Shkreli is being detained, according to the Eastern District of New York State Attorney’s Office, in his apartment in New York. The arrest relates to a seven-count indictment for the crimes of securities fraud, securities fraud conspiracy and wire fraud conspiracy.
The charges against Martin Shkreli do not relate to his time presiding over the two pharmaceutical companies; instead they relate to a time when Shkreli was a hedge fund manager for MSMB Capital and MSMB Healthcare Management LP, as well as serving as chief executive officer for the company Retrophin Inc. Also implicated in the charge is Evan Greebel, an attorney to Retrophin.
The prosecution alleges Shkreli took part in a scheme to defraud investors in the companies MSMB Capital and MSMB Healthcare; and, at the same time, attempting to misappropriate Retrophin funds to repay MSMB investors. The prosecution says over $11 million was taken out of Retrophin. The apparent dealings are said to resemble a type of Ponzi scheme.
Speaking with Biopharmaceutical International, United States Attorney Robert Capers stated: “As alleged, Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit.”
The lawyer added: “His plots were matched only by efforts to conceal the fraud, which led him to operate his companies, including a publicly traded company, as a Ponzi scheme, where he used the assets of the new entity to pay off debts from the old entity.”
Digital Journal readers will be familiar with Martin Shkreli when we reported how his company Turing Pharmaceuticals increased the price of a drug called Daraprim, designed to treat an AIDS-associated illness (toxoplasmosis), by 5,000 percent (the drug rose from $13.50 to $750 per pill.) Following his arrest on December 17, Shkreli resigned from the board of Turing Pharmaceuticals the following day. On December 21, Shkreli also stepped down from his position at KaloBios.
If convicted, Shkreli faces 20 years in prison.
