FBI Busts Pharma Bad Boy on Fraud Charges

Martin Shkreli accused of using company stock to pay other debts
By Jenn Gidman,  Newser Staff
Posted Dec 17, 2015 7:08 AM CST
FBI Busts Pharma Bad Boy on Fraud Charges
Activists hold signs containing the image of Martin Shkreli in front of the building that houses Turing's offices in New York on Oct. 1, 2015, during a protest.   (AP Photo/Craig Ruttle)

(Newser) – Martin Shkreli may have to dump some of his recent musical acquisitions to pay his own legal fees: The 32-year-old pharmaceutical pariah who unapologetically jacked the price of a life-saving drug was arrested by the FBI Thursday on charges of federal securities fraud, Reuters reports. Shkreli is accused of pilfering stock from his former company, Retrophin, and using it to take care of other business debts, per Bloomberg. Prosecutors say when Shkreli's MSMB Capital hedge fund went bust, losing millions, he started playing what Bloomberg calls a "complicated shell game" that involved "secret payoffs" and "sham consulting arrangements." The SEC, which has been looking into Shkreli's dealings for the past three years, is also expected to file a civil suit against him, sources tell Bloomberg.

In August, Retrophin actually sued its former CEO, who was kicked out of the company in October 2014. The biotech firm alleged, among other things, that Shkreli had set up multiple transactions between the company and MSMB investors, bankrupted MSMB, paid off as many as 10 MSMB investors through phony contracts or by dipping into company stock and cash without permission, and then tried to cover it all up via what Bloomberg frames as "complex financial maneuvers." Shkreli's reaction at the time: "The $65 million Retrophin wants from me would not dent me. I feel great. I'm licking my chops over the suits I'm going to file against them." (This means a jailed Brooklyn rapper will have to wait a little longer to make bail.)

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