Martin Shkreli Arrested On Securities Fraud Charges

The securities fraud probe of Shkreli, who is now chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc, stems from his time as manager of hedge fund MSMB Capital Management and CEO of biopharmaceutical company Retrophin Inc, a person familiar with the matter said.

Now, Shkreli has been arrested by the Federal Bureau of Investigation on fraud charges.

He was later charged during the indictment, but he was released after posting $5 million bail.

KaloBios Pharmaceuticals (NASDAQ:KBIO) CEO Martin Shkreli was arrested on charges of securities fraud Thursday, sending KaloBios stock down more than 50% in premarket before trading was halted.

Shkreli, a 32-year old high school drop out, rose to fame in September when he announced that his company bought the manufacturing license for a drug called Daraprim.

Online, many people took delight in his arrest, calling him a greedy, arrogant “punk” who gave capitalism a bad name and got what was coming to him.

The charges are believed to parallel a lawsuit filed against Shkreli by Retrophin, a pharmaceutics company he started while also running the hedge fund MSMB Capital Management.

“Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company”, Brooklyn U.S. attorney Robert Capers said at a press conference midday across the street from the courthouse, where Shkreli awaited arraignment. A second defendant, lawyer Evan Greebel, of Scarsdale, New York, was charged with conspiracy. Daraprim, a decades-old drug used to treat a parasitic infection, is often given to AIDS patients and babies.

The move sparked outrage on the presidential campaign trail and helped prompt a Capitol Hill hearing on drug prices.

Earlier in the day, Skreli – who has been nicknamed the “most hated man in America” – was nabbed by federal agents at his Manhattan home. Hillary Clinton railed against Shkreli, saying he was guilty of price gouging.

Calls to an attorney who has represented Shkreli in the past haven’t been returned. In October 2015, Shkreli donated $2,700 to Bernie Sanders’ campaign but Sanders rejected the offer which led to Shkreli accusing him of being a demagogue.

Asked if Shkreli raised drug prices to pay back investors, Capers said that was not part of the investigation.