Is this the end game for the brash, hip-hop persona of Turing Pharmaceuticals CEO Martin Shkreli? Authorities on Thursday morning picked up Shkreli for securities fraud, Bloomberg is reporting.
Prosecutors in Brooklyn charged him with illegally taking stock from Retrophin Inc., a biotechnology firm he started in 2011, and using it to pay off debts from unrelated business dealings. He was later ousted from the company, where he’d been chief executive officer, and sued by its board.
For people who hate Shkreli for what he’s done in 2015, this will be like the government charging Al Capone for tax evasion. This not about his decision to increase the price of Daraprim, Daraprim’s distribution network, his plans for pirce-spikes at KaloBios, or a perceived general assholeness.
Federal prosecutors will hold a press conference at noon Eastern to share more. But so far they claim that Shkreli created a shell game after his defunct hedge fund, MSMB Capital Management, lost millions, Bloomberg stated.
He is alleged to have made secret payoffs and set up sham consulting arrangements. A New York lawyer, Evan Greebel, was also arrested early Thursday. He’s accused of conspiring with Shkreli in part of the scheme.
No one has heard from Shkreli or anyone from his team (yet). But the federal arrest tracks closely to the Retrophin board lawsuit. Retrophin claimed Shkreli engineered numerous transactions between investors in MSMB and the biotechnology firm. A trade Shkreli made in 2011 cost MSMB more than $7 million, essentially bankrupting the firm, according to the board lawsuit.
Shkreli has always denied any wrongdoing – including this definitive rebuke in a post on InvestorHub.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
The 8-k is completely false, untrue at best and defamatory at worst. I am evaluating my options to respond. Every transaction I’ve ever made at Retrophin was done with outside counsel’s blessing (I have the bills to prove it), board approval and made good corporate sense. I took Retrophin from an idea to a $500 million public company in 3 years–and I had a lot of help along the way.
I am happy to explain any transaction. I am confident that anyone who looked into the transactions would find them perfectly legal, reasonable and quite intelligent (the results of the company speak for themselves). I welcome any scrutiny by any party and have faith any investigation will be resolved without issue–it would not be the first time and it won’t be the last that my moves have been looked at–this is not my first rodeo and I have too many scars to do something stupid.
Is this a speed bump or a dead end? It’s hard to tell – or to know where Martin Shkreli actually begins or ends. The general public hates him. Yet some of the points he makes are often spot on and investors love him (keep in mind the KaloBios stock went up 400 percent after Shkreli bought a majority stake).
And just minutes before the news of his arrest broke we were writing about the guy buying Wu Tang Clan albums and bailing rappers out of jail.
But the love affair may be over – because investors do not like arrests. Trading of KaloBios shares were halted this morning after plunging 50 percent.
Always remember this: Martin Shkreli never apologizes.
Read more: Biglaw Partner Arrested With Martin Shkreli — Pharma Karma [Above The Law]
