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CEO Who Gouged Drug Price Arrested for Securities Fraud

CEO Who Gouged Drug Price Arrested for Securities Fraud

Martin Shkreli

It wasn't because Martin Shkreli raised the cost of a lifesaving drug 5,000 percent that the feds swooped in, but the old shell game. 

Federal agents arrested the man notorious for raising the cost of a drug used to treat an infection particularly hazardous for people with HIV on charges of securities fraud, reports Bloomberg Business.

According to prosecutors, Martin Shkreli's arrest today is unrelated to his price increase for Daraprim, from $13.50 per pill to $750 a pill, and is more related to his other hobbies. He had previously been charged with illegally taking stock from the biotechnology firm he founded and of using the money to pay off debts that were not related to the business. The company's board ousted Shkreli and sued him. His arrest today was in the same vein, according to Bloomberg:

"In the case that closely tracks that suit, federal prosecutors accused Shkreli of engaging in a complicated shell game after his defunct hedge fund, MSMB Capital Management, lost millions. He is alleged to have made secret payoffs and set up sham consulting arrangements. A New York lawyer, Evan Greebel, was also arrested early Thursday. He's accused of conspiring with Shkreli in part of the scheme."

Shkreli rose to public attention this year for increasing the cost of the drug Daraprim, which has proven essential in treating toxoplasmosis. The parasitic infection can result in headaches, confusion, poor coordination, seizures, lung problems, and blurred vision. The infection can be fatal in fetuses and people with compromised immune systems, including those with HIV or cancer.

Recently, Shkreli was back in the headlines for using his wealth to become the sole owner of a Wu-Tang Clan album valued at $2 million.

According to Bloomberg Business, Shkreli -- who hails from Brooklyn and is the son of Albanian and Croatian immigrant janitors -- "both epitomizes the American dream and sullies it." He dropped out of a New York City specialized high school and began making a fortune on Wall Street before he was even 20, according to the website, though his tactics have been unsavory.

Republican presidential hopeful Donald Trump reportedly called Shkreli a "spoiled brat," while Democratic candidate Bernie Sanders rejected Shkreli's donation of $2,700, giving it to an HIV clinic instead.

Before jacking up Daraprim, Shkreli raised the price of a drug used to treat a rare condition that causes debilitating recurring kidney stones from $1.50 a pill to $30.

Now he has set his sights on a drug used to treat Chagas disease, a potentially fatal chronic illness spread by often undetected insect bites. In November it was announced the disease, which is endemic to South and Central America, has appeared throughout most of the Southern United States. As with toxoplasmosis, this disease may be more prevalent in those with weakened immune systems, such as people with HIV.

Recently Shkreli bought a majority stake in KaloBios Pharmaceuticals, a company that acquired the license for benznidazole, a standard treatment for Chagas. The cost of the drug will soon increase from a couple hundred dollars for two months of treatment to a price structure that can run $100,000 for 12 weeks, reports Bloomberg.

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