NEW YORK (BLOOMBERG) - Martin Shkreli boasted to potential clients in his hedge fund that he was managing as much as US$100 million (S$138 million). In reality, prosecutors say, the net asset value of his fund MSMB Capital at one point fell to minus 33 cents, and never held more than US$1.2 million.
Prosecutors on Tuesday (July 11) showed jurors a series of transactions between Shkreli's hedge fund, brokerage accounts, his start-up drug company and his personal accounts to back their allegation that the former pharmaceutical executive was duping investors with bogus claims about his holdings.
The records also show that within days of investors putting money into Shkreli's hedge fund, he repeatedly shuffled it around. The investments would sometimes show up as transfers to Retrophin Inc, the pharmaceutical start-up, according to the records.
Shkreli, who gained international notoriety for raising the price of a potentially life-saving drug by 5,000 per cent, is on trial in Brooklyn, New York, accused of operating his businesses as Ponzi schemes. Prosecutors say he took investors' money from the hedge fund to start Retrophin without their authorisation, and later used US$11 million from the drug company to repay investors in the hedge fund.
Jurors saw that after Shkreli made a disastrous trade on Feb 1, 2011, his hedge fund's net asset value also plummeted from a high of US$1.1 million the day before to just US$55,786 on Feb 28, recording a balance of minus 33 cents by July of that year.
Shkreli also charged Retrophin's credit card US$10,000 for the purchase of tickets to a Jay-Z benefit concert at Carnegie Hall in February 2012, according to records presented by prosecutors.
As soon as money went into Shkreli's hedge fund, it was moved: on the same day as an investor sent a US$850,000 wire transfer to Shkreli's hedge fund on Feb 3, 2012, US$900,000 was transferred from the funds' accounts to Retrophin, according to the records.
Under questioning by prosecutor Alixandra Smith, forensic accountant Wendy Spaulding showed jurors that Shkreli moved tens of thousands of dollars out of his hedge fund into his own personal bank accounts. One record shows Shkreli also moved more than US$1.3 million from Retrophin, the company he created after closing his hedge fund, to his personal account.