Drug company CEO Martin Shkreli and law firm partner arrested in securities fraud case
A partner in the New York office of a major law firm was arrested Thursday, accused in a federal indictment of conspiring with a well-known entrepreneur and former hedge fund manager in a portion of a claimed securities fraud.
Current Kaye Scholer partner Evan Greebel worked with fellow defendant Martin Shkreli when Greebel was a partner at Katten Muchin Rosenmann, according to Bloomberg Business, the New York Times (reg. req.) and Reuters. Shkreli was also arrested Thursday.
Shkreli, a 32-year-old pharmaceutical company founder, achieved notoriety and sparked public protests earlier this year by acquiring a life-saving drug and raising its price from $13.50 to $750 per pill. However, the federal securities fraud case against the two men has nothing to do with the Daraprim drug acquired by Turing Pharmaceuticals, for which Shkreli serves as chief executive officer.
Instead, the Brooklyn indictment involves claimed misuse of Retrophin Inc. stock to pay unrelated debt owed to investors in the now-closed MSMB Capital Management hedge fund, which Shkreli oversaw. Shkreli founded the biopharmaceutical company Retrophin in 2011, and served as chief executive officer from 2012 to 2014. But he was ousted and sued by the Retrophin board in federal court in Manhattan.
Reuters says Greebel served as Retrophin’s outside counsel while he was a partner at Katten Muchin.
The charges against Shkreli and Greebel mirror the civil suit brought by the Retrophin board against Shkreli earlier this year, the news agency reports.
Despite devastating 2011 trading losses in the MSMB Capital fund, Shkreli claimed it had gained as much as 40 percent in value since inception. He concealed his bad management as he persuaded investors to pony over millions more for MSMB Capital and another fund, the indictment alleges. It also says the value of Retrophin, which was a private company at the time, was inflated.
Then, to pay MSMB Capital investors back, Shkreli and Greebel used sham consulting arrangements and settlement pacts to siphon $11 million in Retrophin assets, the indictment continues.
A lawyer for Shkreli didn’t immediately respond to a request for comment by Reuters, but Shkreli has previously denied the allegations in the civil suit. Greebel couldn’t be reached for comment.
Representatives of Kaye Scholer have declined requests for comment by Bloomberg and the Times. The articles don’t include any comment from Katten Muchin.
Hat tip: Above the Law