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Martin Shkreli -- "The Most Hated Man in America" -- Is in Handcuffs. Here's Why.

The Motley Fool The Motley Fool 18/12/2015 Brian Feroldi
Martin Shkreli has been dubbed "the most hated man in America".© Getty Images Martin Shkreli has been dubbed "the most hated man in America".

Martin Shkreli, a former hedge fund manager and the current CEO of two biopharmaceutical companies, is having a really bad day.

News broke earlier today that Shkreli -- who the BBC has referred to as "the most hated man in America" -- has been taken into custody and is being charged with securities fraud. 

Federal prosecutors are alleging that Shkreli illegally took stock from Retrophin (NASDAQ: RTRX), a publicly traded biotechnology company that he started in 2011, and used it to pay off both personal loans and as well as the debts of his now-defunct hedge fund called MSMB Capital Management.

Authorities believe that Shkerli used Retrophin's stock to repay millions in losses that he generated while running the hedge fund. Prosecutors are alleging that he did so by making secret payoffs to former investors and disguising them as "consulting arrangements."

Prosecutors also believe that Shkreli wasn't acting alone. His lawyer, Evan Greebel, and several others who have yet to be named are being accused of conspiring alongside Shkreli. Greebel was also arrested today.
A rocky road
While this news just broke today, the authorities have had Skhreli on their radar for quite some time. Federal prosecutors issued a subpoena to Retrophin back in January, seeking more detailed information about the company's relationship with its former CEO.

Retrophin filed a lawsuit of its own against Shkreli earlier this year, claiming that their former CEO had misused company funds.

Retrophin said that Shkreli had created several fraudulent transactions between the company and his old hedge fund while he was still CEO, saying that he personally took more than $5.6 million in unearned cash from the company and issued another $59 million worth of stock, all without approval of its board of directors.

America's most hated CEO

Shkreli was thrust in the public light earlier this year when his company -- privately-held Turing Pharmaceuticals --purchased a drug called Daraprim and then proceeded to jack up the price from $13.50 a pill to $750 -- a 5,500% increase.

Understandably, the move was seen as price gouging and caused public uproar. Daraprim is used to treat toxoplasmosis, a potentially fatal disease for unborn babies and patients with weakened immune systems, such as patients with cancer or HIV.
The move was instantly turned into a media fiasco. Democratic presidential candidate Hillary Clinton tweeted about the story and expressed her outrage at the move. That single tweet sent shock waves through the entire biotech sector, causing shares of many biotech stocks to tumble.

Another Democratic candidate, Bernie Sanders, has also been railing against the skyrocketing cost of pharmaceutical prices and Shkreli actually tried to get a meeting with him by donating $2,700 to his campaign. Shkreli hoped that the move would allow him to meet with Sanders so he could better explain how drug pricing worked.

Sanders had no interest in meeting with Shkreli, calling him a "poster boy for drug company greed." Sanders donated the money to the Whitman-Walker health clinic instead.

Stirring the pot

Shkreli hasn't been doing himself any favors online during the year, either. He remained very active on Twitter, using the platform to defend his actions.

It's been a rough couple of months for Shkreli, culminating in today's arrest, but this is one case where he is going to have a heck of time garnering any sympathy for his actions.

Looks like the answer to that question today is a resounding no.

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