FBI arrests scorned 'Pharma Bro,' Martin Shkreli, for securities fraud

Martin Shkreli was criticized online for drastically hiking the price of a drug commonly prescribed to AIDS patients upon taking the helm of Turing Pharmaceuticals. Now he has been arrested on charges of securities fraud relating to a previous venture.

Craig Ruttle/Reuters/File
Carrying an image of Turing Pharmaceuticals CEO Martin Shkreli in a makeshift cat litter pan, AIDS activists and others are asked to leave the lobby during a protest highlighting pharmaceutical drug pricing, Oct. 1. Mr. Shkreli, the former hedge fund manager under fire for buying a pharmaceutical company and ratcheting up the price of a life-saving drug, is in custody following a securities probe, Thursday.

The FBI has arrested the man who sparked outrage this year when his company bought a generic prescription drug used to treat infections and swiftly raised the price of the medicine to astronomical proportions.

Federal authorities took Martin Shkreli into custody in Manhattan Thursday morning after an investigation into securities fraud over two companies he used to run.

Mr. Shkreli is now the chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc. But, at one time, he was in charge of hedge fund MSMB Capital Management and biopharmaceutical company Retrophin Inc.

Retrophin was subpoenaed last January by federal prosecutors who were looking at funds managed by Shkreli before he was fired in 2014. Shkreli has repudiated the charges.

In August, Retrophin filed a $65-million federal lawsuit accusing Shkreli of abusing his power by shuffling the company’s funds to pay off investors at MSMB Capital Management and boost his own wealth.

Shkreli was arrested Thursday at a midtown apartment, from where he came out shepherded by police. The FBI confirmed his arrest. Shkreli will likely be charged for illegally using Retrophin assets to compensate debts after MSMB lost millions of dollars.

Since news of his arrest, shares of Shkreli’s new company, KaloBios, have fallen 53 percent to $11.03 in premarket trading.

Congress has also launched investigations into Shkreli's role in Turning Pharmaceuticals' controversial price hike of Daraprim, a drug used to treat an infection commonly diagnosed in AIDS patients. New York state also looked into possible breaches of antitrust laws.

Turing raised the price of the drug Daraprim from $13.50 to $750 for one pill, a move that sparked extensive online scorn and earned Shkreli the nickname, "Pharma Bro." The treatment had been used for 62 years, before Shkreli took charge of the privately-held start-up.

One doctor told a Senate committee last week the price of using Daraprim per patients, which sometimes include babies, went from $1,200 to more than $69,000.

This report contains material from Reuters.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.