Tags: US | pharmaceutical | fraud | investigation | Hillary Clinton

Pharma Chief, Who Jacked Up Drug Price 5000, Arrested on Fraud Charges

Image: Pharma Chief, Who Jacked Up Drug Price 5000, Arrested on Fraud Charges

Thursday, 17 December 2015 04:06 PM

A reviled US pharmaceutical boss who caused a storm in September by jacking up the price of a life-saving drug by 5,000 percent was arrested Thursday on fraud charges, prosecutors said.

The arrest of Martin Shkreli -- who has appeared to revel in his notoriety -- was not linked to the massive increase in the price of Daraprim, a drug used to treat malaria and infections suffered by people with HIV.

The former hedge fund manager, 32, is accused of stealing $11 million in what the FBI described as a "securities fraud trifecta of lies, deceit and greed."

Prosecutors said the scheme involved another company he once led, Retrophin, and two hedge funds.

"As alleged, Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit," said Robert Capers, US Attorney for the Eastern District of New York.

"His plots were matched only by efforts to conceal the fraud, which led him to operate his companies, including a publicly traded company, as a Ponzi scheme, where he used the assets of the new entity to pay off debts from the old entity."

It began in 2009 when Shkreli allegedly lied to eight people to get them to invest about $3 million in his hedge fund, Capers told a press conference.

When he lost the money through "bad trades" he started a new fund to try to cover the losses and continue to line his pockets.

Shkreli was also charged by the Securities and Exchange Commission.

"Over a five-year period, Shkreli is alleged to have perpetrated a series of frauds on investors in his hedge funds and Retrophin's shareholders in order to cover up his poor trading decisions," said Andrew Ceresney, director of the SEC's enforcement division.

Shkreli is accused of siphoning about $120,000 from one of the hedge funds to pay for food, clothing, rent and other personal expenses.

He is also accused of lying to investors about one of the fund's size and performance by claiming returns of nearly 36 percent when it had really generated a loss of 18 percent and saying the fund had $35 million in assets when it really had less than $7,000.

He allegedly stole $900,000 in 2013 from one of the funds to settle with a broker who was suing him and stole more money to pay off disgruntled investors who were threatening legal action.

Also arrested was Evan Greebel, a lawyer who was outside counsel to Retrophin.

 

 

Shkreli gained notoriety in September when his company Turing Pharmaceuticals raised the price of Daraprim from $13.50 a tablet to $750 after acquiring the drug.

The move -- and his arrogant response to the controversy -- was angrily denounced by US politicians.

"Price gouging like this in the specialty drug market is outrageous," Democratic frontrunner Hillary Clinton said on Twitter, vowing to fight runaway drug prices.

Turing later announced that while it would not lower the drug's per tablet price, it would negotiate agreements with health groups on wholesale prices.

Shkreli, the chief executive of the company, specializes in buying patents on inexpensive drugs and then hiking their price.

In November, he gained control of another drug company, Kalobios Pharmaceuticals, whose stock price plummeted on news of his arrest, falling 53.24 percent to $11.03 before trading was suspended.

Reveling in controversy, Shkreli made waves earlier this month by buying a secret Wu-Tang Clan album for $2 million, "Once Upon a Time in Shaolin."

Turing Pharmaceuticals did not immediately return a request for comment.

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© AFP 2018

   
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A reviled US pharmaceutical boss who caused a storm in September by jacking up the price of a life-saving drug by 5,000 percent was arrested Thursday on fraud charges, prosecutors said.
US, pharmaceutical, fraud, investigation, Hillary Clinton
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2015-06-17
Thursday, 17 December 2015 04:06 PM
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