How “Pharma Bro” Martin Shkreli transitioned from "Most Hated Man in America" to convicted fraudster and maybe-whistleblower?
Martin Shkreli earned himself a slew of unflattering nicknames and was the target of oodles of social media vitriol after price gouging the life-saving drug Daraprim by five thousand percent in 2015. However, his conviction relates to fraud committed while he ran the hedge funds MSMB Capital Management LP and MSMB Healthcare LP (MSMB).
Compliance Officer speaks up
Former MSMB chief operating officer Jackson Su testified at Shkreli’s trial about raising the alarm internally about the misconduct he witnessed, to no avail. In late 2012 the straw broke the camel’s back and Su left the company, telling MSMB’s President: “I’m not going back to work, all these things don’t add up.” Apparently, Shkreli reclassified MSMB investments as loans, backdated transactions long after processing, and more.
Su filed a complaint against Martin Shkreli with the US Security and Exchange Commissions (SEC) in 2012. Others followed suit, including Caroline Stewart who also testified in the trial. She had endured Shkreli’s lies and tried to stick it out at the company, until she was ultimately fired.
Martin Shkreli whistleblower?
To put a cherry on top of this convoluted series of events, Shkreli himself may be a whistleblower. He filed a complaint against Mallinckrodt Pharmaceutical who, according to the Federal Trade Commission (FTC), violated antitrust laws when their division Questcor acquired the rights to Acthar. The latter is a specialty drug used to treat infantile spasms.
Once the monopoly was secure, Mallinckrodt supposedly increased the price of the drug and engaged in anti-competitive behaviour in order to keep prices high. Martin must have been upset that someone else was making use of his playbook. Mallinckrodt eventually settled with the FTC, agreeing to pay $100 million and allow a competitor to develop an alternative to the drug Acthar.
In the end, Martin Shkreli might be a fraud, but his involvement in the Mallinckrodt case did manage to jump-start the justice process regarding the acquisition of Acthar. At the very least, this shows that anyone can be a whistleblower against professional misconduct. Unfortunately for him, Jackson Su and Caroline Stewart raised the alarm on his own fraudulent activity when it became apparent internal channels would not do the trick.
Further reading:
Mangan D (2017) Martin Shkreli worker called him ‘mentally unstable,’ and a ‘scam artist’ as she threatened to expose his lies to investors. CNBC, 7th July. [17th June 2022] Available at: https://www.cnbc.com/2017/07/07/martin-shkreli-worker-called-him-mentally-unstable-and-scam-artist.html
RT (2017) 'Pharma bro’ a whistleblower? Martin Shkreli complaint leads to $100mn FTC drug price settlement. RT, 19th January. [17th June 2022] Available at: https://www.rt.com/usa/374168-martin-shkreli-ftc-mallinckrodt/
The Whistleblower Attorneys (2021) How Whistleblowers Helped Bring Down Martin Shkreli, The Most Hated Man in America. The Whistleblower Attorneys, 11th February. [ 17th June 2022] Available at: https://www.whistleblowerattorneys.com/blog/whistleblowers-martin-shkreli
