4 ms·

Shkreli had an ongoing fraud and sec violations before Turing Pharma. Though it looks suspicious, his prosecution is coincidental with the Turing stuff and revo

Shkreli had an ongoing fraud and sec violations before Turing Pharma. Though it looks suspicious, his prosecution is coincidental with the Turing stuff and revolves around the truly atrocious management of his hedge fund. Shkreli deserves what he got, but not because of his public bravado or raising the price of a drug, but because he actively embezzled money and created a Ponzi scheme.

googlryas 9y ago
Was it a Ponzi scheme? I've read that he basically lost his investors money in a real investment failure, and then 'donated' some of his shares from his other, unrelated company to make the investors a profit and look good.
- hacknat 9y ago
  That’s a Ponzi scheme.
  - googlryas 9y ago
    Except a Ponzi scheme repays old clients with new client funds. In this case he was paying them out of his own pocket.
- tomkarlo 9y ago
  Loosely speaking, it was - he was using the supposed gains of earlier investors to attract new investment, then using those new funds to pay off the earlier investors. It was spread across multiple investments rather than just one vehicle, but that seems kind of irrelevant. "Prosecutors were focused on Shkreli’s leadership of two hedge funds, MSMB Capital and MSMB Healthcare, and a pharmaceutical company, Retrophin. Shkreli raised millions for MSMB Capital, but not as much as he told investors. When he made a bad bet that doomed the hedge fund, he launched a scheme to cover it up, prosecutors said. He raised more money for another hedge fund, MSMB Heathcare, which he largely used to fund the start up of Retrophin. When disgruntled investors attempted to claim their profits, Shkreli used money from other investors and Retrophin cash and stock to pay them off, according to prosecutors." https://www.washingtonpost.com/news/business/wp/2017/08/04/martin-shkreli-jury-enters-fifth-day-of-deliberations/?utm_term=.bf75173963d6 https://www.washingtonpost.com/news/business/wp/2017/08/04/m...

googlryas 9y ago

Was it a Ponzi scheme? I've read that he basically lost his investors money in a real investment failure, and then 'donated' some of his shares from his other, unrelated company to make the investors a profit and look good.

hacknat 9y ago
That’s a Ponzi scheme.
- googlryas 9y ago
  Except a Ponzi scheme repays old clients with new client funds. In this case he was paying them out of his own pocket.
tomkarlo 9y ago
Loosely speaking, it was - he was using the supposed gains of earlier investors to attract new investment, then using those new funds to pay off the earlier investors. It was spread across multiple investments rather than just one vehicle, but that seems kind of irrelevant. "Prosecutors were focused on Shkreli’s leadership of two hedge funds, MSMB Capital and MSMB Healthcare, and a pharmaceutical company, Retrophin. Shkreli raised millions for MSMB Capital, but not as much as he told investors. When he made a bad bet that doomed the hedge fund, he launched a scheme to cover it up, prosecutors said. He raised more money for another hedge fund, MSMB Heathcare, which he largely used to fund the start up of Retrophin. When disgruntled investors attempted to claim their profits, Shkreli used money from other investors and Retrophin cash and stock to pay them off, according to prosecutors." https://www.washingtonpost.com/news/business/wp/2017/08/04/martin-shkreli-jury-enters-fifth-day-of-deliberations/?utm_term=.bf75173963d6 https://www.washingtonpost.com/news/business/wp/2017/08/04/m...