Pharmaceutical entrepreneur Martin Shkreli, who has come under fire on allegations of drug price gouging, was arrested Thursday by federal authorities.
The investigation, in which Shkreli, 32, has been charged with securities fraud, is related to his time as a hedge fund manager and running the biopharmaceutical company Retrophin — not the current price-gouging controversy at Turing.
At a news conference Thursday held by federal prosecutors and the Securities and Exchange Commission, officials painted Shkreli's business dealings as "a securities fraud trifecta of lies, deceit and greed." He committed "fraud in nearly every aspect of hedge fund investments and in connection with his stewardship of a public company," said Andrew Ceresney, SEC enforcement director.
At his arraignment Thursday afternoon, Shkreli pleaded not guilty. He was released on $5 million in bail.
Allegations in the indictment and SEC suit predate the public outrage and legislative scrutiny over Shkreli's decision at Turing to acquire a decades-old drug and raise the price of it overnight from $13.50 to $750 a pill.
In a recent interview with the New York Times, he acknowledged the regulatory and criminal investigations into claims of wrongdoing at hedge funds he once controlled as well as at Retrophin, but was dismissive of the inquiries' importance.
The SEC's lawsuit detailed a time line for the allegations: Shkreli told investors in his hedge fund that he had a prominent industry auditing firm, which he did not. In a 2010 email, he told investors his MSMB Capital Management fund had returned 37.77 percent since its founding, when in fact it had sustained losses of 18 percent. He also told investors the firm had assets of $35 million when, in fact, it had less than $1,000 in the bank and its brokerage accounts.
Retrophin said in a statement Thursday that its board had replaced Shkreli last year "because of serious concerns about his conduct" and had cooperated fully with government investigations into Shkreli's activities.