Shkreli's E-Trade Account Has Lost $40 Million, New Lawyer Orders "Pharma Bro" to Zip It
February 4, 2016
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – Embattled former pharmaceutical entrepreneur Martin Shkreli is facing two new challenges—one financial and one personal.
In order to stay out of jail while awaiting his trial for seven counts of securities fraud, Shkreli used a $45 million E-Trade account for security against his $5 million bail. However, value of that account, which was made up mostly of stock from one of his former companies, KaloBios , has dropped in value to between $4 million and $5 million, Bloomberg reported this morning. After Shkreli acquired KaloBios, which was on the verge of shutting down operations, company stock soared to $39.50 per share in November. Since Shkreli’s arrest though, as well as a halted deal to acquire a treatment for Chagas disease, KaloBios stock has plummeted to a low of $2.10 per share. E-Trade had been under a court order to notify the courts if the account had fallen below $5 million. Shkreli was also under order not to trade or transfer any amount from the account. The value of his E-trade account may indicate Shkreli will have to put up additional capital in order to remain free from jail.
In addition to his financial issues, Shkreli will also have to learn to hold his tongue. Benjamin Brafman, Shkreli’s new attorney, told reporters that the very vocal and accessible Shkreli would no longer be speaking to the press until the charges are resolved, Bloomberg reported.
Shkreli’s silence continued this morning on Capitol Hill. The brash entrepreneur appeared before a House oversight committee to talk about high prescription drug prices, but Shkreli cited his Fifth Amendment right to not incriminate himself.
“On the advice of counsel, I invoke my Fifth Amendment privilege against self-incrimination, and decline to answer that question," Shkreli said this morning, according to a report on CNBC.
According to reports he maintained a defiant attitude this morning and “smirked” throughout the hearing.
However, in typical Shkreli fashion, he blasted the members of Congress on Twitter following the hearing.
“Hard to accept that these imbeciles represent the people in our government,” he tweeted.
That’s not the first time Shkreli has been critical of federal lawmakers. In a previous statement he said the deals he made involved “complex accounting matters” that federal authorities “fail to understand.”
Shkreli was arrested by federal authorities on Dec. 17. The seven count indictment against Shkreli included multiple charges of securities fraud, securities fraud conspiracy and wire fraud conspiracy. U.S. Attorney Robert Capers accused Shkreli of running his former company Retrophin Pharmaceuticals and his former hedge fund MSMB Capital Management like a “Ponzi scheme.” The indictment said Shkreli’s scheme, which caused his investors to suffer a loss of more than $11 million, was carried out over a five-year period, from 2009 to 2014.
In August, Retrophin sued Shkreli for $65 million over his use of company funds while helming that company. In its lawsuit, Retrophin said Shkreli breached his duty of loyalty to the biopharmaceutical company and he engaged in self-dealing and also seeks disgorgement of money paid to him. Retrophin said Shkreli used company funds for personal use, enriched himself through false consulting contracts and referred to Shkreli as “the paradigm faithless servant” who “is not entitled to compensation or post-separation benefits.” Retrophin alleges Shkreli struck payoff agreement up to 10 MSMB investors who lost money when the hedge fund collapsed. Shkreli paid some investors through fake consulting agreements and others through unauthorized appropriations of stock and cash, the company alleged in its lawsuit.
The criminal case has been assigned to United States District Judge Kiyo Matsumoto. If convicted, Shkreli faces a maximum sentence of 20 years’ imprisonment, according to the U.S. Attorney’s Office.