Big Frauds

Pharma Bro's trial a test for fraud prosecution

Martin Shkreli (aka Pharma Bro) is best known as the Turing Pharmaceuticals CEO who overnight raised the price of Darprim — an essential drug for AIDS patients — by 5,000 percent, which led the BBC to ask whether he is “the most hated man in America.” (See Shkreli, Drug Price Gouger, Denies Fraud and Posts Bail, by Christie Smythe and Keri Geiger, Bloomberg, Dec. 17, 2015 and Who is Martin Shkreli - ‘the most hated man in America’? by Zoe Thomas and Tim Swift, BBC, August 4.)

However, Shkreli’s unrelated fraudulent activity as a hedge fund manager led to his arrest, trial and conviction on securities fraud. This is the first fraud trial since Bernie Madoff’s to garner such media attention, public interest and academic discussion. But that wasn’t just because of Shkreli’s reputation for frequently and outlandishly using social media or his lawyer quoting Lady Gaga in his opening statement. (See Defending Martin Shkreli: How His Lawyer Aims To Win, by Jacob Frenkel, Forbes, July 5.)

This fraud was also notable because it apparently didn’t leave its investors at a financial loss. In fact, Shkreli eventually repaid all investors with sizeable profits, which led him to denounce the government’s prosecution as a “witch hunt of epic proportions.” (See Why ‘Pharma Bro’ Martin Shkreli Is Swaggering Into Jail, by Misyrlena Egkolfopoulou, Patricia Hurtado and Chris Dolmetsch, Bloomberg, Aug. 4.)

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