FBI arrests Pharma CEO Martin Shkreli on securities fraud charge - KWWL - Eastern Iowa Breaking News, Weather, Closings

FBI arrests Pharma CEO Martin Shkreli on securities fraud charges

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(NBC) -

The pharma boss who became infamous after hiking the price of an HIV drug by 5,000 percent has been arrested by the FBI on securities fraud charges, law enforcement sources said.

The arrest of hedge fund manager-turned-pharmaceutical company CEO Martin Shkreli comes amid an investigation related to a hedge fund and drug company he once ran, Reuters reported.

Shkreli, 32, who was taken into custody at his midtown Manhattan residence, is currently the boss of Turing Pharmaceuticals. He was previously the manager of hedge fund MSMB Capital Management and chief executive of biopharmaceutical company Retrophin Inc.

He is expected to be named in an indictment in federal court in Brooklyn, New York, along with Evan Greebel, who was Retrophin's outside counsel while he was a partner at the law firm Katten Muchin Rosenmann, Reuters reported.

Brooklyn-born Shkreli will be charged for illegally using Retrophin assets to pay off debts after MSMB lost millions of dollars, sources told Reuters.

The probe dates back to at least January when Retrophin said it received a subpoena from prosecutors seeking information about its relationship with Shkreli.

That subpoena also sought information about individuals or entities that had invested in funds previously managed by Shkreli, Retrophin said in a regulatory filing.

MSMB Capital Management was founded in 2009, and Shkreli announced its closure in 2012. Retrophin was founded in 2012, and Shkreli was its CEO until the company fired him in September 2014.

Retrophin in August sued Shkreli in federal court in Manhattan for $65 million, claiming he had used his control over Retrophin to enrich himself and pay off claims of investors in MSMB, which he had also defrauded.

"The $65 million Retrophin wants from me would not dent me," Shkreli previously told Bloomberg Businessweek about the suit. "I feel great. I'm licking my chops over the suits I'm going to file against them."

In September, Shkreli became a lightning rod over another issue: the soaring prices of prescription drugs.

He announced that month that he was ratcheting up the cost of Daraprim from $13.50 to $750 per pill, stoking outrage. Headlines called him the "most hated man in America." Presidential candidates from Hillary Clinton to Donald Trump — the latter called him a "spoiled brat" — pilloried Shkreli.

The CEO defended his actions, saying his first priority was to his investors.

The backlash led the privately held company to say last month it was cutting the cost of the drug.

Shkreli was also unmasked this month as the person who reportedly paid $2 million for the only copy of the new Wu-Tang Clan album, "Once Upon a Time in Shaolin."

His financial perch is a long way from his working-class Brooklyn neighborhood; Shkreli is the son of Albanian and Croatian immigrants who worked as janitors.

With a knack for crunching numbers, he made inroads in the elite world of Wall Street. As a 17-year-old college student, he interned under hedge fund manager and CNBC "Mad Money" host Jim Cramer, Bloomberg reported.

He graduated from Baruch College with a business degree, and set up his own hedge fund in his 20s with the help of an investor. He focused on the biotech field, eventually earning the monikers "boy genius" and "Pharma Bro." He also earned a reputation as a risk taker, but fell into trouble with accusations of misusing company funds.

Shkreli, who once idolized Bill Gates, has been an avid social media user, firing off tweets about everything from his company's stock to his crush on pop star Katy Perry.

He also regularly live-streams his more mundane activities on YouTube, sometimes sporting a laid-back style of hooded sweatshirts and sneakers.

In the latest three-hour video posted on Wednesday night, he plays guitar and computer chess, and listens to people comment online about him buying the Wu-Tang Clan record.

His favorite genre of music is hip-hop, he has said in interviews, and he has aspirations to become a rapper.

"I don't rap for the money—I do it because I love it," he tweeted last week.

In a New York Times profile published this month, Shkreli was labeled the "bad boy of pharmaceuticals." Despite being criticized for his "greedy" behavior, Shkreli told the newspaper that he receives little compensation from his companies. He struck back at the suit by Retrophin that he illegally profited to enrich himself.

"It's rife with inaccuracies," he told The Times, adding it contained "vile accusations." 

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