- The Washington Times - Thursday, December 17, 2015

Martin Shkreli, a pharmaceutical company CEO who became a target of public scorn after raising the price of a life-saving drug by more than 5,000 percent, was arrested Thursday and charged with securities fraud.

The charges are unrelated to his oversight of Turing Pharmaceuticals, where earlier this year he ignited firestorm of controversy by increasing the price of the anti-parasite drug, Daraprim.

Mr. Shkreli, a former hedge fund manager, was indicted on seven criminal counts including securities fraud, securities fraud conspiracy and wire fraud conspiracy for a series of schemes that previously had defrauded investors.

U.S. Attorney Robert Capers said Mr. Shkreli wove an “outrageous web of lies and deceit” to entice hedge fund investors and then after losing their money through bad trades, he engaged in a “Ponzi-like scheme” between 2009 and 2014 by raiding the biopharmaceutical company Retrophin Inc. for $11 million in cash and stock to pay back his disgruntled clients.

“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,” Mr. Capers said.

According to charging documents, Mr. Shkreli defrauded investors in MSMB Capital and MSMB Healthcare, where he was the founder and managing member, and misappropriated assets from Retrophin, where he had been the chief executive officer.

SEE ALSO: Enrique Marquez, ex-neighbor, friend of San Bernardino shooters, arrested, facing criminal charges

In federal court in Brooklyn on Thursday, Mr. Shkreli entered a not guilty plea. He was later released on $5 million bond.

Mr. Shkreli stirred public outrage earlier this year when his company, Turing Pharmaceuticals, jacked up the price of the drug Daraprim, which is used to treat life-threatening infections. Turing raised the price on Daraprim, a 62-year-old drug whose patent expired decades ago, from $13.50 to $750 per pill. The drug is the only approved treatment for a rare parasitic infection called toxoplasmosis that mainly strikes pregnant women, cancer patients and AIDS patients.

Mr. Shkreli again earned public ridicule after Bloomberb Business reported that he had paid millions for the sole copy of the Wu Tang Clan’s new album “Once Upon a Time in Shaolin,” but bragged that he had yet to listen to it.

Authorities were forced to address the Wu Tang record controversy Thursday, when reporters asked about the possibility that the album had been seized during Mr. Shkreli’s arrest.

“I wondered how long it was going to take to get to that,” Mr. Capers said at a press conference announcing the arrest. “We’re not aware of where he got the funds that he raised to buy the Wu-Tang Clan album.”

The FBI’s New York office later confirmed that it did not take possession of the album Thursday as it had only obtained an arrest and not a seizure warrant.

Also arrested Thursday was Evan Greebel, a former partner at the New York office of Katten Muchin Rosenman LLP who served as outside counsel to Retrophin. He was charged with one count of wire fraud conspiracy.

Both Mr. Shkreli and Mr. Greebel face a maximum sentence of 20 years in prison if they are convicted.

This article is based in part on wire service reports.



Click to Read More

Click to Hide