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| 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 Thursday, Dec. 17, 2015, after being taken into custody following a securities probe. A seven-count indictment unsealed in Brooklyn federal court Thursday charged Shkreli with conspiracy to commit securities fraud, conspiracy to commit wire fraud and securities fraud. |
NEW YORK
(AP) -- A boyish-looking entrepreneur who became the new face of
corporate greed when he jacked up the price of a lifesaving drug
fiftyfold was led away in handcuffs by the FBI on unrelated fraud
charges Thursday in a scene that left more than a few Americans
positively gleeful.
Martin Shkreli, a
32-year-old former hedge fund manager and relentless self-promoter who
has called himself "the world's most eligible bachelor" on Twitter, was
arrested in a gray hoodie and taken into federal court in Brooklyn,
where he pleaded not guilty. He was released on $5 million bail.
If
convicted, he could get up to 20 years in prison. He left court without
speaking to reporters. His attorneys had no immediate comment.
Hours later, Shkreli tweeted: "Glad to be home. Thanks for the support."
Online,
many people took delight in his arrest, calling him a greedy, arrogant
"punk" who gave capitalism a bad name and got what was coming to him.
Some cracked jokes about lawyers jacking up their hourly fees 5,000
percent to defend him in his hour of need.
Prosecutors
said that between 2009 and 2014, Shkreli lost some of his hedge fund
investors' money through bad trades, then looted Retrophin, a
pharmaceutical company where he was CEO, for $11 million to pay back his
disgruntled clients.
Shkreli "engaged in
multiple schemes to ensnare investors through a web of lies and deceit,"
U.S. Attorney Robert Capers said in a statement.
Shkreli
was charged with securities fraud and conspiracy. A second defendant,
lawyer Evan Greebel, of Scarsdale, New York, was charged with conspiracy
and also pleaded not guilty.
A spokesman for Shkreli released a statement saying he denies the charges and "expects to be fully vindicated."
"It
is no coincidence that these charges, the result of investigations
which have been languishing for considerable time, have been filed at
the same time of Shkreli's high-profile, controversial and yet unrelated
activities," said spokesman Craig Stevens.
In
September, Shkreli was widely vilified after a drug company he founded,
Turing Pharmaceuticals, spent $55 million for the U.S. rights to sell a
medicine called Daraprim and promptly raised the price from $13.50 to
$750 per pill.
The 62-year-old drug is the
only approved treatment for toxoplasmosis, a rare parasitic disease that
mainly strikes pregnant women, cancer patients and AIDS patients.
The
move sparked outrage on the presidential campaign trail and helped
prompt a Capitol Hill hearing on drug prices. Headlines called the
Brooklyn-born Shkreli such thing as "America's most hated man," the
"drug industry's villain" and "biotech's bad boy" - and those were just
some of the more printable names.
Hillary
Clinton called it price-gouging and said the company's behavior was
"outrageous." Donald Trump called Shkreli "a spoiled brat." Bernie
Sanders returned a donation from Shkreli.
Prosecutors
said the investigation that led to Shkreli's arrest dated back to last
year, before the furor over the drug-price increase.
Shkreli
defended the increase by saying that insurance and other programs would
enable patients to get the drug and that the profits would help fund
research into new treatments.
But he also made
an unapologetic business-is-business argument for the price jump. In
fact, he recently said
he probably should have raised it more.
"No
one wants to say it, no one's proud of it, but this is a capitalist
society, a capitalist system and capitalist rules," he said in an
interview at the Forbes Healthcare Summit this month. "And my investors
expect me to maximize profits, not to minimize them or go half or go 70
percent but to go to 100 percent of the profit curve."
Amid
the uproar, Shkreli said Turing would cut the price of Daraprim. Last
month, however, Turing reneged.
Instead, the company is reducing what it
charges hospitals for Daraprim by as much as 50 percent.
While
most patients' copayments will be $10 or less a month, insurance
companies will be stuck with the bulk of the tab, potentially driving up
future treatment and insurance costs.
On Thursday, Robert Weissman, president of the watchdog group Public Citizen, said Shkreli got "a deserved comeuppance."
"Al
Capone was brought down for tax evasion, but he committed many worse
crimes," Weissman said. "So if Shkreli's arrested for securities
violations, it's a comparable justice."
Shkreli
is known as a prolific user of Twitter and often livestreams his work
day over the Internet, inviting people to chat with him at his desk. He
refers to those who follow him online as his "fans."
Recently
it emerged that he bought the only copy of a Wu-Tang Clan album titled
"Once Upon a Time in Shaolin," which the hip-hop group sold on the
condition that it not be released publicly. He said he paid $2 million.
The
FBI's New York office said on Twitter that agents did not seize
Shkreli's album. Said Capers, the chief federal prosecutor: "We're not
aware of how he raised the funds to buy the Wu-Tang album."
Last
month, Shkreli was named chairman and CEO of KaloBios Pharmaceuticals
after buying a majority stake in the struggling cancer drug developer.
After his arrest, its stock fell by more than half Thursday before
trading in the company was suspended.
