January 20, 2016
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – Former pharmaceutical entrepreneur and chief executive Martin Shkreli is in the market for new attorneys to defend him against seven counts of securities fraud, The New York Times reported this morning.
Shkreli’s Washington, D.C.-based attorneys at Arnold & Porter filed a letter with the Federal District Court in Brooklyn noting that Shkreli was in the process of seeking new legal representation, the Times said. Neither Shkreli nor his attorneys have publicly provided a reason for the change. A judge granted the request and has ordered Shkreli to find new representation within two weeks, CNBC reported.
Shkreli’s next hearing date is set for Feb. 3.
In an interview with a Fox affiliate in New York, Shkreli maintained his innocence and also decried the nickname “pharma bro.” Shkreli said the government’s case against him is “fictitious.” On his Twitter account, Shkreli said he is confident he will prevail against the allegations, which he called baseless. He released a statement saying the Retrophin lawsuit should have been a private civil affair. Regarding the practices of his former hedge fund, Shkreli said the deals he made involved “complex accounting matters” that federal authorities “fail to understand.”
Shkreli was arrested by federal authorities on Dec. 17. The seven count indictment against Shkreli included multiple charges of securities fraud, securities fraud conspiracy and wire fraud conspiracy. U.S. Attorney Robert Capers accused Shkreli of running his former company Retrophin Pharmaceuticals and his former hedge fund MSMB Capital Management like a “Ponzi scheme.” The indictment said Shkreli’s scheme, which caused his investors to suffer a loss of more than $11 million, was carried out over a five-year period, from 2009 to 2014. At the time of his arrest, Shkreli was helming two different pharmaceutical companies, Turing Pharmaceuticals, a company he founded last year and California-based KaloBios , a company he acquired a majority stake in in November 2015. Following his arrest, Shkreli resigned as CEO of Turing and was terminated as CEO of KaloBios by that company’s board of directors.
Shkreli gained notoriety in September after he increased the price of Daraprim, a toxoplasmosis treatment, by 5,000 percent. Shkreli’s Turing acquired the drug in August for $55 million. The cost of Daraprim jumped from $13.50 per pill to $750, which sparked an outrage across the country and ignited a firestorm among politicians who began decrying the high price of prescription medications.
Shkreli is free on a $5 million bond he secured by using a $45 million E-Trade account as collateral. Shkreli is not allowed to sell or transfer any assets of the account. If the account somehow falls below $5 million, E-Trade has been ordered by the courts to immediately notify prosecutors. The action was taken by the courts to settle a lien that authorities had placed on Mr. Shkreli’s account as security for the bond.
In August, Retrophin sued Shkreli for $65 million over his use of company funds while helming that company. In its lawsuit, Retrophin said Shkreli breached his duty of loyalty to the biopharmaceutical company and he engaged in self-dealing and also seeks disgorgement of money paid to him. Retrophin said Shkreli used company funds for personal use, enriched himself through false consulting contracts and referred to Shkreli as “the paradigm faithless servant” who “is not entitled to compensation or post-separation benefits.” Retrophin alleges Shkreli struck payoff agreement up to 10 MSMB investors who lost money when the hedge fund collapsed. Shkreli paid some investors through fake consulting agreements and others through unauthorized appropriations of stock and cash, the company alleged in its lawsuit.
The criminal case has been assigned to United States District Judge Kiyo A. Matsumoto. If convicted, Shkreli faces a maximum sentence of 20 years’ imprisonment, according to the U.S. Attorney’s Office.
