Turing Pharma CEO Martin Shkreli defrauded investors with 'a web of lies,' prosecutor says

Pharmaceutical entrepreneur Martin Shkreli, vilified forbuying up drug companies and then dramatically boostingthe prices of some medications, has beencharged by the FBI with securities fraudrelated tohis former hedge fund and a drug company he once ran.

Shkreli, 32, currently theCEO ofTuring Pharmaceuticals,was taken into custody athis New York City home Thursday.

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The case relates to his dealingsat twofirms, including Retrophin Inc.,a biopharmaceutical company that he founded and used to head.Shkreli's arrest also stems from his time as manager of hedge fund MSMB Capital Management.

A seven-count indictment unsealed in Brooklyn Federal Courtcharged Shkreli with:

• Conspiracy to commit securities fraud.
• Conspiracy to commit wire fraud.
• Securities fraud.

Shkrelipleaded not guiltyto the charges and a federal magistrateagreed to release him on a $5-million US bond.

The indictment against Shkreli alleges that he, among others,fraudulently induced peopleto invest in two separate funds, and misappropriated the assets ofRetrophinto satisfyShkreli'spersonal and unrelated professional debt obligations.

Prosecutors allege thatShkreliraidedRetrophinfor $11 million to pay back his hedge fund clients who'd lostmoney through a series of badtrades. Authorities called it a"Ponzi-likescheme" that ran for five years, ending in 2014.

U.S. prosecutorRobert Capers saidShkrelihad"engaged in multiple schemes to ensnare investors through a web of lies and deceit."

He faces up to 20 years in prison if convicted.

Increased drug price by 5,000%

RetrophinsuedShkreli in Augustfor $65 million US. The firm claimedShkrelihad used his control overRetrophinto enrich himself and pay off claims of investors inMSMB.Shkrelidenied thoseallegations.

The new allegations levelled at Shkrelion Thursdayhave nothing to do with the price-gouging accusations that turned him into a poster boy for corporate greed back in September.

Shkreliwas widely attackedwhen he jacked up the price of Daraprim, a potentially life-savinganti-parasiticdrugtreatment, from $13.50 a pill to $750.

The drug is the only one that isapproved for the treatment oftoxoplasmosis, a disease that is most commonly diagnosed amongpregnant women, cancer patients and AIDS patients.

Faced with a firestorm of protest, heinitially said his firm would lower the price. But Turing Pharmaceuticals later backed away fromthat promise.

Through it all,Shkrelihas beenunapologetic about the huge price hikes he hasengineered.

"No one wants to say it, no one's proud of it, but this is a capitalist society, a capitalist system and capitalist rules," Shkrelisaid in an interview earlier this month. "And my investors expect me to maximize profits, not to minimize them or go half or go 70 per cent but to go to 100 per cent of the profit curve."