Martin Shkreli, so-called ‘Pharma Bro,’ arrested by the FBI and charged with securities fraud

 

 Martin Shkreli has been in the news a great deal of late. Earlier this year, Shkreli bought the rights to a drug used to treat toxoplasmosis and announced he would raise the price to $750 a pill, from $13.50. He agreed to lower that price after public outcry, only to renege on that deal later. More recently, he’s been in the news for planning to raise the price of a drug used to treat Chagas, a common disease in the tropics, from $50-$100 per treatment regimen to $60,000 to $100,000. Oh, and he also bought the only copy of a Wu Tang album for a cool $2 million.

And now, he’s been arrested by the FBI and charged with securities fraud as part of a federal investigation. Isn’t life grand?

Our hero.

Shkreli’s fraud charges don’t stem from any of his recent activities, but from his tenure at a previous company. Before he bought Turing, Shkreli managed the failed hedge fund MSMB Capital (died in 2012) and the biopharmaceutical company Retrophin (Shkreli was CEO from 2012-2014). The indictment against Shkreli states that he made false representations to MSMB investors when he withdrew $3 million in funds from the company. He also stands accused of falsely reporting fantastic growth within MSMB even as the hedge fund was tanking. He solicited an additional $5 million in capital for another fund, MSMB Healthcare Management, while concealing how poorly MSMB Capital had performed under his watch, and provided investors with an overinflated valuation of Retrophin while he was its CEO.

Shkreli also stands accused of raiding Retrophin’s coffers and using an estimated $11 million in funds to pay off angry investors from his disastrous tenure at MSMB. Retrophin has sued Shkreli for $65 million, and the federal indictment against him appears to mirror many of the claims in that case. He’s also under investigation by the New York State attorney general over antitrust concerns, since his purchase of specific pharmaceutical companies and radical price hikes could be considered an abuse of monopoly.

Shkreli has denied that the charges against him have any merit, but the federal indictment suggests something rather different. Multiple political candidates from both sides of the aisle have called for reforms that would prevent life-saving medications from being manipulated in this fashion, and Congress has held multiple investigatory sessions into such practices. Doctors testified on Capitol Hill last week that a single course of Daraprim for a child born with toxoplasmosis (which can be fatal) has leapt from $1200 to at least $69,000, severely limiting how often hospitals can use the drug.