Price-Hike Drug Tycoon Held For ‘Ponzi Scheme’

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Pharmaceutical entrepreneur Martin Shkreli – who hiked the price of a life-saving drug by 5,000% – has been arrested by the FBI on securities fraud charges.

The 32-year-old was wearing a grey hoodie as he was held at an apartment block in midtown Manhattan by agents who escorted him to a waiting car.

In a Thursday news conference, US Attorney Robert Capers said Shkreli “essentially ran his companies like a Ponzi scheme”.

The investigation is linked to his time as manager of hedge fund MSMB Capital Management and chief executive of biopharmaceutical company Retrophin.

He was charged in a seven-count indictment with illegally using Retrophin assets to pay off debts after MSMB lost millions of dollars.

The indictment said Shkreli and others orchestrated three interrelated fraud schemes from 2009 to 2014.

They are accused of soliciting investments into two separate funds before misappropriating Retrophin’s assets to pay off Shkreli’s personal and professional debts.

A second defendant, 42-year-old Evan Greebel, an attorney, was charged with conspiracy.

Both entered pleas of not guilty through their lawyers.

Shkreli was released on a $5m bail bond, after forfeiting his passport.

Under the terms of his release, his travel will be restricted to eastern and southern districts of New York.

In a statement, Shkreli’s representative said: “Mr. Shkreli is confident that he will be cleared of all charges filed by the US Attorney’s Office for the Eastern District of New York (EDNY) and the Securities & Exchange Commission (SEC).”

“(He) also strongly denies the charges regarding the MSMB entities, which involve complex accounting matters that the EDNY and SEC fail to understand,” the representative added.

Shkreli gained notoriety in September when his start-up bought the right to a life-saving drug and then hiked its price from $13.50 to $750 per pill.

Daraprim is a 62-year-old drug mainly used to treat people who have toxoplasmosis, a potentially deadly parasitic infection.

The arrest is unrelated to the drug-pricing row or his current companies Turing Pharmaceuticals and KalaBios.

However, shares of KaloBios fell by around half in premarket trading.

Shkreli – who has called himself “the world’s most eligible bachelor” on Twitter – has shrugged off criticism of his drug price-hikes.

He told a Forbes summit this month: “No one wants to say it, no one’s proud of it, but this is a capitalist society, a capitalist system and capitalist rules.”

Shkreli was in the news again earlier this month when it emerged thathe had purchased a single copy of a one-off Wu-Tang Clan album for $2m (£1.3m).

On Thursday, the prosecutor told reporters: “We’re not aware of where he got the funds that he raised for the Wu-Tang Clan album.”

The group created just one copy of its album Once Upon A Time In Shaolin, and said it would be sold to the highest bidder.

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