Reviled drug CEO Martin Shkreli indicted by feds
NEW YORK (CNNMoney) — Pharmaceutical CEO Martin Shkreli, widely pilloried for jacking up the price of a drug used to treat AIDS patients, has been indicted on criminal charges that he bilked a company out of millions of dollars.
The accusations do not relate to Turing Pharmaceuticals, the company that raised the price of Daraprim by more than 5,000%.
Instead, the federal case centers on his time as CEO of Retrophin, another biotech company that ousted him last year. The indictment, brought by prosecutors in Brooklyn, was unsealed Thursday.
“Shkreli essentially ran [Retrophin] like a Ponzi scheme,” said U.S. Attorney Robert Capers. He said he used the company “as his personal piggy bank.”
Shkreli and an alleged co-conspirator, an attorney who worked with him at Retrophin, face securities fraud and conspiracy charges alleging that they improperly channeled millions in cash and Retrophin stock through sham consulting agreements.
According to prosecutors, the money and stock went to satisfy claims from investors in hedge funds that Shkreli previously bilked.
Retrophin has since sued Shkreli in federal court, seeking $65 million from him, accusing him of misusing the company’s cash and stock. He has denied those charges.
The FBI arrested the 32-year-old Shkreli on Thursday morning in New York.
An attorney who represented Shkreli in a previous civil lawsuit did not return calls seeking comment. A call to Shkreli’s office line went unanswered.
Turing, which Shkreli started after leaving Retrophin, is privately held.
But Shkreli recently took over another small publicly-traded drug company, KaloBios, which develops cancer drugs.
Shares of KaloBios soared 400% on the day after the takeover news. But they plunged 50% Thursday before trading was halted.
Earlier this year, Shkreli became headline fodder with the drug price hike at Turing.
Shkreli has been the focus of widespread criticism in the media, which dubbed him “the most hated man in America,” as well as by politicians. He defiantly defended the price increase in interviews and frequent tweets.
Democratic presidential candidate Bernie Sanders called him a “poster child of greed,” and refused to keep a $2,700 contribution Shkreli made to his campaign. Sanders gave the money to a community health center.