Martin Shkreli raised the price of Daraprim from US$13.50 a tablet to US$750 after acquiring the drug. Pictures / AP
Martin Shkreli raised the price of Daraprim from US$13.50 a tablet to US$750 after acquiring the drug. Pictures / AP
Pharmaceuticals chief executive who jacked up the price of a life-saving drug is now facing multiple fraud counts.
A reviled US pharmaceutical boss who caused a storm in September by jacking up the price of a life-saving drug by 5000 per cent has been arrested on fraud charges, say prosecutors.
The arrest of Martin Shkreli -- who has appeared to revel in his notoriety -- was not linkedto the massive increase in the price of Daraprim, a drug used to treat malaria and infections suffered by people with HIV.
The former hedge fund manager, 32, is accused of stealing US$11 million in what the FBI described as a "securities fraud trifecta of lies, deceit and greed".
Prosecutors said the scheme involved another company he once led, Retrophin, and two hedge funds.
"As alleged, Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit," said Robert Capers, US Attorney for the Eastern District of New York.
"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."
It began in 2009 when Shkreli allegedly lied to eight people to get them to invest about US$3 million in his hedge fund, Capers said.
When he lost the money through "bad trades" he started a new fund to try to cover the losses and continue to line his pockets.
Shkreli was also charged by the Securities and Exchange Commission.
"Over a five-year period, Shkreli is alleged to have perpetrated a series of frauds on investors in his hedge funds and Retrophin's shareholders in order to cover up his poor trading decisions," said Andrew Ceresney, director of the SEC's enforcement division.
Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit.
Shkreli is accused of siphoning about US$120,000 from one of the hedge funds to pay for food, clothing, rent and other personal expenses.
He is also accused of lying to investors about one fund's size and performance by claiming returns of nearly 36 per cent when it had really generated a loss of 18 per cent and saying the fund had US$35 million in assets when it really had less than US$7000.
He allegedly stole US$900,000 in 2013 from one of the funds to settle with a broker who was suing him and stole more money to pay off disgruntled investors who were threatening legal action.
Also arrested was Evan Greebel, a lawyer who was outside counsel to Retrophin.
Shkreli was released after posting a US$5 million bond, while Greebel was released after posting a US$1 million bail.
Shkreli gained notoriety in September when his company Turing Pharmaceuticals raised the price of Daraprim from US$13.50 a tablet to US$750 after acquiring the drug.
He drew shocked rebukes from Congress, doctors and presidential candidates, and brought public attention to the rising prices of older drugs. Donald Trump called Shkreli a "spoiled brat," and the BBC dubbed him the "most hated man in America."
Bernie Sanders, the Democratic presidential candidate, rejected a US$2700 campaign donation from him, directing it to an HIV clinic.
A spokesman said the campaign would not keep money "from this poster boy for drug company greed".
All the criticism seemed at first to have some impact and Shkreli said he would lower the price. Then he reneged.
When Hillary Clinton tried one more time last month to get him to cut the cost, he dismissed her with the tweet "lol".
At a Forbes summit in New York this month, wearing a hooded sweatshirt, he said if he could have done it over, "I probably would have raised the price higher," adding, "My investors expect me to maximise profits."
Turing said that while it would not lower the drug's per tablet price, it would negotiate agreements with health groups on wholesale prices.
Shkreli, the chief executive of the company, specialises in buying patents on inexpensive drugs and then hiking their price.
In November he gained control of another drug company, Kalobios Pharmaceuticals, whose stock price plummeted on news of his arrest, falling 53.24 per cent to US$11.03 before trading was suspended.
Revelling in controversy, Shkreli made waves earlier this month by buying a secret Wu-Tang Clan album, Once Upon a Time in Shaolin, for US$2 million.
Music fans were desperate to hear the album, while Shkreli said he had no immediate plans to listen to it.
He often takes to Twitter and message boards, bragging about his business strategies, musical tastes and politics, and he live-streams from his office for long stretches.
Martin Shkreli:
• Former hedge fund manager accused of stealing US$11 million.
