CEO scorned for raising drug price charged with securities fraud
New Jersey residents might find it interesting that Martin Shkreli, the pharmaceutical entrepreneur who sparked national outrage when he dramatically hiked the price of an infection-fighting drug, has been arrested for securities fraud. The 32-year-old was taken into custody at his swank Manhattan apartment on Dec. 17.
The charges against Shkreli stem from his activities as CEO of the biopharmaceutical company Retrophin between the years of 2012 and 2014 and his management of a hedge fund, MSMB Capital Management, which was shut down in 2012. According to prosecutors, Shkreli was running a Ponzi-like scheme. They say he presented investors with false information to draw $5 million in investments into MSMB and then lied about the hedge fund's performance when it suffered massive trading losses in 2011. They also accuse him of misrepresenting the value of Retrophin to investors and misappropriating $11 million from the company to pay back MSMB investors.
Shkreli pleaded not guilty through his attorneys and was released on a $5 million bond. In August, Retrophin filed a federal lawsuit against him for $65 million, echoing the claims of prosecutors that he misappropriated Retrophin funds to pay back MSMB investors. In September, Shkreli became the target of harsh social media backlash when his company, Turing Pharmaceuticals, purchased the prescription drug Daraprim and raised its per-pill price from $13.50 to $750. The drug, which fights severe parasitic infections, has been on the market for 62 years.
People who have been charged with fraud, running a Ponzi scheme or other federal white-collar crimes could face steep fines and lengthy prison terms if they are convicted. However, with the help of a criminal defense attorney, it may be possible to fight the charges or negotiate with prosecutors for a plea agreement that reduces the severity of the penalties.
Source: Reuters, "Vilified for drug pricing, CEO Shkreli busted for securities fraud," Nate Raymond, Dec. 18, 2015