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CEO of Turing Pharmaceuticals Arrested

2015-12-17

Martin Shkreli, CEO of Turing Pharmaceuticals, was involved in a Ponzi scheme, charged prosecutors today.  He was released on five million dollars bail, secured by a checking account, his father, and his brother.  This arrest has “nothing to do” with the enormous price increase he imposed on Daraprim, a generic drug used by about 8,000 people a year for toxoplasmosis and malaria prophylaxis.  The technical charge is “securities fraud” involving a different drug company, Retrophin, and his activities as a hedge fund manager.

Mr. Shkreli, 32, has been involved in a Twitter war with some of his critics; he also distinguished himself by spending two million dollars for the only copy of a Wu-Tang Clan disc.

A lawyer who worked with him, Evan L. Greebel, was also arrested and released on one million dollars bail.

The fraud began at least by 2010, when he claimed that his hedge fund had made over 37 percent profits when it in fact had lost 18 percent and claimed assets of 35 million dollars.  In 2011 he started Retrophin, whose strategy was to buy up old neglected generic drugs and jack up their prices.  For example, he took Thiola, a drug used to prevent kidney stones in certain rare cases, and raised the price from $1.50 to $30.  He was sued by Retrophin, who claimed that he “used the company as his personal piggy bank” (NYT), and to repay investors in his hedge fund who were unhappy at their losses.

I cannot avoid a grim smile of Schadenfreude at the downfall of this most unpleasant man.   See also my blog post of September 20, 2015, about the Daraprim price increase.

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