The FBI has arrested Turing Pharmaceuticals CEO Martin Shkreli over allegations of a series of security frauds over a five-year period.
Shkreli was arrested yesterday after the Securities and Exchange Commission (SEC) charged him for misappropriating money from two hedge funds he set-up, and making material misrepresentations to investors among other widespread misconduct.
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According to the SEC’s complaint filed in federal district court in Brooklyn, accounting Shkreli of misappropriating $120,000 from hedge fund MSMB Capital Management from October 2009 to July 2011 to unlawfully pay for food, clothing, medical expenses, clothing, office rent, and cash withdrawals.
Shkreli has also been accused of misappropriating $900,000 from another hedge fund MSMB Healthcare in 2013 to settle claims asserted by MSMB Capital Management’s executing broker arising out of the losses suffered in the short selling transaction.
US Attorney for Eastern District of New York Robert Capers has charged Shkreli with seven counts, including conspiracy to commit securities fraud and conspiracy to commit wire fraud.
Capers said at a press conference: "Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company.
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By GlobalData"Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit."
It is reported that Shkreli has been bailed on payment of a $5m bond.
In a statement Turing noted: "The legal matters concerning the Founder and CEO Martin Shkreli are personal and have no bearing on Turing Pharmaceuticals.
"We maintain our deep commitment to patients, providers, and the progress of our important R&D pipeline."
The SEC also charged Retrophin’s former outside counsel and corporate secretary Evan Greebel with aiding and abetting certain aspects of Shkreli’s alleged fraud.
Shkreli faced huge criticism for raising the price of drug Daraprim, which is used to treat a life-threatening infection, to $750 per tablet from $13.50 per tablet. Turing acquired the US rights to Daraprim in August from Impax Laboratories.
Daraprim has been approved by the US Food and Drug Administration (FDA) to be used in combination with a sulfonamide and leucovorin to treat toxoplasmosis, which can be of major concern for patients with weakened immune systems such as those living with HIV / AIDS.
