Martin Shkreli (/ˈʃkrɛli/; born March 17, 1983) is an American businessman, former hedge fund manager, and convicted felon.^[7][8] He was the co-founder of the hedge funds Elea Capital, MSMB Capital Management, and MSMB Healthcare;^[9] co-founder and former chief executive officer (CEO) of the biotechnology firm Retrophin; and founder and former CEO of Turing Pharmaceuticals. Shkreli is the former CEO of start-up software company Gödel Systems, which he founded in August 2016.^[10]

In September 2015, Shkreli received widespread criticism when Turing obtained the manufacturing license for the antiparasitic drug Daraprim and raised its price by a factor of 56 (from US$13.5 to $750 per pill), leading him to be referred to by the media as "the most hated man in America" and "Pharma Bro".^[11][12][13]

Shkreli was charged in federal court, then convicted on two counts of securities fraud and one count of conspiring to commit securities fraud.^[3] In 2018, Shkreli was sentenced to seven years in federal prison and up to $7.4 million in fines.^[14]

Shkreli was born in Coney Island Hospital, Brooklyn, New York City, New York. His birth date is March 17, 1983.^[1] His parents are Albanian and Croatian who emigrated from Montenegro and worked as janitors.^[15] He, his two sisters, and his brother grew up in a working-class community in Sheepshead Bay, Brooklyn.^[16][17][7] Shkreli was raised Catholic and attended Sunday school as a child.

Shkreli attended Hunter College High School. He dropped out before his senior year but received the credits necessary for his diploma through a program that placed him in an internship at Wall Street hedge fund Cramer, Berkowitz and Company when he was 17.^[16][18] Sources differ on whether Shkreli graduated from Hunter^[17] or whether he received sufficient credits there but actually graduated from City-As-School High School.^[19] In March 2015, Hunter College High School announced that Shkreli had donated $1,000,000 which was the largest donation in the school's history.^[20]

Shkreli told Vanity Fair that he developed an interest in chemistry when a family member suffered from treatment-resistant depression.^[21]

During Shkreli's time at Cramer, Berkowitz and Company, he recommended short-selling the stock of Regeneron Pharmaceuticals, a biotech company testing a weight-loss drug. When its price dropped in accordance with Shkreli's prediction, Cramer's hedge fund profited. Shkreli's prediction drew the attention of the Securities and Exchange Commission, which investigated Shkreli's knowledge about the stock but was unable to prove wrongdoing on his part.^[22]

After four years as an associate at Cramer Berkowitz, Shkreli worked as a financial analyst for Intrepid Capital Management and UBS Wealth Management.^[23] He then started his first hedge fund, Elea Capital Management, in 2006.^[18][24] In 2007, Lehman Brothers sued Elea in New York state court for failing to cover a 'put option transaction' in which Shkreli bet the wrong way on a broad market decline. When stocks rose, Shkreli didn't have the funds to make the bank whole. In October 2007, Lehman Brothers won a $2.3 million default judgment against Shkreli and Elea, but Lehman collapsed before it could collect on the ruling.^[22]

In September 2009, Shkreli started his own business. He launched MSMB Capital Management,^[15][25] which took its name from the initials of the two founding portfolio managers, Shkreli and his childhood friend, Marek Biestek.^[18][22] Shkreli and Biestek shorted biotech companies, then described flaws in the companies on stock trading chat rooms.^[21]

On February 1, 2011, in a naked short sale on an account it held with Merrill Lynch, MSMB Capital sold short 32 million shares of Orexigen Therapeutics stock at about $2.50 per share the day after its price plunged from $9.09, when the Food and Drug Administration (FDA) declined to approve the drug Contrave.^[26][27] The stock price rebounded; MSMB could not cover the position, although it had told Merrill Lynch that it could.^[28] Merrill Lynch lost $7 million on the trade and MSMB Capital was virtually wiped out. Retrophin's 2015 SEC Complaint contended Shkreli had created MSMB Healthcare and Retrophin "so that he could continue trading after MSMB Capital became insolvent and to create an asset that he might be able to use to placate his MSMB Capital investors."^[29]

In 2011, Shkreli filed requests with the FDA to reject a new cancer diagnostic device from Navidea Biopharmaceuticals and an inhalable insulin therapy from MannKind Corporation while publicly short-selling both companies' stocks, the values of which dropped after Shkreli's interventions. The companies had difficulty launching the products as a result, although the FDA ultimately approved both.^[22][30][31]

In 2011, MSMB made an unsolicited cash bid for AMAG Pharmaceuticals, US$378,000,000.^[32] Matthew Herper of Forbes wrote that the attempted hostile takeover was "done for the specific purpose of firing the company's management and stopping a proposed merger with Allos Therapeutics. When the merger plans stopped, so did Shkreli."^[33]

Shkreli founded Retrophin (a portmanteau of "recombinant dystrophin") in 2011 under the MSMB umbrella, and ran it as a portfolio company with an emphasis on biotechnology, to create treatments for rare diseases.^{[22][34][35][36]}

Retrophin's board decided to replace Shkreli in September 2014, and he resigned from the company the following month.^[29] He was replaced by Stephen Aselage.^[37] During Shkreli's tenure as CEO, the company's employees used alias Twitter accounts to make gangster rap jokes and encourage short selling of other biotech stocks.^[38]

After Shkreli's departure, Retrophin filed a US$65 million lawsuit against him in August 2015, claiming that he had breached his duty of loyalty to the biopharmaceutical company in a long-running dispute over his use of company funds^[29][39][35] and "committed stock-trading irregularities and other violations of securities rules".^[40] The lawsuit alleged that Shkreli had threatened and harassed a former MSMB employee and his family.^[41]

Shkreli and some of his business associates have been under criminal investigation by the U.S. Attorney for the Eastern District of New York since January 2015. Shkreli invoked his Fifth Amendment right against self-incrimination in order to avoid testifying during civil depositions.^[42][43]

Shkreli's name is on two patents held by Retrophin for drugs to treat PKAN.^[21][44]

Critics argued that Shkreli was intelligent but too immature and unfocused for the job of CEO.^[45] In July 2017, at Shkreli's criminal trial, Aselage testified: "He's [Shkreli] a brilliant intellect, visionary."^[46]

In May 2014, Shkreli had difficulty accessing public markets for capital, but received a $4 million series A funding round and a PIPE deal valued at $10 million underwritten by Roth Capital Partners.^[47] After obtaining the financing, Shkreli was able to acquire rights to market tiopronin (brand name, Thiola), a drug used to treat the rare disease cystinuria and Chenodal and subsequently raise the price of each drug substantially, with Thiola subsequently being marked up about 20 fold, from $1.50 to $30 per pill (patients must take 10 to 15 pills a day),^[48][49] and Chenodal about five fold. Retrophin did not lower the price of these drugs after Shkreli's departure.^[50]

In 2016 Imprimis Pharmaceuticals introduced a lower cost version marketed as a compounded drug.^[51]

Shkreli founded Turing Pharmaceuticals in February 2015, after his departure from Retrophin. He launched Turing with three drugs in development acquired from Retrophin: an intranasal version of ketamine for depression, an intranasal version of oxytocin, and Vecamyl for hypertension.^[52] Shkreli set a business strategy for Turing: to obtain licenses on out-of-patent medicines and reevaluate the pricing of each in pursuit of windfall profits for the new company, without the need to develop and bring its own drugs to market.^[53][54] As markets for out-of-patent drugs are often small, and obtaining regulatory approval to manufacture a generic version is expensive, Turing calculated that with closed distribution for the product and no competition, it could set high prices.^[53]

On August 10, 2015, in accordance with Shkreli's business plan, Turing acquired Daraprim (pyrimethamine), a medication approved by the FDA in 1953,^[55] from Impax Laboratories^[56] for US$55 million.^[57] The drug's most prominent use as of late 2015 was as an anti-malarial^[58] and an antiparasitic, in conjunction with leucovorin and sulfadiazine^[59] to treat patients with AIDS-related and AIDS-unrelated toxoplasmosis.^[60]

The patent for Daraprim had expired, but no generic version was available.^[61] The Turing–Impax deal included the condition that Impax remove the drug from regular wholesalers and pharmacies,^[58] and so in June 2015, two months before the sale to Turing was announced, Impax switched to tightly controlled distribution.^[18] In keeping with its strategy for pricing in the face of limited competition (see above), Turing maintained the closed distribution.^[53] The New York Times noted that the deal "made sense only if Turing planned to raise the price of the drug substantially."^[18]

On September 17, 2015, Dave Muoio of Healio, an in-depth clinical information website for health care specialists,^[62] reported on a letter from the Infectious Diseases Society of America and the HIV Medicine Association to executives at Turing,^[63] questioning a new pricing for Daraprim.^[60] The price of a dose of the drug in the U.S. market increased from US$13.50 to US$750 per pill, overnight, a factor of 56.^[64]

The price increase was initially criticized, jointly, by the Infectious Diseases Society of America and the HIV Medicine Association,^[58][63] by the Pharmaceutical Research and Manufacturers of America,^[65] and soon thereafter by presidential candidates Hillary Clinton,^[66] Bernie Sanders,^[67] and Donald Trump.^[68]

A subsequent organized effort called on Turing to return pricing to pre-September levels and to address several matters relating to the needs of patients, an effort that garnered endorsements from more than 160 medical‑specialty and patient‑related organizations (as of December 2015, 164 organizations from thirty-one states, the District of Columbia, and Puerto Rico).^[69][70]

In response to the controversy, the record label Collect Records publicly ended its business relationship with Shkreli, who had invested in the company.^[71]

In a September 2015 interview with Bloomberg Markets, Shkreli claimed that despite the price increase, patient co-pays would actually be lower, that many patients would get the drug at no cost, that Turing had expanded its free drug program, and that it sold half of its drugs for one dollar.^[72] He defended the price hike by saying, "If there was a company that was selling an Aston Martin at the price of a bicycle, and we buy that company and we ask to charge Toyota prices, I don't think that that should be a crime."^[73][74]

A few days later, Shkreli announced that he planned to lower the price by an unspecified amount, "in response to the anger that was felt by people".^[42] But in late November, Turing reversed course and said it would not lower the price after all.^[75]

Following a request by Senator Bernie Sanders and Representative Elijah Cummings for details of Turing Pharmaceuticals' finances and price-setting practices in September 2015,^[76][77] the company hired four lobbyists from Buchanan, Ingersoll & Rooney with backgrounds in health care legislation and pharmaceutical pricing.^[78][79] In addition to lobbyists, Shkreli hired a crisis public relations firm to help explain the pricing decision.^[80]

On October 22, 2015, Mark L. Baum, CEO of Imprimis Pharmaceuticals, announced that his company would provide a combination product containing pyrimethamine (the active ingredient in Daraprim) and leucovorin at "$1-a-pill" as a cheaper and more efficient alternative to Daraprim.^[81] This product is intended to be used alongside sulfadiazine in the standard protocol to treat toxoplasmosis typically seen in AIDS patients.^[60]

Baum noted, "This is not the first time a sole supply generic drug – especially one that has been approved for use as long as Daraprim – has had its price increased suddenly and to a level that may make it unaffordable". He announced the availability of the compounded replacement for Daraprim as a part of a larger corporate program, "Imprimis Cares", to make "novel and customizable medicines available to physicians and patients at accessible prices". Imprimis is now offering its compounded, orally taken formulations of pyrimethamine and leucovorin beginning at US$99 for a 100‑count bottle, essentially a dollar a dose.^[81]

On November 23, 2015, Turing announced that the company would not reduce the list price of Daraprim, but said it planned instead to negotiate volume discounts of up to 50% for hospitals.^[82] Turing issued a statement that it was not as important to cut the list price as to reduce the cost to hospitals, where most patients get their initial treatment. The company pledged that no patient needing Daraprim would ever be denied access.^[75]

Infectious disease specialists and patient advocates, including Tim Horn of the Treatment Action Group and Carlos del Rio of the HIV Medicine Association, said Turing's actions were insufficient, given that patients initially treated for days at a hospital typically have to continue the treatment for weeks or months after leaving.^[83]

After Shkreli was imprisoned, Turing changed its name to Vyera in 2017.^[84] to avoid negative publicity, and is presently named Phoenixus. In March 2019, The Wall Street Journal reported that Shkreli "steers his old company from prison".^[85] Using a contraband cellphone from his ward in prison at Ft. Dix, N.J., Shkreli was effectively directing the re-named firm, and was reported to have terminated the employment of executive Kevin P. Mulleady.^[86] After this news was reported in various news outlets, Shkreli was moved to the Metropolitan Detention Center in Brooklyn in advance of a subsequent move to a Federal prison in Pennsylvania.^[87] He was also facing a Bureau of Prisons investigation into his breaking federal prison rules, since federal inmates are prohibited both from running a business from prison and from possessing cell phones.^[88]

In November 2015, an investor group led by Shkreli acquired a majority stake in KaloBios Pharmaceuticals (OTC Pink Limited: KBIOQ ^[155] ), a biopharmaceutical company based in South San Francisco, California.^[89] Shkreli was named CEO of the company and also planned to continue in the role of CEO of Turing Pharmaceuticals.^[90][91] After his December 2015 arrest, KaloBios Pharmaceuticals terminated him as CEO.^[92] On December 29, 2015, KaloBios filed for Chapter 11 bankruptcy. This followed NASDAQ delisting its shares, and the resignation of two directors.^[93]

Shkreli founded Gödel Systems in August 2016 as "a professional software company that aims to be the leading information provider of data, workflow, and communications solutions for financial, law, and scientific professionals." By February 2017 Gödel Systems was looking to raise $1 million through a debt offering, and had raised $50,000 out of the $1 million in debt it began issuing in mid-January 2017, according to regulatory filings. Ralph Holzmann, a former senior engineer at Twitter, is the firm's chief technology officer.

Shkreli was subpoenaed to appear before the Committee on Oversight and Government Reform of the U.S. House of Representatives to answer questions about the Daraprim price increase.^[11] Shkreli's efforts to quash the subpoena were unsuccessful.^[11]

On February 4, 2016, Shkreli appeared before the House committee,^[94] along with Nancy Retzlaff,^[95] the Chief Commercial Officer of Turing, and Howard B. Schiller, the interim CEO of Valeant.^[96]

Shkreli followed his lawyer's advice and refused to answer any questions, except to confirm his name^[97][98] – including those related to his acquisition of the most expensive music album ever made^[99] – by exercising his Fifth Amendment rights.^[100]

On December 17, 2015, Shkreli was arrested by the FBI after a federal indictment^[101] in the U.S. District Court for the Eastern District of New York was filed, charging him with securities fraud. The charges were filed after an investigation into his tenure at MSMB Capital Management and Retrophin. He was accused of running a Ponzi-like scheme.^[4]

Federal prosecutors said that Shkreli "engaged in multiple schemes to ensnare investors through a web of lies and deceit".^[102][103] In an interview with The Wall Street Journal, Shkreli said that he was targeted by law enforcement for his price hikes of the drug Daraprim and his flamboyant personality.^[104]

In early 2016, Shkreli retained criminal defense attorney Benjamin Brafman to defend him.^[105][106] At his 2017 trial, Shkreli argued that none of his investors actually lost money (some actually turned a profit) and thus his actions did not constitute a crime.^[107] Shkreli's frequent criticisms of the federal prosecutors in New York's Eastern District, whom he called "junior varsity" compared to their counterparts in the Southern District across the East River, both on his Facebook streaming video feed and in the hallways of the courthouse, led those prosecutors to request that judge Kiyo A. Matsumoto issue a gag order to prevent what they called a "campaign of disruption." Brafman claimed in response that his client was responding to baiting from the media and was also suffering from extreme anxiety because of his situation.^[108] Matsumoto ordered Shkreli not to speak with reporters, either in the courthouse or its immediate vicinity.^[109]

On August 4, 2017, the trial jury found Shkreli guilty on two counts of securities fraud and one count of conspiracy to commit securities fraud, and not guilty on five other counts.^[110] Shkreli said he was delighted with the outcome and described his prosecution as "a witch hunt of epic proportions."^[111]

On September 13, 2017, his bail was revoked following a Facebook post offering $5,000 for a strand of Hillary Clinton's hair which the judge perceived as solicitation to assault, which is not protected under the First Amendment.^[112] Shkreli's post was preceded by others that suggested he might have plans to clone Hillary Clinton.^[113] Shkreli said that his post was satire, and his lawyer described it as tasteless but not a threat.^[113] Shkreli edited the post to add a disclaimer that it was satire,^[114] and later said he did this minutes after publication.^[115] Shkreli apologized for the post.^[116] He was sent to the Metropolitan Detention Center, Brooklyn^[6] while awaiting sentencing.^[116][117]

Shkreli appealed the conviction,^[118] but in 2019 in a swift 3-0 vote jury upheld the earlier ruling.^[119] According to the judge's ruling, Shkreli must continue to serve his 7-year sentence and also still forfeit more than $7.3 million in assets. The judge issued the ruling just three weeks after hearing arguments in the appeal, rather than the normal period of months. The ruling was also unusually short, spanning only seven pages.^[119][120]

On March 5, 2018, Shkreli was ordered to forfeit nearly $7.4 million in assets.^[121] The court ordered that if Shkreli had insufficient cash to fulfill the forfeiture order, his assets—including a piece of art by Pablo Picasso, his unique Wu-Tang album Once Upon a Time in Shaolin, the then unreleased Lil Wayne albumTha Carter V, and Shkreli's pharmaceutical company shares—could be seized.^[122] In April he was ordered to pay $388,000 in restitution.^[123]

During his sentencing, judge Kiyo Matsumoto said Shkreli seemed "genuinely remorseful," regarding his "egregious multitude of lies," but said he had "repeatedly minimized" his misconduct. Shkreli, who reportedly cried as he gave his statement to the court, stated "I was never motivated by money."^[124]

On March 9, 2018, Shkreli was sentenced to seven years in federal prison.^[14][125] He is federal inmate number 87850-053 and was held at the Metropolitan Detention Center, Brooklyn prior to being transferred to federal prison.^[126] On March 27, 2018, it was reported that Judge Kiyo Matsumoto agreed to recommend Shkreli serve his prison sentence at the minimum security federal camp at USP Canaan, which he had previously requested.^[127][128] On April 18, 2018, Shkreli was transferred from Metropolitan Detention Center, Brooklyn to FCI Fort Dix after his request to serve at USP Canaan was denied. As of August 2019, Shkreli is serving his sentence at FCC Allenwood.^[6]

Several media outlets on 6 September 2019 reported that Shkreli leveled a lawsuit against a former investor into his Elea Capital fund before a Brooklyn court, "accusing him of fraudulently inducing Shkreli into signing a promissory note that has left him owing $420,000 to the man’s father."^[129][130]

In December 2016, the New York state Department of Taxation and Finance issued a tax warrant for $1.26 million for unpaid taxes owed by Shkreli. After Shkreli made partial payments, the state recouped another $134,500 from Shkreli by seizing and auctioning off an Enigma machine for $65,000, a manuscript signed by Isaac Newton, a letter from Charles Darwin, and another letter written by English mathematician and writer Augusta Ada King-Noel, Countess of Lovelace.

On April 23, 2018, it was reported that in court filings New York's attorney general had asked Judge Matsumoto for priority on more than $480,000 in court-ordered forfeitures, to recover additional unpaid taxes and penalties owed to the state, over the federal government's claims for Shkreli's forfeited assets. Prior to Shkreli's conviction, the state of New York had been aggressively attempting to collect the tax debts from Shkreli and had already seized and auctioned off several of items including the rare Nazi Enigma code machine.

At the same time, the Securities and Exchange Commission announced that Shkreli had agreed to an order that would bar him from the securities industry in order to settle a pending SEC administrative action against him, however, Shkreli is eligible to apply for readmission to the industry subject to applicable laws and regulations governing the process.^[118]

In January 2016, Fortune estimated the then-32-year-old Shkreli's net worth was at least $45 million but later updated its profile to reflect that "[S]ince this article was published the value of Shkreli's E*Trade account had dropped by more than $40 million".^[131] Shkreli leveraged a $4 million E-Trade account for his bail.^[132]

In June 2017, Reuters reported that Shkreli had reported his net worth at $70 million after being arrested in 2015 and that his attorney Benjamin Brafman, in a hearing before Judge Kiyo Matsumoto, had conceded that his client still owned shares of Turing Pharmaceuticals worth between $30 to $50 million.^[133]

In October 2015, presidential candidate Bernie Sanders acknowledged having received a $2,700 donation from Shkreli, whom he had previously called a "poster child of greed". Sanders, however, said he would forward the money to Whitman-Walker Health, a D.C. community clinic known for its expertise in HIV/AIDS healthcare. Shkreli told medicine news portal STAT that among his reasons for donating to Sanders' campaign was that he supports some of Sanders' positions, excluding the ones about drug prices. He claimed he hoped to gain Sanders' attention in order to explain to him in a private meeting the drug companies' price-setting mechanisms.^[134]

Shkreli, an avid League of Legends player, began expressing interest in purchasing an eSports team in May 2014.^[135] Enemy eSports rejected a US$1.2 million offer from Shkreli.^[136] He later founded his own team, Odyssey eSports, and aimed to qualify for the 2015 North American League of Legends Challenger Series but the team failed. In August 2015, Odyssey merged with another team to become the organisation Team Imagine, with Shkreli becoming chairman of the team. During the merger, the organization signed the Dota 2 team Leviathan.^[137][138]

Shkreli won an auction for the Wu-Tang Clan album Once Upon a Time in Shaolin after the single copy of the album was sold via Paddle8 on November 24, 2015, for US$2 million.^[139][99] In October 2016, Shkreli claimed on his Twitter that he would release the album for free download if Donald Trump won the 2016 US presidential election and would destroy the album if Hillary Clinton won.^[140] He shared the intro and one track the day after Trump became the President-elect.^[141]

In September 2017,^[142] Shkreli attempted to sell Once Upon a Time in Shaolin on eBay, with the winning bid passing $1m. He was incarcerated on unrelated fraud counts before the sale could be completed.^[143] In March 2018, following Shkreli's conviction for fraud, a federal court seized assets belonging to him worth $7.36m, including Once Upon a Time in Shaolin.^[144]

In February 2016, he announced in an offer letter $10 million to become the sole owner of Kanye West's album The Life of Pablo.^[145][146] On February 12, 2016, Shkreli increased his offer for West's The Life of Pablo from $10 million to $15 million.^[147]

Shkreli was formerly a benefactor of Collect Records, a record label run by musician Geoff Rickly, and offered to bail out rapper Bobby Shmurda; Shkreli retracted this offer after his own arrest.^[148][149]

In February 2017, Shkreli was invited to speak at Harvard University. The requested travel was approved by a judge.^{[150][151][152]}