Business

Pharma boss Martin Shkreli arrested on fraud charges

Martin Shkreli, the former hedge fund manager under fire for buying a pharmaceutical company and ratcheting up the price of a life-saving drug, is escorted by law enforcement agents in New York Image copyright AP

Representatives for pharmaceutical boss Martin Shkreli, who sparked outrage after hiking up the price of a medicine used by Aids patients, says he strongly denies fraud charges.

He is accused of fraud relating to a drug company he previously headed, Retrophin, and a hedge fund, MSMB Capital Management, where he was a fund manager.

He is currently chief executive of Turing Pharmaceuticals.

Mr Shkreli was arrested by the FBI.

He was later bailed on payment of a $5m (£3.3m) bond package and allowed home.

A spokesman for Mr Shkreli said he expected to be "fully vindicated".

Mr Shkreli was accused of running a "Ponzi scheme" where Retrophin assets were illegally used to pay off debts after MSMB lost millions of dollars.

At a news conference on Thursday, US Attorney Robert Capers, said: "Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit."

FBI prosecutors allege Mr Shkreli cheated the company's investors out of $11m (£7.3m).

The US Securities and Exchange Commission also charged him with defrauding investors in his hedge fund to hide poor investment choices.

The SEC alleged Mr Shkreli took $120,000 from one fund to use on personal expenses - including his clothes and rent- told investors in another fund it had $35m in assets when it really had less than $7,000 and stole $900,000 from a fund in 2013 to pay a legal settlement.

Price hike

In September he was lambasted after hiking up the price of popular medicine Daraprim by 5,000% - from $13.50 to $750 - prompting unfavourable reaction on social media.

The drug treats toxoplasmosis, a parasitic affliction that affects people with compromised immune systems, and is used by Aids patients.

The move led presidential candidate Hilary Clinton to vow to tackle the problem of price gouging by pharmaceutical companies.

Analysts said that the issue had since led to volatility in pharma shares.

In November, Mr Shkreli was also made chief executive of KaloBios Pharmaceuticals. Share trading in the company was suspended on reports of Mr Shkreli's arrest.

'Serious concerns'

The FBI's investigation dates back at least to January, when Retrophin said it received a subpoena from prosecutors seeking information about its relationship with Shkreli.

Retrophin, which Shkreli founded in 2011, sued its former boss in August for misuse of company funds.

Retrophin's board members chose to replace Shkreli as chief executive of the company in September 2014.

On Thursday, the company wrote in a statement: "The directors of Retrophin replaced Martin Shkreli as chief executive officer more than a year ago because of serious concerns about his conduct.

"Following his departure, the company authorised an independent investigation of Mr Shkreli's conduct, publicly disclosed its findings, and has fully cooperated with the government investigations into Mr Shkreli."

More on this story