{"id":67981,"date":"2015-12-21T12:00:35","date_gmt":"2015-12-21T12:00:35","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=67981"},"modified":"2015-12-21T06:05:55","modified_gmt":"2015-12-21T06:05:55","slug":"martin-shkreli-arrested-for-securities-fraud","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2015\/12\/martin-shkreli-arrested-for-securities-fraud\/","title":{"rendered":"Martin Shkreli Arrested for Securities Fraud"},"content":{"rendered":"

\"pharma-douche-640x400<\/a><\/p>\n

18 Dec 2015 \u2013 <\/em>Martin Shkreli, the 32-year-old former hedge fund manager who became infamous earlier this year for price-gouging lifesaving medications, was arrested Thursday [17 Dec] morning on charges of securities fraud stretching back several years. Shkreli is accused of lying to investors about the state of his now-defunct hedge funds, MSMB Capital and MSMB Healthcare, and then illegally using money and stock from biotechnology firm Retrophin, of which he was then CEO, to pay off his debts.<\/p>\n

Shkreli provoked popular outrage in September after announcing that Turing Pharmaceuticals, another biotechnology firm founded by Shkreli, would raise the price of Daraprim, a 62-year-old drug used to treat toxoplasmosis, by 4,000 percent, from $13.50 to $750 per pill.<\/p>\n

Although much of the popular outrage centered around Shkreli personally (ABC dubbed him \u201cthe most hated man in America\u201d), the practice of buying up older drugs in order to jack up their prices is rampant across the pharmaceutical industry. Nevertheless, especially after his unrepentant statements to the press, Shkreli became something of a poster child for the antisocial and essentially criminal behavior of Wall Street in the pursuit of ever-higher profits (See: US pharmaceutical industry price-gouging and the case of Martin Shkreli<\/a><\/u>)<\/p>\n

It is noteworthy that Shkreli\u2019s undoing has come not from swindling ordinary patients in need of lifesaving medicines, but from swindling his wealthy investors, leading them to believe that they stood to make millions off of financial speculation.<\/p>\n

\"Getty<\/a>

Martin Shkreli (2nd R), CEO of Turing Pharmaceutical, is brought out of 26 Federal Plaza by law enforcement officials after being arrested for security fraud. Getty Images.<\/p><\/div>\n

Shkreli is accused of defrauding millions from his investors by lying about the earnings and assets of his hedge funds beginning in 2009, while paying far more to himself than he was contractually entitled to. Shkreli\u2019s funds lost millions from bad bets made on pharmaceutical stocks, which he then worked to conceal from his investors.<\/p>\n

\u201cShkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company,\u201d Brooklyn US Attorney Robert Capers told a press conference.<\/p>\n

In 2010, for example, Shkreli told investors in MSMB Capital that the fund had made returns of 37.77 percent since its founding and had $35 million in assets. In fact, the fund had lost 18 percent and had a balance of only a few hundred dollars. In 2011, Shkreli founded the pharmaceutical company Retrophin, whose business model also relied on buying up older medication and jacking up their prices. He then utilized sham consulting contracts to pay $7.6 million of company money to his earlier investors, despite the fact that Retrophin was not liable for those debts.<\/p>\n

Shkreli was allegedly aided in this scheme by corporate lawyer Evan Greebel, who was also arrested on Thursday. Retrophin\u2019s board of directors forced Shkreli out as CEO in September 2014 and filed a $65 million lawsuit alleging that Shkreli used the company as his own personal \u201cpiggy bank.\u201d<\/p>\n

Shkreli founded Turing Pharmaceuticals in February of this year, where he continued his speculative activities. In addition to jacking up the price of Daraprim, Shkreli also lobbied the Food and Drug Administration (FDA) not to approve drugs made by companies whose stock he was short-selling.<\/p>\n

Shkreli\u2019s activities became known to a wider public when a New York Times<\/em> article in September on price gouging in the pharmaceuticals industry focused on Turing\u2019s purchase of Daraprim. Despite popular outrage, and self-serving calls from politicians such as Hillary Clinton for him to cancel the price increase, Shkreli remained adamant. \u201cThere\u2019s no doubt, I\u2019m a capitalist,\u201d Shkreli told CBS in an interview. \u201c\u2026 I\u2019m trying to create a big drug company, a successful drug company, a profitable drug company. We\u2019re trying to flourish.\u201d<\/p>\n

Finally, bowing to public pressure, Shkreli announced that Turing would lower the drug\u2019s price \u201cto a point that is more affordable and is able to allow the company to make a profit, but a very small profit.\u201d However, he since reneged on this promise in November, instead offering lesser discounts to hospital purchasers of the drug.<\/p>\n

Since coming to the public\u2019s attention three months ago, Shkreli, apparently fancying himself as a kind of celebrity, continually inserted himself into the news with provocative and at times bizarre behavior. In November, he purchased the only copy of the Wu Tang Clan\u2019s controversial latest album, intended by the rap group as a luxury item for the super-rich, for $2 million and told Bloomberg News<\/em> that he had no immediate plans to listen to the album. In a subsequent interview with a music web site, Shkreli announced plans to bail a local Brooklyn rapper out of jail in exchange for recording music for him.<\/p>\n

Shkreli is the product of the domination of American society by a narrow layer of an ultra-wealthy financial aristocracy that seeks to engorge itself through speculative and essentially criminal transactions. More often than not, the result is the destruction of productive capacity and the restriction of access to essential commodities.<\/p>\n

Shkreli\u2019s activities, moreover, are not only the norm, they are relatively modest in scale. By contrast, in November the pharmaceuticals giant Pfizer announced that it would buy Allergan for a record $160 billion to create the world\u2019s largest drug company, which will be based in Ireland in order to avoid paying any income tax.<\/p>\n

Go to Original \u2013 wsws.org<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Martin Shkreli, the 32-year-old former hedge fund manager who became infamous earlier this year for raising the price of a 62-year-old drug to treat cancer by 4,000 percent, from $13.50 to $750 per pill, was arrested Thursday [17 Dec] on charges of securities fraud stretching back several years.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[58],"tags":[],"class_list":["post-67981","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/67981","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=67981"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/67981\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=67981"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=67981"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=67981"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}