News

Wu-Tang Album Buyer Martin Shkreli Accused of 'Misappropriating' More Than $1 Million

Martin Shkreli
Paul Taggart/Bloomberg via Getty Images

Martin Shkreli photographed in 2011.

Martin Shkreli -- best known for attempting to price-gouge a life-saving AIDS drug and later buying Wu-Tang Clan's one-of-a-kind album Once Upon a Time in Shaolin for $2 million -- was arrested Thursday (Dec. 17) morning in New York City on charges of security fraud and "widespread fraudulent conduct."

In the U.S. Securities and Exchange Commission's complaint against Shkreli, provided to Billboard by the SEC, the controversial pharmaceutical CEO/Wu-Tang fan is accused of "misappropriating" more than $1 million from MSMB Capital Management and MSMB Healthcare, two hedge funds Shkreli founded and managed. Both hedge funds, as well as his lawyer Evan Greebel, are defendants in the complaint.

According to the SEC, "Shkreli made material misrepresentations and omissions to investors and prospective investors in MSMB; lied to one of MSMB's executive brokers about MSMB's ability to settle short sales." He's also accused of having "misappropriated funds" from MSMB to the tune of $120,000 between 2009 and 2014.

In reference to his second hedge fund, Shkreli is accused by the SEC of misappropriating "approximately $900,000 of investor funds from MSMB Healthcare to fund the settlement of an arbitration process" involving a separate company in 2013. In short, he's accused of using investors' money to deal with legal issues.

Martin Shkreli Wants to Bail Out Bobby Shmurda

Retrophin -- a company Shkreli was CEO of before the board ousted him in 2014 -- is mentioned in the SEC's complaint as well. The SEC accuses Shkreli, "aided and abetted" by his lawyer Greebel, of having hedge fund investors "enter into agreements with Retrophin that misleadingly stated the payments were for consulting services, when in fact the payments were for the release of potential claims against Shkreli." Retrophin said they fully cooperated with the federal investigation of Shkreli in a statement.

Given that Shkreli's alleged conduct violates a litany of laws, the SEC seeks to "permanently enjoin Defendants from engaging in the acts, practices and courses of business alleged herein."

A press agent for the Department of Justice confirmed to Billboard that United States Attorney Robert L. Capers is holding a press conference at noon today (Dec. 17) to discuss the matter.

Price-Gouging Drug Exec Revealed as 'Shaolin' Album Buyer

In addition to grabbing headlines for buying Wu-Tang Clan's exclusive album, Shkreli recently told HipHopDX he was considering paying incarcerated rapper Bobby Shmurda's $2 million bail.

Shkreli first earned a national profile when critics blasted him for attempting to raise the price on a life-saving AIDS drug from $13.50 per pill to $750 as CEO/founder of Turing Pharmaceuticals. After national outcry, it was revealed Shkreli was a significant investor in former Thursday frontman Geoffrey Rickly's Collect Records. Learning of Shkreli's ethically questionable conduct, Rickly quickly cut off all ties with Shkreli.

Billboard reached out to Rickly and representatives for Wu-Tang Clan for comment.