June 27, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Martin Shkreli, the so-called “Pharma Bro,” the former chief executive officer of Turing Pharmaceuticals, headed into a fraud trial yesterday. But before he showed up in court, he managed to install five new board members at Turing who are all business associates or friends of his.
Aside from presenting his smug smirk and persona to the world every time he’s interviewed, Shkreli is best known for Turing acquiring a toxoplasmosis drug, Daraprim, and then increasing the price by 5,000 percent. Daraprim is a 66-year-old drug originally developed by GlaxoSmithKline .
He left Turing after being charged with multiple charges of federal securities fraud. The seven-count indictment included multiple charges of securities fraud, securities fraud conspiracy and wire fraud conspiracy. Federal agents arrested him in December 2015.
The charges go back to when he founded a drug company, Retrophin , and two hedge funds, MSMB Capital Management and MSMB Healthcare. The U.S. Securities and Exchange Commission (SEC) alleges “widespread fraudulent conduct.”
Per National Public Radio, “Prosecutors say Shkreli misled investors about the size and performance of MSMB Capital Management, claiming that its returns were ‘+35-77% since inception’—when the fund had actually lost 18 percent. In another instance, he claimed the fund had $35 million in assets, when in fact it had less than $1,000 in assets.”
He also is accused of lying to MSMB’s executing broker regarding its ability to settle a short sale. This resulted in more than $7 million in losses for the broker.
Shkreli faces eight counts of securities fraud and conspiracy to commit securities and wire fraud. Five of the counts carry a maximum sentence of 20 years in prison—each. The remaining three charges have maximum prison sentences of five years each.
But just prior to the beginning of yesterday’s trial, Shkreli stage-managed an overturn of Turing’s board in a battle with the company’s chief scientist and chief executive officer Eliseo Salinas. Some of the five new board members include:
• Akeel Mithani, chief financial officer of Godel Systems. Shkreli was reported to be working on Godel Systems.
• Edward Painter, chief executive officer of A2A Pharmaceuticals. Painter worked in business development and investor relations at Turing while Shkreli helmed the pharmaceutical company.
• Monica Richardson, managing partner, RHM Consulting Group
• Jordan Walker, founder of Kindly.
Turing, after the sweeping changes, stated, “Following the meeting, the new board began the process of moving the company forward, including a review of Turing’s management team and recent credible offers that Turing has received from reputable pharmaceutical entities for the acquisition of company stock or assets.”
Turing already received one offer to acquire Daraprim, and an insider tells Endpoints News’ John Carroll that it’s received another third-party offer. Both offers are in the range of $100 million.
Meanwhile, Shkreli, of his trial, said, “I think they’ll return a not-guilty verdict in two hours. There are going to be jurors who will be fans of mine. I walk down the streets of New York and people shake my hand. They say, ‘I want to be just like you.’”
That is always possible, but to date jury selection for the trial is reportedly not going well. A CNBC report said, “Jurors used words including ‘evil,’ ‘snake,’ and ‘greed’ to refer to Shkreli, and several believed incorrectly he had been responsible for the price increase of another drug besides his own.”
One potential juror, a young woman, said, “I think he’s a very evil man.” Another said, “I know he’s the most hated man in America.”
In another example, CNBC cited, “Soon after she was excused for bias, another woman said, referring to Shkreli raising the price of the drug, which is used to treat pregnant women, infants, and people with HIV and AIDS, ‘Who does that? A person who puts profits ahead of everyone else.’ The woman then mimicked wringing the neck of Shkreli, who was sitting a dozen or so feet away, but likely couldn’t hear her words to the judge, prosecutors and defense lawyers.”
