Martin Shkreli, ‘most hated man in America,’ arrested for fraud

The charges relate to his time at a drug company he previously headed, Retrophin Inc., and a hedge fund, MSMB Capital Management, where he was a fund manager. A second defendant, attorney Evan Greebel, of Scarsdale, New York, was charged with conspiracy to commit wire fraud.

Craig Stevens, a lawyer representing Shkreli released a statement on Thursday saying, “Mr. Shkreli is confident that he will be cleared of all charges”.

Authorities believe that Shkerli used Retrophin’s stock to repay millions in losses that he generated while running the hedge fund. Prosecutors are alleging that he did so by making secret payoffs to former investors and disguising them as “consulting arrangements”.

When the trades didn’t work and he needed to repay the investors, Retrophin accused him of getting his share from the company and then using its funds to pay off its investors.

Caption + Martin Shkreli, center, leaves the courthouse after his arraignment in New York, Thursday, Dec. 17, 2015.

U.S. Attorney Robert L. Capers reported that Shkreli “engaged in multiple schemes to ensnare investors through a web of lies and deceit” and that “his plots were matched only by efforts to hide the fraud, which led him to operate his companies … as a Ponzi scheme”.

The charges were unconnected to the drug price hikes imposed by his company, Turing Pharmaceuticals, and instead involved his actions at another drug company, Retrophin, which he ran as CEO from 2012 to 2014. He faces up to 20 years in jail if found guilty. Rather, the former hedge fund manager is being charged with securities fraud.

Once MSMB Capital started functioning, Shkreli allegedly lost $700,000 of his investors’ money.

Allegations in the indictment and SEC suit predate the public outrage and legislative scrutiny over Shkreli’s decision at Turing to acquire a decades-old drug and raise the price of it overnight from $13.50 to $750 a pill. He was later ousted from the company, where he’d been chief executive officer, and sued by its board.

The indictment states that Shkreli made false representations to investors in order to raise $3 million in investments. A call to Shkreli’s office line went unanswered. Most patients’ copayments will be capped at $10 or less a month. Then, it pays enough to buy the Wu-Tang Clan’s million dollar album.

Turing later announced that while it would not lower the drug’s per tablet price, it would negotiate agreements with health groups on wholesale prices. INTERNET PARIAH The outcry over Daraprim turned Shkreli, a boyish drug company entrepreneur, into a pariah on the Internet, where he persistently provoked his critics on Twitter.