Pharmaceutical CEO who jacked up price of AIDS drug now facing 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.

Prosecutors say in a “Ponzi-like scheme” between 2009 and 2014, Shkreli lost hedge fund investors’ money through bad trades, then raided Retrophin for $11 million in cash and stock to pay back his disgruntled clients.

Shkreli “engaged in multiple schemes to ensnare investors through a web of lies and deceit”, U.S. Attorney Robert Capers said in a statement. After it was revealed that he paid millions for a one-of-a-kind Wu-Tang Clan album, he lashed out at the group for distancing themselves from him.

Shkreli’s arrest prompted speculation about the fate of the album, and a prosecutor would not comment on the matter during a press conference about the charges Thursday. His arrest is unrelated to that accusation.

“The sale of Once Upon a Time in Shaolin was agreed upon in May, well before Martin Shkreli’s business practices came to light, said member RZA”.

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.

People also noted how ironic it was that Shkreli recently said he wanted to bail out rapper Bobby Shmurda, who’s in jail on charges of conspiracy to commit murder – among other things. For all the short-term tabloid attention that Shkreli’s prosecution is likely to garner, the odds against a truly satisfying, Madoff-style turn in the hoosegow for our boy CEO are steep.

The investigation follows recent controversy surrounding Shkreli, whose Turing Pharmaceuticals made the decision to raise the prices of a 62-year-old treatment for a parasitic infection from $13.50 a tablet to $750 tablet. In addition, the indictment does not name specific things it means to seize in the event Shkreli is found guilty – something the government will have to do in advance of any action to take his property. After news broke of Shkreli’s arrest, shares were down by 50 percent before being halted indefinitely, pending receipt of additional information requested by the Nasdaq, according to MarketWatch. Though he stood by the move as necessary to shore up more money for drug research, he later dropped the price for hospitals only. “Starting sometime in early 2012, and continuing until he left the company, Shkreli used his control over Retrophin to enrich himself, and to pay off claims of MSMB investors (who he had defrauded)”.

The FBI’s NY office announced on Twitter that it didn’t have a seizure warrant when it arrested Shkreli, so the Wu-Tang album is still in his possession.