were first reported by both Reuters and Bloomberg — which only yesterday was reporting on Shkreli's skills at short selling. Today, he's accused of executing a series of frauds against investors, from October of 2009 to March of 2014.
Among the accusations leveled by the Securities Exchange Commission: that when Shkreli stated in 2010 that his hedge fund was managing $35 million in assets, the fund actually had less than a combined $1,000 in its bank and brokerage accounts.
He's also accused of misappropriating hundreds of thousands of dollars to pay for his personal expenses and to settle claims against him.
"Over a five-year period, Shkreli is alleged to have perpetrated a series of frauds on investors in his hedge funds and Retrophin's shareholders in order to cover up his poor trading decisions," said Andrew J. Ceresney, director of the SEC's enforcement division.
"Prosecutors charged him with illegally taking stock from Retrophin Inc., a biotechnology firm he started in 2011, and using it [to] pay off debts from unrelated business dealings. He was later ousted from the company, where he'd been chief executive officer, and sued by its board."
The SEC has requested a jury trial in the case, in which it's asking a court to order Shkreli and his lawyer, Evan Greebel, to "disgorge their ill-gotten gains," to levy fines on the pair, and to bar them from serving as officers or directors of companies.
Shkreli, 32, became notorious among AIDS activists and others in September, when Turing Pharmaceutical, the company he founded after leaving Retrophin, raised the price of Daraprim, a drug that HIV patients have for years used to fight a deadly parasitic infection, from $13 a pill to $750 — a 5,000 percent increase.
This month, Shkreli has also been in headlines for his affection for rap music, gaining the nickname Pharma Bro after being identified as the purchaser of the sole copy of the Wu-Tang Clan's album Once Upon a Time in Shaolin, for $2 million.
On Wednesday, Shkreli's Twitter feed was full of responses to his move to bail Brooklyn rapper Bobby Shmurda out of jail.
When reached for comment, a Retrophin spokesperson replied with this statement:
"The Directors of Retrophin replaced Martin Shkreli as Chief Executive Officer more than a year ago because of serious concerns about his conduct. 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."
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