Martin Shkreli, former CEO of Retrophin and Turing Pharmaceuticals, notorious for raising the price on a life-saving drug from $13.50 to $750 per pill and for his ‘Pharma Bro’ persona on Twitter and YouTube, was convicted on felony securities fraud charges.
He was accused of misleading investors in his two failed hedge funds. Instead of telling them what he was doing with their money, he lost it on bad stock picks. As CNBC reports, Shkreli then came up with a scheme to recover the money:
Prosecutors said a mountain of testimony and evidence at that trial showed that Shkreli duped multiple investors into putting millions of dollars into two hedge funds he ran, MSMB Capital and MSMB Healthcare, by falsely claiming to have an excellent record of running such funds, and by falsely stating his investment strategy had a low level of risk.
After getting their money, prosecutor said, Shkreli quickly lost much of it, and also used some of it to capitalize his infant company Retrophin even as he continued sending out financial statements to investors claiming positive returns.
And when investors asked for their money to be redeemed to them in cash, Shkreli brushed them off for months or more, inventing excuses and suggesting alternative ways to pay them back, according to the prosecution’s case.
Two of the securities fraud counts for which Shkreli was convicted related to those hedge funds.
Prosecutors said that he then improperly used Retrophin stock and cash from the young firm to pay off the the funds’ investors.
Even though the convictions carry a maximum penalty of 20 years in prison, Shkreli could get no jail time since the defrauded investors did not actually suffer any financial losses.