Martin Shkreli, who the New York Times once called the “bad boy of pharmaceuticals,” was arrested Thursday, Dec. 17 for fraud.
Shkreli, the 32-year-old founder of the secretive Turing Pharmaceuticals, became a household name and national pariah in 2015. Earlier this year, he acquired an old drug used to treat HIV patients and sick infants and raised the price 5,000% to $750 per pill overnight, a price-gouging tactic he’s used frequently in his short career in the pharmaceutical industry.
Since he first became a public figure, the CEO has invited controversy. Most recently, he made headlines for paying $2 million to buy the only known copy of a Wu Tang Clan hip-hop album. In the days leading up to his arrest, Shkreli told a hip-hop news site he would share the record, but if and only if pop star Taylor Swift performed sexual favors for him.
At the time, Lauren Rikleen, the president of the Rikleen Institute for Strategic Leadership, said comments about women like that should disqualify the young businessman from serving as CEO.
“A CEO who is completely uninterested in the impact of his words is bad for business,” Rikleen told Fortune. “You don’t make that kind of comment unless you have a complete antipathy towards women, you just don’t, you wouldn’t think of saying it. So, at what point do his investors say, ‘Is this who I trust to run this business?’ That’s the question that should be asked amidst all this publicity he’s getting.”
Days later, federal authorities arrested the boy wonder at his Midtown Manhattan apartment. His corporate lawyer could not be reached for comment, because his corporate lawyer was also arrested Thursday morning.
The Securities and Exchange Commission has increased enforcement of fraud, insider trading, and other securities violations under the Obama administration. In fiscal year 2014, the SEC brought a record 755 enforcement actions and obtained $4.1 billion in disgorgement and penalties, according to SEC records.
According to the New York Times, the charges stem from Shkreli’s time at his previous pharmaceutical company Retrophin, whose board accused its founder of using the company as his own personal ATM. In a lawsuit, Retrophin’s board claimed Shkreli used company stock to pay off investors from his failed hedge fund, sometimes hiring them as phony consultants on Retrophin’s payrolls.
“Shkreli was the paradigm faithless servant,” Retrophin’s complaint said. “Starting sometime in early 2012, and continuing until he left the company, Shkreli used his control over Retrophin to enrich himself and to pay off claims of MSMB investors (who he had defrauded).”
