Page 25 - Martin Shkreli Case Study

Shkreli Arrested

On December 16th KaloBios
Pharmaceuticals Inc., fired
Martin Shkreli as chief
executive, the same day he was
arrested on charges of a
securities fraud.

Shkreli was charged with
securities fraud and conspiracy. Prosecutors say from 2009 to 2014,
Shkreli lost some of his hedge fund investors' money through bad
trades, then looted a pharmaceutical company where he was CEO for
$11 million to pay back his disgruntled clients.

His replacement at Turing as interim CEO, Mr. Tilles had been chairman

of the company who vowed to make the drug affordable:

"We remain committed to ensuring that all patients have ready
and affordable access to Daraprim."

Shkreli had been arrested for engaging in what U.S. prosecutors said
was a Ponzi-like scheme at his former hedge fund MSMB Capital
Management and Retrophin Inc. He was released soon after on a $5
million bond. If convicted Shkreli faces up to 20 years in prison.
The US authorities claimed that Shkreli essentially ran his company like
a Ponzi scheme where he used each subsequent company to pay off
defrauded investors from the prior company.

The SEC said Shkreli began losing money and lying to investors from
the time he began managing money. In his mid-20s, he got nine
investors to place $3 million with him and at one point he had only $331.