Drug Company CEO Martin Shkreli Reportedly Arrested On Charges Of Fraud

Martin Shkreli, the pharmaceutical CEO who infamously jacked up the price of an HIV medication from $13.50 to $750 per pill, was arrested earlier today.

According to The New York Times, federal agents arrested the 32-year-old at his Manhattan home for securities fraud.

Prosecutors claim Shkreli used stock from Retrophin LLC, a biotechnology company he founded in 2011, to pay off debts.

The charges seem to be related to a $65 million lawsuit Retrophin filed against Shkreli last August accusing him of using company money to pay off investors of hedge fund MSMB Capital Management LLC, which Shkreli also ran.

Shkreli was dismissed from Retrophin by its board in September of 2014.

The lawsuit states he hired MSMB investors as fake Retrophin consultants and secretly paid them off with Retrophin stocks after the hedge fund lost millions due to a trade deal with Merrill Lynch, Bloomberg reports.

Retrophin's complaint reportedly stated,

Shkreli was the paradigm faithless servant. Starting sometime in early 2012, and continuing until he left the company, Shkreli used his control over Retrophin to enrich himself and to pay off claims of MSMB investors (who he had defrauded).

Shkreli is additionally accused of concealing the payments with fraudulent tactics like classifying MSMB's $900,000 equity investment in Retrophin as a loan.

He is said to have then paid off that loan with money from Retrophin.

Shkreli previously denied Retrophin's accusations and claimed the lawsuit was merely an attempt from the company to avoid giving him severance payments.

A New York lawyer accused of conspiring with Shkreli was arrested today as well.

In 2012, the US Securities and Exchange Commission launched an investigation on Shkreli, possibly due to Retrophin's strategy of acquiring old drugs and then raising their prices.

A neglected drug used to treat kidney stones, for example, went from $1.50 to $30 per pill.

The US Securities and Exchange Commission is expected to file a civil lawsuit of its own against Shkreli, according to sources close to the investigation.

Citations: Martin Shkreli Arrested on Fraud Charges (The New York Times), Shkreli CEO Reviled for Drug Price Gouging Arrested on Securities Fraud Charges (Bloomberg)