Martin Shkreli, infamous for massive price hikes, now charged with defrauding investors
On December 17th, 2015, Bloomberg News reported: “Martin Shkreli, the boyish drug company entrepreneur, who rocketed to infamy by jacking up the price of a life-saving pill from $13.50 to $750, was arrested by federal agents at his Manhattan apartment early Thursday morning and charged with securities fraud. After pleading not guilty in Brooklyn federal court he was freed on a $5 million bond.”
In the week prior, the Deadly Prescription blog focused twice on Shkreli’s exploits, including his plans to take control of the pricing of a drug that treats a potentially deadly infection caused by parasites and his controversial $2 million acquisition of several songs by the hip-hop group Wu-Tang Clan.
“Shkreli, 32, ignited a firestorm over drug prices in September and became a symbol of defiant greed,” added Bloomberg.
The former Turing Pharmaceuticals CEO (The Daily Kos website reported on December 18th that he was forced out by the board the day after his arrest) now faces federal charges related to a Madoff-style Ponzi scheme. “Prosecutors in Brooklyn charged him with illegally taking assets from Retrophin Inc., a biotechnology firm he started in 2011, and using it to pay debts from unrelated business dealings. He was later ousted from the company, where he’d been chief executive officer, and sued by its board,” according to the Bloomberg report.
While his arrests sent shock waves up and down Wall Street, patients and doctors are likely not surprised by the news of his alleged crimes. Many have for years said that Shkreli’s price-gouging practices affecting live-saving treatments were tantamount to criminal.
“In a federal indictment and complaint by the Securities and Exchange Commission, authorities outline years of investment losses and lies Shkreli allegedly told investors almost from the moment he began managing money,” Bloomberg said. “By his mid-20s,” it said, “he got nine investors to place $3 million with him, lost their money and covered it up. At one point, his fund’s accounts had a balance of $331.”
His name entered public consciousness after he raised the price more than 55-fold for Daraprim. It is the preferred treatment for 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. His former company, Turing Pharmaceuticals AG, bought the drug, moved it to a closed distribution system and instantly drove the price into the stratosphere.
When Hillary Clinton tried one more time last month to get him to cut the cost, he dismissed her with the tweet “lol,” said Bloomberg. Bernie Sanders, a Democratic presidential candidate, rejected a $2,700 campaign donation from him, directing it to an HIV clinic. A spokesman told Bloomberg News in October that the campaign would not keep money “from this poster boy for drug company greed.”
At a Forbes summit in New York this month, wearing a hooded sweatshirt, he said if he could have done it over, “I probably would have raised the price higher.”
“Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company,” U.S. Attorney Robert Capers said at a press conference. Shkreli was walked through a large group of photographers as he was brought into custody at FBI headquarters in Manhattan.