“Pharma Bro” Martin Shkreli Convicted for Securities Fraud
Martin Shkreli, probably the most hated CEO in America, was recently convicted by a jury for two counts of securities fraud and one count of conspiracy to commit securities fraud.
Shkreli rose to infamy when he created Turing Pharmaceuticals and bought the rights to the HIV drug Daraprim. Soon after and without apparent justification, he increased the price of the drug from $13.50 per pill to $750 per pill.
His unrepentant and often smug attitude afterward earned him the nickname of “Pharma Bro,” but it was his history of questionable business practices prior to the Daraprim incident that got him into legal trouble.
Shkreli’s Ponzi Scheme
Shkreli managed two hedge funds: MSMB Capital and MSMB Healthcare. He got off to a bad start right away by lying about the net worth of the funds to lure in investors. He reportedly claimed that the value was around $100 million dollars at a time when it was closer to a mere $300.
Unfortunately for Shkreli, he didn’t manage his investors’ money very well and made a series of bad trades that resulted in substantial net losses. While he apparently originally relied upon the recruitment of new investors to keep the hedge fund above water, eventually this proved impossible to maintain.
Not wanting to fall short of the promises he’d made to the members of his hedge fund, Shkreli reportedly used funds from the pharmaceutical company Retrophin—of which he was the CEO at the time—to pay off the MSMB investors, as well as some of his own personal debts.
Multiple Securities Fraud Convictions
Due to Shkreli’s infamy as the “Pharma Bro,” prosecutors in the recently concluded Retrophin case had a notoriously difficult time finding unbiased jurors. Many candidates reacted negatively to Mr. Shkreli’s perpetual smirk and look of disdain, saying that he looked “evil,” “like a snake,” and worse.
Eventually a suitable jury was found to consider eight counts of criminal acts against Mr. Shkreli, acquitting him of five but convicting him of three. Reportedly, Shkreli responded in character, rolling his eyes disdainfully at the jury as the guilty verdicts were read.
For the three counts he was found guilty of, Shkreli could face as much as twenty years in prison.
He currently awaits sentencing.
SEC Whistleblower Attorneys
Meissner Associates is known for helping whistleblowers expose corporate and securities fraud. Martin Shkreli put his hedge fund investors at risk, defrauding them through his use of a Ponzi scheme. He also put the employees and investors of Retrophin at risk by using company funds to pay off his other debts.
If you’ve encountered securities fraud, whether through your work, investing, or independent analysis, you might be eligible to become a whistleblower and claim an award. To find out, submit a free, confidential tip through the form below. Alternatively, you can also call us at 1-866-764-3100.
