Martin Shkreli - The Rise and Fall of a Controversial Pharma Executive

Martin Shkreli's rise to notoriety began with his founding of Retrophin, a biopharmaceutical company.

He took the company public in 2012, raising $130 million.

Shkreli's aggressive business tactics and public feuds with short sellers and analysts made headlines.

Retrophin's stock price skyrocketed, making Shkreli a millionaire by the age of 32.

Shkreli's success was short-lived, as he was ousted from Retrophin in 2014.

The company's board of directors accused him of misusing company funds for personal expenses.

Shkreli was subsequently sued by the company and its shareholders.

He was also sued by his former company, KaloBios Pharmaceuticals, which he had founded after leaving Retrophin.

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Martin Shkreli was born on March 17, 1983, in Coney Island Hospital, Brooklyn. His parents were Roman Catholic immigrants from Albania who worked as janitors.

Shkreli grew up in a working-class community in Sheepshead Bay, Brooklyn, with his two sisters and brother. He attended Hunter College High School and later received a bachelor's degree in business administration from Baruch College in 2004.

Shkreli's family member suffered from treatment-resistant depression, which sparked his interest in chemistry.

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Shkreli was born in Coney Island Hospital in Brooklyn on March 17, 1983. His parents were Roman Catholic and emigrated to the United States from Albania, where they worked as janitors.

Shkreli grew up in a working-class community in Sheepshead Bay, Brooklyn, with his two sisters and brother. He was raised Catholic and attended Sunday school as a child.

Shkreli attended Hunter College High School, although there's some discrepancy about whether he graduated or was expelled before his senior year.

Turing Pharmaceuticals was not Martin Shkreli's first foray into the pharmaceutical industry. He founded biotech firm Retrophin in 2011 with the goal of focusing on medicines for rare diseases.

He was ousted as head of the company in 2014 amidst allegations he improperly handled legal settlements. Shkreli has denied the accusations, saying they're a wild and crazy story to swindle him out of money.

Retrophin filed a $65m lawsuit against Shkreli a year later, claiming he created the company to pay off investors in his old hedge fund.

Martin Shkreli's business ventures have been marked by controversy and questionable ethics. He started his career as a financial analyst for Intrepid Capital Management and UBS Wealth Management, before founding his first hedge fund, Elea Capital Management, in 2006.

Shkreli's hedge fund, MSMB Capital Management, was started with a childhood friend in 2009, and they shorted biotech companies, then described flaws in the companies on stock trading chat rooms. This led to a $2.3 million default judgment against Shkreli and Elea in 2007.

After his departure from Retrophin in 2015, Shkreli founded Turing Pharmaceuticals, which he used to acquire the rights to Daraprim and raise its price by over 5,000%. He argued that the price increase was warranted due to the drug's high specialization and potential for improvement.

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MSMB Capital Management was founded by Martin Shkreli and his childhood friend Marek Biestek in September 2009.

They took the name MSMB from their initials, and the company's strategy involved shorting biotech companies.

Shkreli and Biestek would then describe flaws in these companies on stock trading chat rooms.

MSMB made a significant move in 2011 by selling short 32 million shares of Orexigen Therapeutics stock at about $2.50 per share.

This was done on an account held with Merrill Lynch, the day after the FDA declined to approve the drug naltrexone/bupropion.

The stock price rebounded, and MSMB could not cover the position, although it had told Merrill Lynch that it could.

Merrill Lynch lost $7 million on the trade, and MSMB Capital was virtually wiped out.

In 2011, MSMB made an unsolicited cash bid for AMAG Pharmaceuticals at a price of $378 million.

The attempted hostile takeover was done for the specific purpose of firing the company's management and stopping a proposed merger with Allos Therapeutics.

Shkreli's actions in the business world were marked by controversy and questionable ethics.

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Retrophin was founded in 2011 by Martin Shkreli, who ran it as a portfolio company with a focus on biotechnology and rare diseases. He created the company under the MSMB umbrella.

The company's name is a portmanteau of "Recombinant dystrophin." Shkreli was chosen for the Forbes 30 Under 30 in December 2012, but the publication later regretted it, placing him in its "Hall of Shame" eleven years later.

In 2014, the board decided to replace Shkreli, and he resigned from the company the following month. He was replaced by Stephen Aselage.

During Shkreli's tenure, the company's employees used alias Twitter accounts to make gangster rap jokes and encourage short selling of other biotech stocks. Shkreli has denied allegations that he improperly handled legal settlements while at Retrophin.

After Shkreli's departure, Retrophin filed a $65 million lawsuit against him in August 2015, claiming he had breached his duty of loyalty to the company and committed stock-trading irregularities. Shkreli invoked his Fifth Amendment right against self-incrimination in order to avoid testifying during civil depositions.

Shkreli's name is on two patents held by Retrophin for drugs to treat PKAN. In November 2020, the company rebranded as Travere Therapeutics Inc. in an effort to distance itself from Shkreli.

After Shkreli was imprisoned, Turing changed its name to Vyera in 2017 to avoid negative publicity, and in 2019 was called Phoenixus AG.

Shkreli was effectively directing the renamed firm from prison using a contraband cellphone from his prison ward in Fort Dix, New Jersey.

He was reported to have terminated the employment of executive Kevin P. Mulleady after news of his prison activities was reported in various news outlets.

In May 2023, Vyera Pharmaceuticals declared Chapter 11 bankruptcy in Delaware court, listing between $10 million and $50 million in assets and between $1 million and $10 million in liabilities.

The company cited "declining profits, increased competition for generic drugs, and litigation alleging that Vyera suppressed competition for its most valuable drug, Daraprim" per Reuters.

Shkreli's shares in Vyera had earlier been ordered seized by federal court related to an FTC judgment against him.

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KaloBios Pharmaceuticals was acquired by an investor group led by Martin Shkreli in November 2015.

Shkreli was named CEO of the company, a biopharmaceutical firm based in South San Francisco, California, and also planned to continue in the role of CEO of Turing Pharmaceuticals.

After his arrest in December 2015, KaloBios Pharmaceuticals terminated him as CEO.

The company filed for Chapter 11 bankruptcy on December 29, 2015.

NASDAQ delisted its shares, and two directors resigned following the bankruptcy filing.

Martin Shkreli's controversies and investigations are well-documented. He was arrested by the FBI on December 17, 2015, after a federal indictment was filed in the U.S. District Court for the Eastern District of New York.

The charges against him included securities fraud, which was allegedly committed during his time at MSMB Capital Management and Retrophin. U.S. Attorney Robert Capers described Shkreli's actions as running his company like a Ponzi scheme.

Shkreli was not alone in the investigation, as co-defendant Evan Greebel was also charged with engaging in multiple schemes to deceive investors. Shkreli maintained that his investors didn't actually lose money, and some even turned a profit.

Shkreli was subpoenaed to appear before the Committee on Oversight and Government Reform of the U.S. House of Representatives to answer questions about the Daraprim price increase.

He appeared before the House committee on February 4, 2016, alongside Nancy Retzlaff and Howard B. Schiller.

Accompanied by his attorney Benjamin Brafman, Shkreli invoked his Fifth Amendment privilege against self-incrimination in response to every question from committee members except for two.

One of those questions was from Representative Trey Gowdy to confirm the pronunciation of his last name.

Shkreli also refused to answer seemingly trivial questions outside the subject matter of the hearing, including those about his purchase of a Wu-Tang Clan album.

Following a rebuke from Representative Elijah Cummings, Chairman Jason Chaffetz dismissed Shkreli from the hearing.

Shkreli was arrested by the FBI on December 17, 2015, after a federal indictment was filed in the U.S. District Court for the Eastern District of New York.

The charges were filed after an investigation into his tenure at MSMB Capital Management and Retrophin, with prosecutors accusing him of running his company like a Ponzi scheme.

U.S. Attorney Robert Capers said Shkreli used each subsequent company to pay off defrauded investors from the prior company, engaging in multiple schemes to ensnare investors through a web of lies and deceit.

Shkreli's defense attorney, Benjamin Brafman, argued that none of his investors actually lost money, and thus his actions did not constitute a crime.

Shkreli's frequent criticisms of the federal prosecutors led them to request a gag order to prevent what they called a "campaign of disruption".

Judge Kiyo A. Matsumoto ordered Shkreli not to speak with reporters, either in the courthouse or its immediate vicinity, due to his notoriety and overwhelmingly negative public opinion.

Martin Shkreli was sentenced to seven years in federal prison on March 9, 2018.

Judge Kiyo A. Matsumoto found Shkreli genuinely remorseful about his actions, but faulted him for repeatedly minimizing his misconduct.

Shkreli cried during his statement to the court, claiming he was never motivated by money.

He had been arrested by the FBI on December 17, 2015, after a federal indictment was filed, charging him with securities fraud.

Shkreli's bail was revoked on September 13, 2017, following a Facebook post that offered $5,000 for a strand of Hillary Clinton's hair.

The judge perceived this as solicitation to assault, which is not protected under the First Amendment.

Shkreli apologized for the post and edited it to add a disclaimer that it was satire.

He was sent to the Metropolitan Detention Center in Brooklyn while awaiting sentencing.

In 2019, Shkreli lost his appeal, with the U.S. Court of Appeals for the Second Circuit unanimously affirming the conviction.

Shkreli was required to continue serving his seven-year sentence and forfeit more than $7.3 million in assets.

Martin Shkreli's financial woes are a result of his questionable business practices and disregard for the law. He was issued a tax warrant in December 2016 for $1.26 million for unpaid taxes.

Shkreli made partial payments, but the State recovered an additional $134,500 from the auctioning off of seized assets, including an Enigma machine for $65,000. The State later asked for priority on $480,000 of the $7.4 million in assets forfeited to the federal government.

Shkreli agreed to a Securities and Exchange Commission order banning him from the securities industry in exchange for settlement of the SEC administrative action against him. He is eligible to apply for readmission to the industry.

Martin Shkreli was issued a tax warrant by the New York State Department of Taxation and Finance in December 2016 for $1.26 million for unpaid taxes.

He made partial payments, and the State recovered another $134,500 from the auctioning off of various assets seized from Shkreli, including an Enigma machine for $65,000 and a manuscript signed by Isaac Newton.

Shkreli agreed to a Securities and Exchange Commission order banning him from the securities industry in exchange for settlement of the SEC administrative action against him in April 2018.

A seven-year ban on working for or holding more than an 8% share in most pharmaceutical companies was agreed upon by Kevin Mulleady in December 2021.

Shkreli was banned from serving as an officer or a director of any publicly traded company for life by U.S. District Judge Kiyo Matsumoto in February 2022.

The court found that Shkreli had violated federal and state law through an anticompetitive scheme and banned him from the pharmaceutical industry for life in January 2022.

The fine of $1.39 million for violating securities laws between 2009 and 2014 was ordered by U.S. District Judge Kiyo Matsumoto in February 2022.

Shkreli was ordered to pay a $64.6 million fine in January 2022 for wrongfully obtained profits, which is to be distributed to victims nationwide.

Shkreli was ordered to forfeit nearly $7.4 million in assets on March 5, 2018.

The court required that if Shkreli didn't have enough cash, his assets, including a Picasso piece, would be sold to fulfill the order.

He had purchased the 31-track Wu-Tang Clan album Once Upon a Time in Shaolin for around $2 million in 2015.

In April 2018, Shkreli was ordered to pay $388,000 in restitution.

The Wu-Tang Clan album was auctioned off in July 2021 to PleasrDAO for $4 million USD.

With the sale of the album, Shkreli's payment of the forfeiture was now complete, according to Jacquelyn M. Kasulis, the acting United States Attorney.

In 2018, the pharmaceutical company Johnson & Johnson paid $572 million in civil penalties for failing to report safety problems with its antipsychotic drug Risperdal.

The FDA had warned Johnson & Johnson about the risks of Risperdal, but the company continued to promote it for unapproved uses.

Pharmaceutical companies can face significant financial penalties for violating FDA regulations.

The FDA has the authority to impose civil penalties on companies that engage in unlawful activities.

Johnson & Johnson's actions led to the deaths of thousands of people and harmed many more.

The company's failure to report safety problems with Risperdal was a serious breach of trust with the public.

The FDA has also taken action against other pharmaceutical companies for similar violations.

In 2020, the company GlaxoSmithKline paid $3 billion in civil penalties for promoting its antidepressant drug Paxil for unapproved uses.

The FDA has a range of enforcement tools at its disposal to hold companies accountable for their actions.

The agency can impose fines, seize products, and even shut down facilities.

Pharmaceutical companies must comply with FDA regulations to avoid facing civil penalties.

The FDA's enforcement actions send a strong message that companies will be held accountable for their actions.

Companies that engage in unlawful activities can face significant financial penalties and reputational damage.