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Former hedge fund manager and New York attorney indicted in multi-million-dollar fraud scheme

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Martin Shkreli, the founder and managing member of hedge funds MSMB Capital Management LP (MSMB Capital) and MSMB Healthcare Management LP (MSMB Healthcare) and former Chief Executive Officer of Retrophin Inc has been charged with fraud.

Evan Greebel, a former partner at the New York office of law firm Katten Muchin Rosenman LLP, who served as outside counsel to Retrophin, has also been charged. Shkreli is charged with securities fraud, securities fraud conspiracy, and wire fraud conspiracy for orchestrating three interrelated schemes: schemes to defraud investors in MSMB Capital and MSMB Healthcare and a scheme to misappropriate Retrophin’s assets. Greebel is charged with wire fraud conspiracy for his role in the Retrophin scheme.
The charges were announced by Robert L Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“As alleged, Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit. His plots were matched only by efforts to conceal the fraud, which led him to operate his companies, including a publicly traded company, as a Ponzi scheme, where he used the assets of the new entity to pay off debts from the old entity. When regulators and auditors questioned Shkreli’s decisions, he joined forces with Evan Greebel, who used his law license and training to conceal and further the scheme,” says United States Attorney Capers. “The charges and arrests announced today reflect our commitment to hold accountable corporate executives and licensed professionals who betray their positions of trust in order to fraudulently enrich themselves.”
“The charges announced today describe a securities fraud trifecta of lies, deceit, and greed. As charged, Martin Shkreli targeted investors and retained their business by making several misrepresentations and omissions about key facts of the funds he managed. He continued to lie about the success of the investments and used assets from Retrophin to payoff MSMB investors. In the end, Shkreli and Greebel used a series of settlement and sham consulting agreements that resulted in Retrophin and its investors suffering a loss in excess of USD11 million. While the charges announced today are significant, they are but one example of what’s left to come as the FBI continues this investigation,” says FBI Assistant Director-in-Charge Rodriguez.

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