Martin Shkreli, infamous for leading Turing Pharmaceuticals to a 5,000 percent price increase of an essential drug, has been arrested on charges of securities fraud. Prosecutors allege he illegally took stock from his biotechnology firm, Retrophin Inc., and used that to pay debts from unrelated business dealings, Bloomberg reports. Photo: Martin Shkreli/Twitter
WASHINGTON, Dec. 17 (UPI) -- Martin Shkreli, infamous for shepherding Turing Pharmaceuticals to a 5,000 percent price increase of an essential drug, has been arrested on charges of securities fraud, Bloomberg reported.
Shkreli, 32, was arrested in relation to a firm he founded in 2011, unrelated to the price hike he instituted for Daraprim. Prosecutors allege he illegally took stock from his biotechnology firm, Retrophin Inc., and used that to pay debts from unrelated business dealings, the Bloomberg report said Thursday. The Retrophin board of directors later sued Shkreli and he was ousted from the company where he served as CEO.
In a related move, the Securities and Exchange Commission, which opened an investigation into Shkreli in 2012, is expected to file a civil complaint against Shkreli for allegedly fraudulently reclassifying a $900,000 equity investment as a loan.
Shkreli allegedly reclassified a equity investment from his defunct hedge fund, MSMB Capital Management, after it lost millions and made Retrophin pick up the tab as a loan.
In August, Turing Pharmaceuticals acquired Daraprim, often used to treat toxoplasmosis in people with compromised immune systems like AIDS patients, and the company immediately increased the price of the drug. The price increase raised the average treatment costs for patients from about $1,130 a year to $63,000. Certain patients may need to pay up to $634,000 each year for Daraprim treatment.
Daraprim, known generically as pyrimethamine, treats toxoplamosis, an infection caused by the Toxoplasma gondii parasite, one of the world's most common parasites. The parasite can enter its host when people eat under-cooked meat or drink contaminated water.
In November, a special committee of the U.S. Senate reached out to Turing Pharmaceuticals to demand explanations over the company's controversial 5,000 percent price increase of Daraprim.
Although toxoplamosis isn't considered dangerous in people who are generally healthy, for people who are pregnant or have a weakened immune system, such as AIDS or cancer patients, the effects of the infection can be severe. Daraprim is also used to treat malaria.
Shkreli received more negative backlash earlier this month when it was revealed he was the buyer of Wu-Tang Clan's one-of-a-kind album, Once Upon a Time in Shaolin. He paid $2 million for the only issued copy of the album, immediately placed it in a vault and said he "probably won't listen to it for years."
He was contractually obligated not to sell the music commercially for 88 years.