UPDATE: Shkreli has been charged with securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud in seven different counts, according to an indictment via The New York Times.
Pharmaceutical entrepreneur Martin Shkreli, who came under fire for drastically raising the price of a drug used to fight deadly infections, has been arrested for securities fraud, The New York Times reports.
The charges are believed to parallel a lawsuit filed against Shkreli by Retrophin, a pharmaceutics company he started while also running the hedge fund MSMB Capital Management. The suit accuses Shkreli of using Retrophin as a slush fund to pay off investors who lost money at MSMB; in some instances he did so by allegedly hiring MSMB investors as fake consultants to Retrophin.
The Retrophin board filed its suit against Shkreli in August after booting him from his CEO position in September 2014. In an interview with the Times earlier this month, Shkreli acknowledged he was under criminal and regulatory investigations, but downplayed their importance.
Federal prosecutors are expected to hold a press conference later today, Thursday, when they will detail the specific charges against Shkreli. Also arrested was Evan L. Greebel, a corporate lawyer, who worked with Retrophin and whose name appears on many of the company’s filings with the Securities and Exchange Commission.
Although Retrophin also dabbled heavily in buying the rights to old drugs and raising their prices, Shkreli did not come under fire for the controversial practice until September when his new company, Turing, acquired Daraprim and increased its price from $13.50 a pill to $750. For over 60 years the drug has been used to treat toxoplasmosis, a parasitic infection that can cause brain damage in babies and AIDS patients.
Shkreli, however, was unfazed by the public backlash. He fought critics on Twitter and argued that the price hike was meant to fund further research and development of new drugs.
Coincidentally, the controversy surrounding Shkreli has included various music-related stories, including the recent news that he bought the sole copy of a Wu-Tang Clan album for $2 million. Shkreli had also been a silent investor in Collect Records, a Brooklyn label founded by Thursday’s Geoff Rickly. Although Rickly was aware of Shkreli’s past dealings when he came on as an investor, it wasn’t until after the uproar over the Daraprim hike that Collect decided to severe ties with Shkreli.