America's most hated pharma bro is likely wishing that he had an extra $2 million laying around for bail money right about now.
A boyish drug company entrepreneur, who rocketed to infamy by jacking up the price of a life-saving pill from $13.50 to $750, was arrested by federal agents at his Manhattan home early Thursday morning on securities fraud related to a firm he founded.
Wait, we know that guy!
Martin Shkreli, 32, ignited a firestorm over drug prices in September and became a symbol of defiant greed. The federal case against him has nothing to do with pharmaceutical costs, however. Prosecutors in Brooklyn charged him with illegally taking stock from Retrophin Inc., a biotechnology firm he started in 2011, and using it to pay off debts from unrelated business dealings.
Oh Martin, is this where you got the money for that emo label? Is this how you were going to remunerate your ex-girlfriend for some nostalgic nookie?
In the case that closely tracks that suit, federal prosecutors accused Shkreli of engaging in a complicated shell game after his defunct hedge fund, MSMB Capital Management, lost millions. He is alleged to have made secret payoffs and set up sham consulting arrangements.
Well this does explain Martin's seemingly desperate yearn to price-gouge. He needed all that revenue after learning that was a terrible hedge fund manager.
Retrophin sued Shkreli in August for misuse of company funds, claiming he engineered numerous transactions between investors in MSMB and the biotechnology firm. Similar allegations are laid out in the company's regulatory filings.
The company alleged in a complaint filed in Manhattan federal court that, through a disastrous trade with Merrill Lynch in 2011, Shkreli cost MSMB more than $7 million, leaving it virtually bankrupt.
Retrophin also asserts that Shkreli entered into payoff agreements with as many as 10 MSMB investors who lost money when the hedge fund became insolvent. Shkreli paid some investors through fake consulting agreements and others through unauthorized appropriations of stock and cash, the company alleged.
While we're loath to offer anyone advice, we will break from tradition and tell Martin that during his time in Brooklyn's federal holding cells, he would be wise to not make any offers to "smash that" or share his thoughts about the future of modern music. You know, like this one:
Hang in there, Martin...
The Securities and Exchange Commission, which according to court documents opened an investigation into Shkreli in 2012, is expected to file a parallel civil complaint against him, according to people familiar with the matter.