‘Pharma Bro’ Takedown: FBI Charges ‘Most Hated Man in America’ With Fraud

Martin Shkreli is free on $5 million bond, Bloomberg News reports.

Brooklyn U.S. Attorney Robert Capers said at a news conference that Shkreli “essentially ran his companies like a Ponzi scheme, where he used each subsequent company to pay off defrauded investors in the prior company”. Shkreli is expected to be charged Thursday for illegally using assets from a biopharmaceutical company he once headed, Retrophin, to pay off the debts of MSMB Capital Management, where he was a former hedge fund manager.

The images of Shkreli’s arrest – in a grey hoodie to boot – delighted some Twitter users.

While he confidently defended the decision in the media, the price hike was denounced by the public and politicians alike and although he quickly agreed to reduce the price, he later refused to honor his promise – insisting on doing wholesale deals with medical groups instead.

His arrest was not linked to the 5,500-per cent increase in the price of Daraprim, a drug used to treat malaria and infections suffered by HIV-positive people.

The “Most Hated Man In America” was on the receiving end of what many Americans would call righteous karma Thursday morning when he was arrested by the Federal Bureau of Investigation on charges of securities fraud. On Twitter, the top hashtag and keyword related to his arrest was #Karma.

According to a press release from the Eastern District of New York State Attorney’s Office, a seven-count indictment was unsealed on December 17, 2015 in federal court in Brooklyn charging Shkreli with securities fraud, securities fraud conspiracy, and wire fraud conspiracy.

The indictment, the result of an ongoing investigation, also charged Evan Greebel, a former partner at law firm Katten Muchin Rosenmann who was Retrophin’s outside counsel.

If convicted, he could get up to 20 years in prison. They closed Wednesday at $23.59, and had lost about half their value in early trading Thursday before the action was halted by the Nasdaq Stock Exchange.

Lawyers for Retrophin and Shkreli did not immediately respond to a request for comment.

It’s just the start of Shkreli’s big plans in the music space.

Earlier this month, Bloomberg reported that Shkreli dropped $2 million on the only existing copy of the latest Wu-Tang Clan album, “Once Upon a Time in Shaolin.” for $2 million. Bernie Sanders returned a donation from Shkreli. Retrophin did not receive any legitimate consulting services based on these sham agreements, but paid more than $7.6 million in cash and RTRX stock to settle claims that the auditors had previously determined were not the responsibility of Retrophin.

Capers, the chief federal prosecutor, sidestepped a question about whether authorities had seized Shkreli’s album, and said: “We’re not aware of how he raised the funds to buy the Wu-Tang album”.

Turing Pharma CEO Martin Shkreli arrested - Reuters witness

 

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