Articles Tagged with Martin Shkreli

Us District Court Judge Kiyo Matsumoto has ruled that Martin Shkreli is going to be held responsible for $10.4M in financial losses sustained by investors after he is sentenced for his crimes. Shkreli, who was found guilty of two counts of securities fraud and one count of conspiracy to commit securities fraud, had tried to argue that he wasn’t responsible for those losses, seeing as investors eventually profited when he partially paid them back with Retrophin stock while he was the CEO of that pharmaceutical company.

The fraud charges are related to his running of the investment funds MSMB Capital, Elea Capital, and MSMB Healthcare. Federal prosecutors accused him of bilking investors of more than $11M in a Ponzi scam. Shkreli also is accused of lying to investors, including failing to tell them when two of the hedge funds he operated failed. Prosecutors contend that Shkreli was the cause of somewhere between $9M and $20M in investor losses.

Judge Matsumoto’s ruling regarding Shkreli’s financial responsibility is more about determining the length of the recommended prison term he should get and not about how much he owes the government, along with his sentence. With this latest ruling, Shkreli could face up to 20 years behind bars. Previous to that, his defense attorneys were hoping to get him either no time in prison or under 16 months. However, the higher the loss involved in a crime, federal guidelines recommend the calculation of a longer prison term.

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A jury has found former pharmaceutical CEO and hedge fund manager Martin Shkreli guilty of securities fraud in connection with his two hedge funds, MSMB Capital and MSMB Healthcare, as well as of conspiracy to commit securities fraud involving shares of the drug company Retrophin, which he founded.

Prosecutors had said that Shkreli misled investors, losing their money on bad stock picks while scheming to try recover millions of dollars of these losses. At one point, Shkreli claimed he had $40M in one hedge fund when it had only $300 in the bank.

That said, prosecutors experienced some challenges in proving their criminal case against the ex-hedge fund manager. For example, during the trial, a number of rich Texan financiers admitted that Shkreli’s scam made them money, sometimes even double or triple of what they invested, when Retrophin’s stock went public.

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A federal jury has found ex-American Realty Capital Properties (ARCP) Inc. CEO Brian Block guilty of securities fraud, conspiracy to commit securities fraud and other offenses, and of submitting false certifications and filings to the US Securities and Exchange Commission. Block was convicted of overstating the adjusted funds from operations (AFFO) at the real estate investment trust. Following the rendering of the verdict in the REIT fraud case, a lawyer for Block said that his client plans to appeal.

According to the US Department of Justice, an employee notified Block, as well as then-accounting chief Lisa McAllister about the funds overstatement before the first quarter results were publicly released in 2014. However, neither of them reported the error to auditors or to the REIT’s board. Prosecutors contend that Block tried to cover up the incorrect figures in financial reports for the second quarter.

The Wall Street Journal, which reviewed ARCP’s filings, reports that during 2014’s first quarter, McAlister and Block overstated the AFFO by over $12M and by about $10.9M during the next quarter. McAlister pleaded guilty to securities fraud and other criminal charges last year.
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At the Federal District Court in Brooklyn, former hedge fund manager Martin Shkreli is on trial for multiple counts of securities fraud and wire fraud. Just this Monday, over 120 potential jurors were dismissed for various reasons. A number of them, through their statements, revealed that they could not be impartial, with some blaming Shkreli for problems involving the pharmaceutical industry, including that his actions had directly impacted them and/or their loved ones.

For example, one potential juror said that both of his parents now struggle to pay for their daily medical care after Shkreli raised the price of Daraprim from $13.50/pill to $750/pill overnight. The drug is used to treat parasites and has also been used for babies and AIDS patients suffering from infection. At the time of the price hike, Shkreli was running Turing Pharmaceuticals.

This criminal securities fraud case, however, is not about his time at Turing. Shkreli is accused of using the assets of Retrophin, a biotech company, in a Ponzi-like fraud when he was its CEO and of robbing investors of over $11M.

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Martin Shkreli, the founder of Turing Pharmaceuticals AG, has asked a judge to wait before scheduling his criminal trial on charges of securities fraud. Shkreli, 33, says he may be subject to more charges.

He is accused of bilking investors of Retrophin Inc., which is a drug company that he also ran, and certain hedge funds. He allegedly used up to $11M of assets from that company to repay hedge fund investors who lost money.

Shkreli also is accused of lying to investors regarding the amount of money he oversaw and about his track record as a money manager. Now, Shkreli may face charges involving the distribution of stock in Retrophin, as well as a private placement deal that helped to finance the company. Also charged over the alleged securities scam is ex-corporate attorney Evan Greebel, who allegedly aided Shkreli with his scam and helped him hide the fraud.

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Ex-Retrophin CEO Martin Shkreli has been charged with fraud based on the time he worked as a hedge fund manager. The Securities and Exchange Commission claims the 32-year-old, who has just stepped down as the CEO of Turing Pharmaceutical, misappropriated funds from two hedge funds, made material misrepresentations, and engaged in other misconduct. His former outside counsel Evan Greebel faces SEC charges of aiding and abetting Shkreli’s alleged fraud.

According to the regulator’s complaint, the purported fraud occurred between 2009 and 2014 when Shkreli was portfolio manager for MSMB Capital Management LLP and MSMB Healthcare LP, which he both founded. The Commission claims Shkreli misappropriated about $120K from MSMB Capital Management to pay for personal expenses while misleading investors about the hedge fund and its size and performance. Shkreli said in July 2010 that the fund had returned over 35% when it actually lost about 18%.

Some of the other allegations against Shkreli are that he lied to one of the hedge fund’s executing brokers about its ability to sell a substantial short position in a pharmaceutical stock in an account. Because of this, the broker lost over $7 million, which this person then had to cover in the open market. Shkreli is also accused of misappropriating $900K in 2013 to resolve claims made by said broker from the short selling losses.

As for Greebel, he is accused of helping Shkreli to fraudulently persuade Retrophin, when he was CEO, to pay dissatisfied investors of his hedge fund who were threatening to take legal action. The two men allegedly had investors go into agreements with the pharmaceutical company by claiming that they were paying for consulting service when what they were doing was releasing Shkreli from possible claims. SEC Director Andrew Calamari said that the attorney’s purported involvement in the hedge fund fraud violated legal boundaries as well as ethical and professional duties.
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