Shkreli Turns to $45 Million E*Trade Account to Stay Free

Martin Shkreli's Former Company Files for Bankruptcy
  • Ex-Turing, KaloBios CEO released last month on $5 million bond
  • Shkreli is accused of scheme to defraud hedge fund investors

Martin Shkreli put up his $45 million E*Trade account to secure $5 million bail after federal authorities arrested him on fraud charges last month.

The youthful founder of hedge funds and pharmaceutical companies attracted national attention in September for increasing the price of a life-saving drug more than 5,000 percent. Prosecutors say he lied to investors and used money from a company he ran to cover losses at his funds. He pleaded not guilty and was released on bond.

A court filing offers some of the clearest evidence to date of the wealth Shkreli amassed as a health care entrepreneur and investor. Under the terms of the security arrangement, he can’t sell or transfer any of the assets in the account, which “have a current value of $45 million,” according to the filing.

E*Trade was directed to notify prosecutors if the value of the account fell below $5 million.

Stocks used as security for bail often exceed the bond amount to account for market volatility, which is less of a concern for other assets that might be pledged such as real estate, said veteran defense lawyer Sally Butler, who is not involved in the case.

Real property also has other characteristics that can make it "more reliable" than securities, she said, in an e-mail. "It can’t be moved, for example."

In a phone interview on Friday, Shkreli declined to comment about his assets or the document filed with the court.

Rare Album

A frequent presence on social media and known to spend hours live-streaming himself on the Internet, Shkreli, 32, drew even more attention for buying a one-of-a-kind album by the Wu-Tang Clan and saying he had no immediate plans to play it.

Speculation abounded at the time of his arrest over whether the album could be seized as part of the case, until the FBI said it hadn’t seized the record.

While prosecutors accuse him of lying to investors in his hedge funds and deceiving officials at Retrophin Inc., a biopharmaceutical company he founded, Shkreli has said the drug-price increase, which isn’t part of the federal case, spurred the government to target him.

Ousted by Retrophin in 2014, Shkreli stepped down as chief executive officer from another company he founded, Turing Pharmaceuticals AG, after his arrest. Another company, KaloBios Pharmaceuticals Inc., fired him as CEO after the arrest and sought bankruptcy protection in late December. Investors have sued that company to recover $5.4 million.

Tinder Date

This week, the Washington Post published an account by actress Jacklyn Collier of a night out she had with Shkreli shortly after the controversy erupted over the drug-price increase.

Collier wrote that the two met using the dating app Tinder, and went to Brushstroke, a Japanese restaurant in Manhattan, where Shkreli ordered a $120 cup of tea. When he asked if she wanted one, Collier said she declined.

"I thought about making a price-gouging joke, but couldn’t think fast enough," she wrote.

More Complex

Collier said she was "outraged" about the price increase of Daraprim, a drug used to treat a parasitic infection that can be deadly to unborn babies and AIDS or cancer patients. But Shkreli, who discussed his family and philanthropy interests, was "a lot more interesting and complex than I would have imagined."

Shkreli, once called a "boy genius," grew up in working-class Brooklyn and is the son of Albanian and Croatian immigrants who worked as janitors. More recently, he has come to be labeled in the media by other monikers, including a "poster boy" for greed, “pharma bro” and the "most hated man in America."

The case is U.S. v. Shkreli, 1:15-cr-00637, U.S. District Court, Eastern District of New York (Brooklyn).

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