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Things are going from bad to worse for price gouging pharma bro Martin Shkreli. Just days after he gained Internet infamy for jacking up the price of life-saving drugs some 5,000 percent, it was revealed that federal prosecutors are investigating Shkreli on criminal charges related to his former biotech company.
Shkreli allegedly admitted to owing his former company profits from insider information stock trading and is accused of misappropriation of company funds and defrauding shareholders.
The criminal allegations concern Shkreli's time at Retrophin Inc., a biotechnology company he founded in 2011 and ran until he was fired last year. The Huffington Post reports that SEC filings say Shkreli confessed to owing Retrophin over $600,000 in "short-swing profits," which he accrued by buying and selling stock with inside information during a six-month window. This in and of itself is not illegal, but failing to turn the profits over to the company is.
Shkreli is also accused of selling off Retrophin stock while urging others to buy more of it. And Newsweek reports he may have taken as much as $400,000 from Retrophin and used it to settle investor lawsuits regarding himself and Shkreli's hedge fund, MSMB Capital Management. Shkreli then allegedly classified these payments as compensation under consulting agreements.
The Huffington post article is based on filings with the Securities Exchange Commission (SEC), which investigates cases of insider trading and securities fraud. Using one company as your personal piggy bank to defend lawsuits against another company would certainly fall under the SEC's prosecution of fraud and financial crimes.
Meanwhile, Newsweek is reporting an investigation by the US Attorney's Office for the Eastern District of New York. It's unclear whether these are two separate investigations or part of one criminal complaint. Either way, it's safe to say that Martin Shkreli's big year isn't getting any better.
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