CEO who price gouged HIV drug arrested
December 17, 2015
Prosecutors in New York said on Thursday that the 32-year-old CEO had been arrested for allegedly tricking investors in his hedge funds, and at the pharmaceutical firm he used to head, out of millions of dollars.
He was detained by authorities just three months after hitting the headlines for what's been widely described as price-gouging of a specialist drug used to treat the effects of HIV-AIDS.
"Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit," Robert Capers, US Attorney for the Eastern District of New York, told the media.
Ponzi scheme
The charges relate to the hedge fund MSMB Capital Management and a biopharmaceutical company he once led called Retrophin. Prosecutors say he ran the finances of both companies as a giant Ponzi scheme, using the assets of one entity to pay off debts from the other.
The FBI said Shkreli sent fabricated updates to investors for months after the failure of the MSMB fund, touting profits as high as 40 percent.
The drugs company executive was also charged by the Securities and Exchange Commission, who claimed Shkreli "perpetrated a series of frauds on investors in his hedge funds and Retrophin's shareholders in order to cover up his poor trading decisions."
Price hike denounced
In September, Shkreli gained notoriety when his current company, Turing Pharmaceuticals, raised the price of Daraprim from $13.50 (12.50 euros) a tablet to $750 after acquiring the drug's license.
While he confidently defended the decision in the media, the price hike was denounced by the public and politicians alike and although he quickly agreed to reduce the price, he later refused to honor his promise - insisting on doing wholesale deals with medical groups instead.
US media reported that following the price hike, one customer was quoted $27,000 for a month's supply of Daraprim, which is used to treat parasitic infections in HIV-AIDS patients, among others.
Backlash continues
Thursday's arrest is unrelated to his work at Turing Pharmaceuticals, which is facing two separate Congressional probes on the pricing issues of Daraprim.
Within minutes of his detention, the top related hashtag and keyword was #Karma, with many users saying that Shkreli was getting what he deserved.
mm/msh (AFP, AP, Reuters)