The pharma boss who became infamous after hiking the price of an HIV-related drug by 5,000 percent has been arrested by the FBI on securities fraud charges, law enforcement sources said.
The arrest of Martin Shkreli — a hedge fund manager-turned-pharmaceutical company CEO — comes amid an investigation related to “widespread fraud” through a hedge fund and drug company he once ran, according to a complaint filed Thursday by federal regulators.
Shkreli, 32, who was taken into custody at his midtown Manhattan residence, is currently the boss of Turing Pharmaceuticals and KaloBios Pharmaceuticals. He was previously the manager of hedge fund MSMB Capital Management and chief executive of biopharmaceutical company Retrophin Inc.
Shkreli is named in a seven-count indictment in federal court in Brooklyn, New York, along with Evan Greebel, 42, who was Retrophin’s outside counsel.
“Some of this fraudulent conduct was aided and abetted by Shkreli’s lawyer, Greebel,” according to the complaint by the Securities and Exchange Commission.
Shkreli is being charged for illegally using Retrophin assets to pay off debts after MSMB lost millions of dollars, according to the SEC.
The indictment said Shkreli and Greebel, along with others, orchestrated three interrelated fraud schemes from September 2009 through September 2014.
It said they fraudulently induced investors to invest in two separate funds and misappropriated the assets of publicaly traded Retrophine to satisfy Shkreli’s personal and unrelated professional debt obligations.
The probe dates back to at least January when Retrophin said it received a subpoena from prosecutors seeking information about its relationship with Shkreli.
That subpoena also sought information about individuals or entities that had invested in funds previously managed by Shkreli, Retrophin said in a regulatory filing.
MSMB Capital Management was founded in 2009, and Shkreli announced its closure in 2012. Retrophin was founded in 2012, and Shkreli was its CEO until the company fired him in September 2014.
Retrophin in August sued Shkreli in federal court in Manhattan for $65 million, claiming he had used his control over Retrophin to enrich himself and pay off claims of investors in MSMB, which he had also defrauded.
“The $65 million Retrophin wants from me would not dent me,” Shkreli previously told Bloomberg Businessweek about the suit. “I feel great. I’m licking my chops over the suits I’m going to file against them.”
In September, Shkreli became a lightning rod over another issue: the soaring prices of prescription drugs.
He announced that month that he was ratcheting up the cost of Daraprim from $13.50 to $750 per pill, stoking outrage. Headlines called him the “most hated man in America.” Presidential candidates from Hillary Clinton to Donald Trump — the latter called Shkreli a “spoiled brat” — pilloried him.
The CEO defended his actions, saying his first priority was to his investors.