Shkreli, CEO Reviled for Drug Price Gouging, Arrested on Securities Fraud Charges

[Rob L 3,811]

who says there is no justice?

32-year-old pleads not guilty and goes free on $5 million bond

Martin Shkreli, the boyish drug company entrepreneur, who rocketed to infamy byjacking 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 withsecurities fraud. After pleading not guilty in Brooklyn federal court he was freed on a $5 million bond.

Shkreli, 32, ignited a firestorm over drug prices in September and became a symbol of defiant greed. The federal case against him has nothing to do with pharmaceutical costs but suggests he was running a Madoff-style Ponzi scheme on a much smaller scale. 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.

Federal prosecutors accuse Shkreli of engaging in a complicated shell game after a hedge fund he started lost millions. He is alleged to have made secret payoffs and set up sham consulting arrangements. A New York lawyer, Evan Greebel, also arrested early Thursday, is accused of conspiring with him. He too pleaded not guilty and was freed on a $1 million bond.

Read the full text of the indictment here

Spokeswomen for Katten Muchin Rosenman LLP where Greebel worked during the time in question, and Kaye Scholer, where he works now, declined comment. Greebel, who served as lead outside counsel to Retrophin from 2012 to 2014, joined Kaye Scholer in July, after the activities detailed in the indictment.

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. By his mid-20s, they 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.

He covered up his losses with scheme after scheme, telling investors that his returns were as high as 35.8 percent when he was down 18 percent. He used client money to pay for clothing, food and medical expenses and lied to the broker handling his fund’s accounts, authorities said.

AIDS activists pour cat litter on an image of Shkreli in a makeshift cat litter pan during a protest highlighting pharmaceutical drug pricing, in front of the building that houses Turing's offices, in New York.

Photographer: Craig Ruttle/AP Photo

“Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company,” Brooklyn U.S. Attorney Robert Capers said at a press conference. Shkreli was walked through a gaggle of photographers outside FBI headquarters in Manhattan.

Shkreli’s extraordinary history—and current hold on the public imagination—makes the case more noteworthy than most involving securities fraud. The son of immigrants from Albania and Croatia who worked as janitors and raised him deep in working-class Brooklyn, Shkreli both epitomizes the American dream and sullies it. As a youth, he showed promise and independence and, after dropping out of an elite Manhattan high school, began his conquest of Wall Street before he was 20.

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 company, Turing Pharmaceuticals AG, bought the drug, moved it to a closed distribution system and instantly drove the price into the stratosphere.

The moves drew shocked rebukes from Congress, public-interest groups, doctors and presidential candidates, and cast a spotlight on the rising prices of older drugs. Donald Trump called Shkreli a “spoiled brat,” and the BBC dubbed him the “most hated man in America.” Bernie Sanders, a Democratic presidential candidate, rejected a $2,700 campaign donation from him, directing it to an HIV clinic. A spokesman said in October that the campaign would not keep money “from this poster boy for drug company greed.”

“The $65 million Retrophin wants from me would not dent me. I feel great. I’m licking my chops over the suits I’m going to file against them”

Shkreli initially responded to the criticism by saying he would lower the Daraprim price and then changed his mind again. When Hillary Clinton tried one more time last month to get him to cut the cost, he dismissed her with the tweet “lol.” 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,” adding, “My investors expect me to maximize profits.”

In fact, it is not only his drug pricing that has turned him into an object of public derision. He recently spent millions on the only copy of a Wu-Tang Clan album that music fans would love to hear and then told Bloomberg Businessweek that he had no immediate plans to listen to it. He spars often on Twitter and message boards, bragging about business strategies, musical tastes and politics; he live-streams from his office for long stretches.

The SEC complaint and federal indictment lay out a series of schemes and cover-ups that mirror complaints of investors.

[Darnell 8,478]

http://www.visajourney.com/forums/topic/579190-ceo-who-hiked-price-of-drug-arrested-after-securities-probe/

but i like your post better.

[Rob L 3,811]

http://www.visajourney.com/forums/topic/579190-ceo-who-hiked-price-of-drug-arrested-after-securities-probe/

but i like your post better.

I obviously need to spend more time reading VJ CEHST posts!