The FBI has announced Wednesday that Turing Pharmaceutical CEO Martin Shkreli ran a multi-million dollar Ponzi scheme that “stole millions” from unsuspecting investors.
Shkreli, who ignited a national firestorm by overcharging the life-saving drug Daraprim in September, was arrest by Federal agents on allegations of securities fraud early Thursday morning.
“His plots were matched only by efforts to conceal the fraud, which led him to operate his companies, including a publicly traded company, as a Ponzi scheme, where he used the assets of the new entity to pay off debts from the old entity,” U.S. Attorney Robert Capers said in a press conference.
Related article – Price-gouging ‘Pharma Bro’ Martin Shkreli was just arrested on fraud charges
According to investigators, Shkreli founded several hedge fund companies since 2009, from which he used one to finance the other in a proverbial house of cards.
He was able to lie his way into finding new investors for new companies, while abandoning the others with an alleged promise to pay back the lost capital.
“Shkreli committed fraud in nearly every aspect of his hedge fund managing,” Andrew Cereseny of the Securities Exchange Commission said.
FBI Assistant Director-in-Charge Diego Rodriguez said that Shkreli targeted investors and retained their business by making several misrepresentations and omissions about key facts of the funds he managed.
In the end, Shkreli used a series of settlements and sham consulting agreements that resulted in investors suffering losses in excess of $11 million, according to Rodriguez.
Shkreli and his business crony who was also arrested, Evan L. Greebel, will each face a maximum prison sentence of 20 years if convicted. Authorities say the investigation was continuing and more forthcoming arrests are possible.
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