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Summary: Prominent hedge fund manager and pharmaceutical entrepreneur Martin Shkreli has been arrested on issues surrounding the management of his hedge fund and biopharmaceutical company, not for the price-gouging scandal.
Martin Shkreli has not tried to hide his elaborate lifestyle from the public. The former hedge fund manager and pharmaceutical entrepreneur is being investigated by federal authorities for the price-gouging of drugs but his arrest comes from another matter.
Shkreli has been charged with securities fraud, called by officials as “a securities fraud trifecta of lies, deceit and greed.” Director of enforcement at the Securities and Exchange Commission, Andrew J. Ceresney, went on to explain that Shkreli committed “fraud in nearly every aspect of hedge-fund investments and in connection with his stewardship of a public company.”
The real source of controversy surrounding Shkreli is his acquisition of a common drug and then raising the price to $750 per pill overnight when the original price was $13.50.
Another person arrested in connection to the charges was Shkreli’s corporate attorney Evan L. Greebel. Despite client-attorney privileges, prosecutors argue that they don’t apply here because the two conspired together to commit crimes and cover up crimes. Greebel recently joined law firm Kaye Scholer after he had worked with Shkreli.
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The details of the fraud begin with lies Shkreli told investors of his hedge fund of an industry auditing firm that he owned, when in fact no such firm existed. He also explained to investors that his MSMB Capital Management Fund was bringing in 37.77 percent when it was actually losing 18 percent. His lies continue when he told investors that the firm had assets of $35 million when there was less than $1,000 in the bank and brokerage accounts.
The pharmaceutical company Retrophin was brought into his tangled mess of lies in 2011 when he began the pattern of acquiring old drugs used for rare diseases such as Thiola, a drug used to treat a disease that causes kidney stones. The price of the drug was $1.50 per pill before Shkreli got a hold of it and raised it to $30 a pill. After taking the company public, the board removed him from the position as chief executive and sued him for using the company to pay off investors of MSMB.
Source: http://www.nytimes.com/2015/12/18/business/shkreli-fraud-charges.html?_r=0
Photo: businessinsider.com
