Pharma CEO Martin Shkreli Arrested for Securities Fraud
This story has been corrected. See below.
Martin Shkreli, the now-notorious CEO of Turing Pharmaceuticals, has been arrested on suspicion of securities fraud, according to Bloomberg News.
Shkreli, 32, became infamous earlier this year when he drastically raised the price of a drug taken by AIDS patients, but Bloomberg said the case against him is unrelated to that.
Instead, prosecutors have charged him with illegally taking stock from Retrophin Inc., a biotech firm which he founded in 2011, and using it to pay off unrelated business debts, Bloomberg said.
Shkreli’s hedge fund MSMB Capital Management suffered heavy losses totaling more than $7 million as a result of a “disastrous trade” with Merrill Lynch, according to a separate lawsuit that Retrophin filed against its former CEO in August. After the hedge fund consequently went bankrupt, that complaint alleges, Shkreli used Retrophin to try to make his shareholders whole. He allegedly diverted Retrophin’s cash and set up “sham consulting agreements” at the company with several of his “defrauded” shareholders, siphoning more than $20 million from the company for the payouts.
Correction, Dec. 17: An earlier version of this story incorrectly stated the cause of financial losses suffered by Shkreli’s hedge fund. They were not related to the legal allegations against him, but due to a poor investment before Retrophin existed.