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Pharmaceutical CEO Martin Shkreli Arrested for Securities Fraud
Martin Shkreli, former chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc., was arrested on Dec. 17, 2015 at his apartment in New York City for securities fraud.According to a press release from the Eastern District of New York State Attorney’s Office, a seven-count indictment was unsealed on Dec. 17, 2015 in federal court in Brooklyn charging Shkreli with securities fraud, securities fraud conspiracy, and wire fraud conspiracy.
Martin Shkreli, former chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc., was arrested on Dec. 17, 2015 at his apartment in New York City for securities fraud.
According to a press release from the Eastern District of New York State Attorney’s Office, a seven-count indictment was unsealed on Dec. 17, 2015 in federal court in Brooklyn charging Shkreli with securities fraud, securities fraud conspiracy, and wire fraud conspiracy.
The charges predate Shkreli’s time at Turing and Kalo, and occurred when he was a hedge fund manager at MSMB Capital and MSMB Healthcare Management LP, and CEO of Retrophin Inc. The indictment also names Evan Greebel, a New York attorney that provided outside counsel to Retrophin.
According to the press release, Shkreli engaged in a scheme to defraud investors in MSMB Capital and MSMB Healthcare. The former hedge fund manager is also charged with fraud after he misappropriated Retrophin funds in order to repay MSMB investors. Retrophin investors lost more than $11 million in the scheme.
At a Dec. 17, 2015 press conference, United States Attorney Robert Capers compared Shkreli’s actions to a Ponzi scheme.
“As alleged, Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit,” he said. “His plots were matched only by efforts to conceal the fraud, which led him to operate his companies, including a publicly traded company, as a Ponzi scheme, where he used the assets of the new entity to pay off debts from the old entity.”
Shkreli ruffled feathers in September 2015 after his company, Turing Pharmaceuticals, hiked the price of Daraprim nearly 5000%. Daraprim, a drug used to treat toxoplasmosis, is prescribed to patients with compromised immune systems (i.e., pregnant women, cancer patients, those with HIV). The company raised the price of the medication from $13.50 to $750 per pill and spurred a Congressional inquiry of the increase.
According to the release, if Shkreli is convicted, he could face a maximum sentence of 20 years in prison.
Retrophin released a statement on Shkreli's indictment, saying, "upon discovering potential misconduct by Mr. Shkreli, we authorized an independent investigation, filed a lawsuit, and fully cooperated with government investigations." The company is now under new leadership, and said they continue to move forward.
Turing Pharmaceuticals also released a brief statement about the indictment saying, "the legal matters concerning the Founder and CEO Martin Shkreli are personal and have no bearing on Turing Pharmaceuticals."
KaloBios Pharmaceuticals Inc. declined comment on the matter.
Update Dec. 18, 2015
On Dec. 18, 2015 Turing Pharmaceutical's announced in a press release Martin Shkreli's resignation from his position as CEO. The company appointed Ron Tilles, chairmen of the company's board of directors as interim CEO.
Update Dec. 21, 2015
KaloBios announced the termination of Shkreli from his position as CEO of the company in a statement. The company wrote, "Martin Shkreli was terminated as Chief Executive Officer of the Company and resigned from his position as a member of the board of directors."
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