Turing Pharmaceuticals chief Martin Shkreli was arrested in his Manhattan home Thursday for alleged securities fraud, following a federal investigation into his past dealings as a hedge fund manager.
The charges are unrelated to the recent controversy over the 32-year-old Shkreli’s pricing practices at Turing, which included severely marking up the price of 62-year-old drug Daraprim 5,000 percent, from $13.50 a pill to $750, after acquiring it earlier this year. The controversy led to Shkreli being named the “most hated man in America” by the BBC.
Instead, prosecutors are charging Shkreli with fraud while managing his hedge fund, MSMB Capital Management, and biopharmaceutical firm Retrophin, which he also founded.
Shkreli is alleged to have lied to investors about his hedge fund’s rate of return, which was actually negative. According to the indictment, MSMB had only $700 in assets despite Shkreli’s claim to have $35 million. And he seems to have honed his price-gouging skills at Retrophin, where he established the business model that would make him infamous this year – buying old drugs only to raise their prices substantially.
Retrophin’s board ousted Shkreli last year for his dubious practices, and filed a suit this summer in which it said “Shkreli was the paradigm faithless servant” who had “used his control over Retrophin to enrich himself, and to pay off claims of MSMB investors (who he had defrauded).”
During a press conference Thursday, U.S. Attorney Robert Capers said that Shkreli “engaged in multiple schemes to ensnare investors through a web of lies and deceit. His plots were matched only by efforts to conceal the fraud, which led him to operate his companies…as a Ponzi scheme.”
Also arrested Thursday was Evan Greebel, a lawyer at New York’s Kaye Scholer firm, who prosecutors say had conspired with Shkreli.