Drug CEO Who Jacked Up Prescription Prices, Arrested On Fraud
Drug-company entrepreneur Martin Shkreli, 32, made a lot of enemies after he purchased Daraprim, an important HIV medication, and jacked the price of the pill from $13.50 to $750 per pill. And he did it simply because he could.
That move quickly labeled him an enemy to many people: everyone from the common man to the HIV community worldwide.
It’s also worth noting that earlier this month, Shkreli spoke at a conference, and when asked about raising the price of the HIV med, he offered this:
“I probably would have raised the price higher,” he said, adding, “My investors expect me to maximize profits.”
This week, after reportedly paying $2 million for a rare Wu-Tang Clan album, he’s now asking for the hip hop community to show him “some respect.”
But after all of that, something happened that people are calling it, karma at work.
At 6 a.m. Thursday, December 17th, F.B.I. agents arrested Mr. Shkreli, 32, at his Murray Hill apartment.
According to Bloomberg, Shkreli was arrested on securities fraud, charged with taking stock from his own biotech company to pay off debts from other businesses.
The criminal charges brought against him actually relate to his time as a hedge fund manager and when he ran his first biopharmaceutical company, Retrophin. Federal officials described his crimes as a quasi-Ponzi scheme in which he used money from his company to pay off money-losing investors in his hedge funds. An F.B.I. official called his business schemes a “securities fraud trifecta of lies, deceit and greed.”
Still, for many of his critics, Mr. Shkreli’s arrest was a day of reckoning for the young exec who has seemed to enjoy sticking it to other people.
In 2006, Mr. Shkreli opened his own hedge fund — Elea Capital. But it didn’t last long. After collapsing in 2007 on a big bet he made that failed, he started his second hedge fund in 2009 called, MSMB Capital.
Like Elea, MSMB’s performance wasn’t nearly as hot as Mr. Shkreli would have liked others to believe. From 2009 through 2012, Mr. Shkreli lost millions of dollars trading in the market, according to the accusations contained in the indictment. But he hid those losses, telling investors instead that the funds had strong double-digit returns.
In 2011, Mr. Shkreli started Retrophin, which quickly adopted a controversial business strategy, acquiring old, neglected drugs used for rare diseases and quickly raising their prices.
Soon, however, Mr. Shkreli was making a plan to use Retrophin assets to pay off MSMB investors. When seven MSMB investors threatened to sue in 2013, Mr. Shkreli and Evan Greebel, the lead outside counsel for Retrophin, used $3.4 million in Retrophin funds and stock to settle the investors’ claims, even though Retrophin had no responsibility, the indictment says.
We’ll stay close to this story and see how it develops.
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