Turing Pharmaceuticals Founder May Face More Securities Fraud Charges

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.

Shkreli has been embroiled in controversy before. He angered the public when he dramatically raised the price of Daraprim, an important drug that combats a potentially deadly parasite, from $13.50/pill to $750/pill. He also doesn’t have the best record as a money manager.

In 2007, Shkreli lost all of Elea Capital Fund, which was a hedge fund that he oversaw. There also was a $2.3M judgment against him in a trade with Lehman Brothers. He lost $3M of clients’ money that he invested in his new fund MSMB Capital and ended up owing Merrill Lynch $7M after betting that shares of Orexigen Therapeutics Inc. would decline.

When he launched MSMB Healthcare after MSMB failed, Shkreli purportedly paid himself way more than the agreed upon 1% management fee and 20% profit incentive. He started MSMB Healthcare using $5M of investor funds, which he then used to invest in Retrophin.

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U.S. Warns Shkreli May Face More Charges in Securities Case, Bloomberg, May 3, 2016

Hedge funder Martin Shkreli has been arrested in a securities-fraud investigation, Business Insider, December 17, 2015