Dirty Dozen (Revisited) –     Entrant  #3

 

Readers who have followed me for a while may remember a previous reference to Mr. Martin Shkreli former CEO of Turing Pharmaceuticals.  He is now back in action, would you believe, as a consultant to a law firm.  What exactly he consults boggles the mind. There are many categories I can think of, but none of them are complementary, and all of them are about how to avoid the law.

 

Shkreli was convicted of fraud in 2017 and sentenced to five years in jail.  He has served five of those seven years and was released in June 2022.

 

 

A career of Lies and Deceit

In September 2015, The New York Times wrote about the young pharmaceutical C.E.O. and former hedge-fund manager, who had hiked the price of a lifesaving drug called Daraprim more than 5,000% overnight.  The drug went from $13.50 to $750 per dose.

 

Shkreli saw nothing wrong with increasing the price of the drug used by AIDS patients, and maybe you don’t either; business is business, after all!

 

The problem is that he didn’t develop the drug and the drug was over sixty years old.  He was found guilty on three counts of securities fraud, defrauding millions of dollars of investors in his hedge funds.

 

The same year, Shkreli was branded “the most hated man in America”.  He’s been called a “morally bankrupt sociopath,” a “scumbag,” a “garbage monster,” and “everything that is wrong with capitalism’.  Those are some of the tamer comments.

So how did a rap music-loving, former hedge-fund manager suddenly become the target of online ridicule and even death threats?

 

Shkreli ran Turing Pharmaceuticals, which acquired the rights to Daraprim. Developed in the 1950s, the drug is the best treatment for a relatively rare parasitic infection called toxoplasmosis. People with weakened immune systems, such as AIDS patients, have come to rely on it.

 

Shkreli, at 17, began an internship at a hedge fund founded by television personality Jim Cramer.  In 2016, he started his own hedge fund, Elea Capital Management.

The fund closed a year later, after a $2.3m lawsuit from Lehman Brothers, before anyone could collect from the ruling.

 

After Elea, Mr Shkreli started MSMB Capital Management in 2018. The fund would be his launch pad for founding biotech firms, including Turing.

 

 

The Turing Fiasco

Turing was not  Shkreli’s first foray into the pharmaceutical industry. In 2011, he founded a biotech firm, Retrophin, intending to develop medicines for rare diseases.

 

There, he also jacked up the price of the rare disease medication Thiolafrom just $1.50 to $30 per pill. Retrophin’s board tossed Shkreli out by the time he hit the public spotlight as CEO of Turing Pharmaceuticals.

 

A year later, the company filed a $65m lawsuit that claimed Shkreli created Retrophin and took it public simply to pay off investors in his old hedge fund, MSMB, when the fund went under.

 

Shkreli has argued the Daraprim price increase was warranted because the drug is highly specialised; he likened the Daraprim to an Aston Martin previously being sold at the price of a bicycle.

The additional profits, he said, will be used to make improvements to the 62-year-old drug recipe.

That didn’t happen.

The FBI arrested Shkreli in December 2015 on charges that he used shares of Retrophin to settle debts he incurred while running his hedge fund, MSMB Capital Management.

An SEC investigation alleged that Shkreli claimed to have $35 million, when he had $1,000.

 

The SEC alleged that he was running a Ponzi-like scheme, telling investors MSMB had a 36% return when, in fact, it was losing 18%.

 

Shkreli allegedly lost more than $10 million of his hedge fund investors’ money and turned to Retrophin’s coffers to repay it. Rather than owning up to his lies and admitting his investments were a failure, he doubled down by engaging in an even bigger fraud.

 

Shkreli’s negative press was so widely known that it took the court three full days to find 12 jurors without a pre-existing opinion of him.

 

Venting on Social Media

Often venting on social media, he was banned from Twitter after harassing a female journalist and came under fire for auctioning off a chance to punch him in the face. (There was probably a long line of takers!)

 

Perhaps his biggest social misnomer involved Democratic presidential candidate Hilary Clinton.  She criticized the company for the drug price increase, calling it “price gouging.”

 

 In response, Shkreli asked his Facebook followers to obtain hair from Hillary while she was on her book tour, offering $5,000 per hair.  This prompted a judge to pull his bail while awaiting a securities fraud conviction sentencing.

 

Shkreli, wore bunny slippers and a stethoscope around the office, slept there in a sleeping bag and was eccentric, to say the least. His colleagues called him names such as “nerd,” “odd duck,” and “mad scientist”; in the industry, he became known as the “Pharma Bro.”

 

He brought the industry into disrepute and sparked an investigation into the pharmaceutical industry’s price hike.  Unfortunately, he was convinced his actions were completely ethical and legitimate.

 

Shkreli now earns a reported $2,500 monthly and lives with his sister in Queens (part of his probation requirements).

 

He is still up to his old tricks.

 

In June this year, he was barred from streaming or disseminating copies of a record album he had purchased for $ 2 million in 2015.  Ordered to surrender it as part of his fraud conviction, it now seems Shkreli (

against the terms of his conviction) made and retained copies of the record tracks to release to the public .

Shkreli is currently banned from the pharmaceutical industry for life.

 

A Worthy Member

Shkreli made $64.6 million from his price hike of the drug Darapirm; who knows how many lives he ruined.  His story provides an example of someone who became so hated for his actions that he qualifies not only as a ‘bad apple” but a member of the Dirty Dozen (revisited).

What do you think?

 

Thanks for reading, till next time,

 

Calvin