Remarks as Prepared for Delivery by SAC Michael Harpster Regarding Charges Against Martin Shkreli and Evan Greebel
The charges announced today describe a securities and wire 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.
The partnership of MSMB Capital was founded in 2009. Nearly two years later, the fund suffered a loss of over $7 million as a result of a short sale position that Shkreli couldn’t cover. Despite this significant loss, he continued to tell Capital investors that their accounts were flourishing.
The hedge fund, however, was essentially worthless.
With no money left in the fund, Shkreli opened MSMB Healthcare in 2011 and eventually lost the money of his MSMB Healthcare investors as well.
Later that year, Shkreli established the Retrophin Corporation. Coincidentally, the company went public in December 2012, shortly after an e-mail was sent to investors of both MSMB funds allowing them to redeem their investments for cash or shares of Retrophin.
At this point, Shkreli, along with outside counsel Evan Greebel, conspired to create a series of settlement agreements detailing the payoff to MSMB investors without the approval of Retrophin’s board of directors. When an auditor stumbled upon the settlement agreements, the payments were classified as a liability. Shkreli wrote a note payable to the company for the withdrawn assets, which he, in fact, never intended to repay.
To avoid speculation on behalf of the auditors, Shkreli and Greebel then created a series of sham consulting agreements in which investors in MSMB were made to appear as consultants in order to qualify for money paid out by the Retrophin Corporation. The investors, however, never provided any consulting services to Retrophin in exchange for the compensation they received.
In the end, the settlement and sham consulting agreements resulted in Retrophin and its investors suffering a loss in excess of $11 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.
Many thanks, as always, to our partners from the Eastern District of New York: U.S. Attorney Robert L. Caper, Chief of the Business and Securities Fraud Section Winston Paes, and AUSA Alixandra Smith.
I’d also like to thank our partners at the Securities and Exchange Commission.
And last but not least, I extend my sincere congratulations to FBI Special Agents Christopher Delzotto and Michael Braconi and Supervisory Special Agent Lilian Perez for their work on this investigation.