Martin Shkreli, a boastful pharmaceutical executive who came under withering criticism for price gouging vital drugs, denied securities fraud charges on Thursday following an early morning arrest, and was freed on a $5 million bond. While the 32-year-old has earned a rare level of infamy for his brazenness in business and his personal life, what he was charged with
had nothing to do with skyrocketing drug prices. He is accused of
repeatedly losing money for investors and lying to them about it,
illegally taking assets from one of his companies to pay off debtors in
another.
In the federal indictment and a complaint by the
Securities and Exchange Commission, authorities say Shkreli began losing
money and lying to investors from the time he began managing money. In
his mid-20s, he got nine investors to place $3 million with him and at
one point he had only $331. Securities fraud is hardly unheard of on Wall Streeet and
the amounts involved here are nowhere near on the scale of Bernie
Madoff. But Shkreli’s case has drawn such attention because of his
defiant price-gouging and his own up-by-the-bootstraps history.
The son of immigrants from Albania and Croatia who did
janitorial work and raised him and his brothers in working-class
Brooklyn, Shkreli seemed at first to embody the American dream and then
to mock it. After dropping out of an elite Manhattan high school, he
worked as an intern for Jim Cramer’s hedge fund as a 17-year-old and
quickly impressed with his ability to call stocks. He created hedge
funds, taught himself biology and, after earning a BA at Baruch College
in New York City, began hedge funds investing in biotech.
He became famous within a certain world but entered public consciousness after he raised the price
more than 55-fold for Daraprim in September from $13.50 per pill to
$750. It is the preferred treatment for a parasitic condition known as
toxoplasmosis, which can be deadly for unborn babies and patients with
compromised immune systems including those with HIV or cancer. His
company, Turing Pharmaceuticals AG, bought the drug, moved it to a
closed distribution system and instantly drove the price into the
stratosphere. He drew shocked rebukes from Congress, doctors and
presidential candidates, and brought public attention to the rising
prices of older drugs. Donald Trump called Shkreli a “spoiled brat,” and
the BBC dubbed him
the “most hated man in America.” Bernie Sanders, the Democratic
presidential candidate, rejected a $2,700 campaign donation from him,
directing it to an HIV clinic. A spokesman said the campaign would not
keep money “from this poster boy for drug company greed.”
All the criticism seemed at first to have some impact and
Shkreli said he would lower the price. Then he reneged. When Hillary
Clinton tried one more time last month to get him to cut the cost, he
dismissed her with the tweet “lol.”
At a Forbes summit in New York this month, wearing a hooded sweatshirt,
he said if he could have done it over, “I probably would have raised
the price higher,” adding, “My investors expect me to maximize profits.”
