Hedge funder Martin Shkreli has been arrested in a securities-fraud investigation
Martin Shkreli was arrested in a securities-fraud investigation on Thursday
morning, Bloomberg reports.
Business Insider has also confirmed the arrest.
Shkreli, the 32-year-old CEO of KaloBios, gained notoriety in September after it was revealed that as CEO of another company, Turing Pharmaceuticals, he raised the price of a drug used to treat parasitic infections by 5,000%.
According to Bloomberg reporters Christie Smythe and Keri Geiger, however, the current charges are unrelated to those two companies.
Before Turing Pharmaceuticals, Shkreli served as CEO of the publicly traded biotech company Retrophin.
"Prosecutors charged him with illegally taking stock from Retrophin Inc., a biotechnology firm he started in 2011, and using it pay off debts from unrelated business dealings," Smythe and Geiger report. "He was later ousted from the company, where he'd been chief executive officer, and sued by its board."
Lawyer Evan Greebel, a partner at Kaye Scholer and outside counsel to Retrophin, was arrested along with Shkreli. Kaye Scholer had no commented when contacted by Business Insider.
United States Attorney Robert Capers will hold a press conference at noon where he'll unseal the indictment of Shkreli and Greebel.
Shares of Retrophin fell more than 6% in the pre-market.
Shkreli has previously denied any wrongdoing at Retrophin, in a message on a pharma news bulletin board.
Retrophin lawsuits
From September 2014 to December 2014, Shkreli was named in four lawsuits filed by Retrophin investors in New York's Southern District.
These suits accused him of having profited through insider trading and making "materially false and misleading statements" that "artificially inflated" the company's stock price. One suit was dismissed. In another, attorneys for both sides indicated they would seek resolution in "private mediation." Two of the lawsuits are ongoing.
Shkreli told Business Insider in September that all of the suits from Retrophin investors were"copy and paste stock went down lawsuit[s]" filed by opportunistic lawyers.
Shkreli is also being sued by Retrophin. According to that suit, which was filed in August, the company's board ousted him as CEO in September 2014.
Retrophin, which is seeking $65 million in damages, accuses Shkreli of engaging in multiple "self-dealing schemes" while he was at the company. Many of these alleged schemes would have benefited MSMB Capital Management, a defunct healthcare-focused hedge fund he helped found.
The schemes detailed in the suit included having Retrophin "enter into sham consulting agreements" through which the company paid investors who were "defrauded" by Shkreli's hedge fund. Shkreli was also accused in the suit of using funds "misappropriated" from Retrophin to pay for a settlement that stemmed from a trade made by his hedge fund, among other things.
Shkreli told Business Insider back in September this suit was "blackmail" and a defensive move by the company.
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