Reviled drug-price gouging CEO arrested on fraud charges
Nathan Bomey, Kevin McCoy and Kim Hjelmgaard
The reviled poster boy of drug price hikes perpetuated a Ponzi scheme on investors in hedge funds and a pharmaceutical company he founded and previously led, federal prosecutors and regulators alleged Thursday.
Martin Shkreli, a pharmaceutical entrepreneur criticized for raising the price of the lifesaving drug Daraprim from $13.50 a pill to $750, was arrested early Thursday in New York City and charged on criminal and civil charges of securities fraud.
Shkreli’s arrest stems from allegations by federal prosecutors that he illegally took stock from Retrophin — a biotech company he started in 2011 and was ousted from in 2014 — to pay off unrelated business debts.
Evan Greebel, 42, who served as Retrophin’s outside counsel, was also arrested and charged with aiding the alleged scheme.
Prosecutors charged Shkreli with two counts of conspiracy to commit securities fraud, three counts of conspiracy to commit wire fraud and two counts of securities fraud. Investigators alleged that Shkreli, 32, siphoned millions from Retrophin to repay investors he’d defrauded in two now-defunct hedge funds.
He was also accused of using company funds to settle personal disputes with investors, unjustly enriching himself and forming false ties to consultants.
For example, Shkreli told one investor Dec. 2, 2010, that his hedge fund held $35 million in assets, even though it only had $700, the criminal indictment al- leged. U.S. Attorney Robert Capers charged that Shkreli, with Greebel’s help, used Retrophin as his “personal piggy bank.”
Shkreli was freed on $5 million bond after he entered a not guilty plea. Greebel was freed on $1 million bond with similar conditions.
“Mr. Shkreli is confident that he will be cleared of all charges,” spokesman Craig Stevens said.
Shkreli, CEO of Turing Pharmaceuticals, raised the price of Daraprim by more than 5,000%. The drug is used to treat a parasitic disease that afflicts people with weakened immune systems.