How do you become the most hated man in America? Well, first, you have to mess with people’s health. You also have to take to Twitter and troll everybody who criticizes you. Basically, be an asshole. By the way, you can also take part in securities fraud and be happy that you end up in jail. Prison won’t stop you. In fact, you might even work from there. And, anyway, you’ll be out in months, and all of us, can’t stop you from doing any of this again. We’ve just described Martin Shkreli, and this is just the tip of the iceberg. So, let’s find out why he’s the most hated man in America.
In December 2015, Martin Shkreli walked out of his apartment and into the back of a squad car. He looked like crap and tried to cover most of his face with a gray hoodie. So, it was a long way from the typically cocky and brash executive he had been just months before.
An FBI indictment sent him to jail, and the US District Court of New York charged Shkreli with multiple felonies. After tumultuous months, he finally testified in front of the US House of Representatives.
When I say testified, he sat down and pleaded the Fifth Amendment, rejecting to answer all questions and mocking everyone with his gestures. So, when it came time for the trial, it wasn’t easy. Everyone hated Shkreli so much that finding a jury was almost impossible.
But, interestingly, the reason people hated him wasn’t the same reason that landed him in court. Instead, the US District Court accused him of securities fraud and running a Ponzi Scheme to cover his debts.
To understand how he got to this point, we need to go back to 2003. At age 17, Martin Shkreli “weaseled” into an internship at the Wall Street hedge fund Cramer, Berkowitz, and Company. Yes, those are his words. He “weaseled” himself into it. And, yes, that’s this guy’s fund. There, he made a name for himself. First, he recommended that the company bet against a particular biotech company. When the stock fell, the fund made a lot of money.
But, for every positive, it seemed that he managed to come up with a negative. People admired his intelligence but despised his personality. He was cocky, aggressive, and had a vast catalog of annoying expressions. After four years of working at the fund, he left Cramer, Berkowitz, and Company, then skipped about in other funds until he formed Elea Capital Management with one goal.
Shkreli loved shorting stocks. His goal with Elea was to keep doing it; the bad thing was that, though he loved it, he wasn’t great. He had a terrible track history.
In 2007, Shkreli was sure that the stock market again would fall. So, he placed a put option, which is a bet, through Lehman Brothers. The bad thing is that the stock market did the total opposite and went up.
So, instead of collecting, he had to pay up, but he didn’t have the money. When Lehman Brothers demanded that he pay, he opted for a defensive attitude, claiming that there was too much pressure and that he could end up in bankruptcy. Lehman Brothers fired back and sued him for $2.3 million, and a court agreed.
But then, luck helped Shkreli when the 2008 Crisis came and swept Lehman Brothers off the face of the Earth. So, now, the company couldn’t cash out on the verdict. Lucky him. Elea wouldn’t survive, and Shkreli ended up living with his parents. But, he still wanted to short stocks. So, he created a new fund, MSMB Capital Management, and history repeated itself.
Martin Shkreli wasn’t afraid to go against the grain, and MSMB was no different. As a result, his tactics became even more aggressive, even repulsive. First, they’d short biotech companies and then create strategies to drive down the stock. These included researching and blasting the companies on stock trading chat rooms.
Though the method seemed ludicrous, Shkreli had one thing in his favor: he was brilliant. Moreover, he had no difficulties understanding the biotech companies’ complex terms and ideas. So, for him, weeding out companies that faked medical results was easy. And people believed him. But, this strategy would bite him in the ass.
In 2011, he made another gamble when the FDA declined to approve the drug Contrave from Orexigen Therapeutics. The day after the rejection, its stock plunged from its original $9,09 value.
So, Shkreli shorted 32 million Orexigen shares at about $2.50 through a Merrill Lynch account. Can you guess what happened? The share rebounded, and MSMB couldn’t cover the difference.
The problem was that Shkreli had said it could cover. So, now, Merrill Lynch had lost $7 million, and MSMB was knee-deep in debt. But that didn’t stop Shkreli, not one bit.
Only months later, he created MSMB Healthcare and a pharmaceutical company called Retrophin. When the world noticed this, people were left scratching their heads. Why was he venturing into pharma?
He said that he met a boy who had a rare type of muscular dystrophy. Eventually, the boy succumbed to his condition, and Shkreli was devastated. So, he had a new purpose in life.
Why wouldn’t we believe him? After all, he focused a lot on rare diseases. Plus, it’s not like he’s a stranger to adversity.
Shkreli’s parents migrated from Albania and Croatia. Both worked humble jobs as janitors and put their four kids through prestigious education. Martin’s school, the Hunter College High School, even has a reputation for sending kids to the Ivy League.
But, even then, there are conflicting reports. Shkreli’s stint there is dubious. It isn’t clear whether the school expelled Shkreli or he got enough credits for a diploma. So, once again, for every positive, he manages to bring for a negative.
Anyways, back to the story. Let’s talk about that change of heart he had. Sure, the boy’s death affected him but, Shkreli also said, in an interview, that he entered pharma because there wasn’t enough money on hedge funds. But, hey, at least he was honest.
Change of heart or not, Martin Shkreli had two new companies and clear goals. With Retrophin, he started creating treatments for rare diseases, keeping with his “noble” cause. He even patented two for a rare condition called PKAN.
But, Martin Shkreli was also a viper. Former employees state that he forced them to create fake Twitter accounts to encourage short-selling other biotech stocks.
He hacked into employees’ social networks and harassed them and family members, and threatened others.
His reputation made it hard for Shkreli to get funding. But somehow, he managed to scrape by $4 million through funding and $10 million through a private deal from Roth Capital.
With this money began Shkreli’s journey to becoming the most hated man in America. Shkreli bought the rights to sell tiopronin and Chenodal, two medications for rare diseases.
These are expensive. For example, patients on Tiopronin can consume from 10 to 15 units a day.
So, what did Martin Shkreli do with these new purchases? Well, he raised the prices by a lot. Tiopronin went from $1.50 to $30 per pill, and Chenodal increased around five times the original price.
He was unapologetic about the price increment. The only reason he gave was that he could. There was no other explanation, and the world took notice.
People said it had been the most unethical price increase the world had seen. The media followed with constant attacks and, still, Shkreli didn’t apologize. He even trolled the world through Twitter. He was dead-set in that he wasn’t doing anything wrong or illegal. But the world, and the company, hated him.
Retrophin’s Board of Directors had had enough and removed Shkreli from the company in September 2014, just weeks after the price spike. But it didn’t end there. Unfortunately, this show is Forensics, so it got worse.
Daraprim is a medication that the FDA approved in 1953. It helps to treat toxoplasmosis in immunocompromised patients, such as those with HIV.
The patent for Daraprim had expired a long time ago, and there was no generic version in the market. Now, this isn’t unusual in pharma because what can happen is that some medications are so easy to make that there’s little room for money. So, only a handful of companies have patents to produce them.
For a competitor to get into the business, they’d have to go through an FDA approval which isn’t easy. So that, right there, is a business opportunity, and Martin Shkreli saw it.
After leaving Retrophin, Shkreli wasted little time creating his next endeavor, Turing Pharmaceuticals, in February 2015. He had only one goal: to buy the rights for manufacturing and distribution from these companies and “reevaluate” the pricing these drugs had. Then, by controlling the price and the distribution, he would have total control.
To accomplish this, he began looking for funds and got $90 million, and many wondered how. After all, nobody liked him. Where did all this money come from?
Out of the $90 million, $62.7 million came from outside investors. But the company didn’t explain the origins of the remaining $27,3 million.
At that same time, former investors were attacking Shkreli, saying he had purposedly run Retrophin to the ground to earn money for this new project and that those $27,3 million came from the defunct company.
When the media inquired about the funding round, Shkreli sent blunt emails advising outlets to “stop inquiring.” He told them: it’s none of your business. But it was!
These moves would only make sense if Shkreli planned to increase the price, and that’s what he did. One September morning, in 2015, the price for Daraprim went from $13,50 to $750. Overnight, it increased 5,400%! The price gouging was outrageous.
Bernie Sanders, Hillary Clinton, and Donald Trump all lashed out at Shkreli and the company. One hundred sixty-four organizations in total expressed their concerns over Shkreli’s actions. Trump even called him a spoiled brat. Trump!
But, what did Shkreli do? Again, he trolled the world. First, he fired back at Trump, saying, “We could’ve been friends.” Then, when Sanders wrote a letter demanding that the company lower the price, Shkreli sent him a donation of $2,700, which Sanders gave to a local clinic.
Shkreli defended the price hike. After all, the system allowed him. He duped journalists by explaining that patients could get drugs at a cheaper rate thanks to this move, according to him. And, to some point, he was right.
To a point, again. If insurance companies didn’t pass the hike to the customers. And only if patients had insurance. Otherwise, they’d had to pay for the increase.
But, if there’s one thing we have to give to him is his ability to argue and defend his points. His understanding of the pharmaceutical industry was even superior to that of most people, so his counterpoints left many unable to speak. Still, his ability to debate couldn’t save him. By then, his reputation was in shambles, and companies parted ways with him and released him as CEO.
Oh, by the way, Shkreli is a music addict. He loved buying albums, including the only copy in existence of Wu Tan Clan’s Once Upon A Time In Shaolin for more than $2million.
We’ll get to that later. As for the public, he was still divisive. Some people called him a god, others, I don’t know, you make your conclusions: “just fucking die, will you?” All the while, Shkreli was a dick about it, until the pressure was too much.
Shkreli said that the anger and “cancel culture” was such that he would lower the prices to an undisclosed amount, although he made it clear it wouldn’t be pre-September levels. The problem was that he didn’t do it. Instead, he backed out of lowering the prices and said he’d work out a deal with hospitals, which never happened.
Another company took advantage of the situation and offered the compounded replacement for much cheaper. So, it’s all about seizing the opportunity in the pharma world.
Meanwhile, authorities took notice of this behavior, but not for the reasons that you might think. Sure, the world hated his actions, but he wasn’t breaking any rules. What authorities noticed is that there was something with his companies that didn’t make sense. The red flags came up with investors who accused him of fraud and authorities listened. That’s how we end up at his trial in 2016 and even that is complicated.
The SEC and FBI concluded that Shkreli had used Retrophin as a personal piggy bank to pay investors and debts from MSMB. That was the Ponzi scheme that was terrible enough for authorities to take him to prison.
Finally, at the end of a complex trial that put everyone’s patience to the test, the jury found Shkreli guilty of three out of the eight charges.
And he smiled. Martin Shkreli smiled when they said he was guilty. He was delighted because he knew it could’ve been worse. The Judge even granted him bail, but he lost the right when he offered $5,000 to anyone who got him a strand of Hilary Clinton’s hair. Authorities took that as a threat to Clinton and removed his right to bail. Smart.
Then, in prison, authorities discovered that Shkreli was running a company from inside his cell. The name of the company was Phoenixus AG, but, in reality, it was Turing Pharmaceuticals, under a new name.
Yes, he was still calling the shots! From prison! He was even active on Twitter. That’s as bad as it can get for the US Federal System. Having an inmate tweet from prison, mocking them. In addition, he bragged about how he’d be richer after leaving prison.
In 2020, he made a plea to have a compassionate release, which the Judge rejected and claimed was a delusional representation of a massive ego. So instead, Shkreli was to carry out his sentence and leave prison in 2022. By the way, that’s next year.
As part of the arrest, he lost all his belongings. His possessions represented his ego and his smarts. including the Wu-Tang Clan album, a manuscript with Isaac Newton’s autograph, and an Enigma Machine that helped the British win World War II. So, an eclectic mix, no doubt.
But, to this day, one thing concerns me: as far as the price hikes, the reason everyone hated him, as far as the US Healthcare system goes, he didn’t do anything illegal.
A lot of other companies can do the same. So, in the end, yes, he’s a dick, he’s unbearable, but he also knew how to take advantage of the twisted system that surrounded him.
Is he the only one? No. I bet there are thousands like him out there. We don’t even have to find a replacement, as he’s bound to leave prison in months. Yes, Martin Shkreli is the most hated guy in America. I mean, look at his face. But the system? That’s even worse.