Photo Martin Shkreli, known for ratcheting up drug prices, was arrested before dawn Thursday. Credit Craig Ruttle/Associated Press Martin Shkreli told investors that his hedge fund had an auditor, that it had posted a 36 percent return since its inception and that it had $35 million in assets under management.
None of it was true, federal authorities say.
Mr. Shkreli has gained nationwide notoriety for his bravado in spiking prices on pharmaceuticals , one of the biggest industries in the country. But his predawn arrest in Manhattan on Thursday was on charges of a small-time hedge fund fraud.
An indictment unsealed by federal prosecutors in Brooklyn and a related civil lawsuit filed by the Securities and Exchange Commission assert that Mr. Shkreli was nothing like the stock market genius and savvy entrepreneur that he had portrayed.
His former hedge fund, MSMB Capital Management, had recorded losses of at least 18 percent and was essentially broke by 2011, having less than $1,000 in its bank account, according to the indictment. The hedge fund had no auditor.
The authorities described Mr. Shkreli, 32, as a failed trader with a habit of spreading falsehoods and running his businesses on fumes and misappropriated money. His Ponzi-like scheme, they said, involved looting Retrophin, a biopharmaceutical company he used to run, to pay back his disgruntled investors. Photo Left, Robert Capers, the federal prosecutor, and a chart with the charges against Martin Shkreli. Credit Pearl Gabel for The New York Times “At a certain point, when you lie, it catches up with you,” said Robert L. Capers, the United States attorney for the Eastern District of New York, at a news conference discussing the charges.
The investigation of Mr. Shkreli was underway long before he became a target of criticism for raising the price of a drug sold by a company […]
