Martin Shkreli: The Downward Spiral of Fraud and Greed

Martin Shkreli, former CEO of a pharmaceutical company is known for buying up old drugs and immediately raising the price to consumers by as much as 5,000% overnight. He recently raised the price of one drug that treats a devastating infection in babies and people with AIDS from $13.50/pill to $750/pill. Mr. Shkreli has often spoken out against critics, and has become known as the “bad boy of pharmaceuticals,” portrayed by his excessive greed. On December 17^th, Mr. Shkreli was arrested for securities fraud and wire fraud charges, not because he raised prices so quickly in his current company, Turing Pharmaceuticals, but because of fraud he committed in two prior hedge funds and a previous biopharmaceutical company, Retrophin.

Mr. Shkreli lied to investors for both of his hedge funds while losing millions of dollars. He then paid them off by using funds from Retrophin without consent from the board of directors. Throughout the process, he and a partner fabricated consulting agreements so that external auditors would not be suspicious of the transactions taking place between Retrophin and the investors of the two hedge funds. This article from The New York Times and the video below (posted by the Associated Press) give more information about what Mr. Shkreli did and what he has been charged for.

I find it really interesting to note the behavior of Mr. Shkreli after the major frauds were committed in his hedge fund companies and at Retrophin. He has become more outspoken against critics, more greedy, and more self-centered (though currently offline, he has a live-streaming YouTube channel of himself talking in his apartment – https://www.youtube.com/watch?v=YCB6AybM4Cs). He has even said that his only mistake in raising drug prices by drastic amounts was not raising the prices more. 

Greed often leads to fraud, but what is interesting is that as a fraud is carried out, the fraudster seems to become even greedier. This concept can be applied across all industries. As people exhibit more greed, not only is it possible that greed is leading them to commit a fraud, but it is also likely that they are already committing a fraud, and, in the process of attempting to cover it up, are displaying more greed. Greed leads to fraud and, as in a vicious circle, fraud also leads to greed.