Turing Pharmaceutical CEO Martin Shkreli Arrested For Securities Fraud (Photo : Getty Images)
Former hedge fund manager Marti Shkreli was arrested by federal agents on Thursday morning. However, the arrest was not because of drug price-gouging which Shkreli has become notorious when he jacked up the price of a cancer drug by 5,000 percent.
Rather, the pharmaceutical executive is facing fraud charges, particularly securities fraud when he was hedge fund manager and official of Retrophin, a biopharmaceutical company. The 32-year-old current chief executive of Turing Pharmaceuticals was arrested at his Midtown Manhattan apartment in New York, reports The New York Times.
In a news conference, Andrew Ceresney, U.S. Securities and Exchange (SEC) director of enforcement, accuses Shkreli of fraud of almost all aspects of hedge-fund investments. He believes that Shkreli, who pleaded not guilty on Thursday afternoon at an arraignment and released on a $5-million bail, should be banned from working in the securities industry or serving as director of a listed company. The hedge fund manager was also guaranteed by his father and brother.
Also arrested and released on a $1 million bail, plus guarantee by the wife and mother, is Evan Creebel, a corporate lawyer who worked with Shkreli. The bail was also secured by Creebel's house. Creebel's transactions that the SEC is investigating happened before he was hired in summer by law firm Kaye Scholer, points out Andrea Orzehoski, spokeswoman of Kaye Scholer.
Before Shkreli started Retrophin in 2011, he lost a lot of money in two hedge funds he began, Elea Capital and MSMB Capital. He hid the losses and instead told investors their money were earning double-digit returns. To pay off seven MSMB investors who threatened to file a lawsuit, he used $3.4 million Retrophin money.
The Retrophin auditor questioned the settlements that led to his firing as chief executive in September 2014. He then opened Turing, purchased the marketing rights for Daraprim and hiked its price by 5,000 percent to $750 from $13.50.
He defended then the move, insisting that Turing is not a greedy drug company "trying to gouge patients" but is attempting to stay in business. He explains that Turing's stockholders expect the pharma to make the most profit, reports Time. Charges filed by the SEC appear that it is not shareholders who are greedy, but the former hedge fund manager has made a lot of bad investment decisions that are now haunting him.
