Investor still made money off bad Martin Shkreli deal
An investor who poured money into disgraced CEO Martin Shkreli's hedge fund is claiming the Pharma Bro conned him, but admitted he still made millions in the deal.
Darren Blanton, a Dallas-based investor, said he still turned a sizable profit after a deal went sour between him and Shkreli's company more than six years ago, he told a New York federal court on Thursday.
Blanton accused Shkreli of defrauding him by repeatedly lying to him about his hedge fund's assets, which led Blanton to invest $1.25million in the company.
Despite the dispute between the two parties, it was revealed Blanton made out with $200,000 and around 360,000 shock shares, which netted him $2.4million.
Pharma Bro Martin Shkreli (left) is on trial for federal security fraud. Darren Blanton (right), a former investor, told a New York court Thursday that Shkreli conned him but said he still made money off the deal
Blanton, who is a biotechnology investor, appeared in Brooklyn federal court as a witness for US prosecutors who are trying Shkreli for securities fraud, stemming from his tenure at the helm of Retrophin Inc.
Blanton told jurors he invested in Shkreli's hedge fund MSMB Capital after being told the fund was managing $35million in assets and had an independent auditor.
He said he later learned both of those claims were false and found Shkreli evasive when he tried to get some of his money back.
Blanton said he eventually filed a whistle-blower complaint with the US Securities and Exchange Commission.
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ShareUnder cross-examination by Shkreli's lawyer, Blanton conceded that despite his misgivings, his $1.25million investment with Shkreli paid off, largely through an agreement in which Shkreli gave him shares in his drug company Retrophin Inc.
Blanton said he still holds 150,000 shares of Retrophin, worth nearly $3million at Wednesday's closing price of $19.83 per share, and previously sold shares worth $2.4million.
He also said he received a cash payment of $200,000.
Prosecutors have claimed the agreement between Blanton and Shkreli, termed a consulting agreement, was a sham.
Shkreli is most notorious for raising the price of a life-saving drug by 5,000 percent and is on trial for federal security fraud during the disgraced CEO's tenure at the helm of Retrophin Inc
Blanton said Shkreli founded Retrophin after learning that a friend of Blanton's had lost a son to a rare disease, myotubular myopathy, and vowed to find a cure.
Defense attorneys also questioned Blanton about his net worth, in a seemingly effort to make Blanton appear familiar with large-scale hedge fund investments.
It was revealed that Blanton had allegedly previously claimed he was on his way to being a billionaire because of his successful investments.
One of these prized investments is the frozen sperm of a star horse, which is estimated to be worth $20million, according to Dallas Morning News.
Blanton's testimony came after US District Judge Kiyo Matsumoto ordered Shkreli to stop talking about his case in or around the Brooklyn courthouse where the trial is taking place.
Five days earlier Shkreli had burst into a room full of spectators and attacked the credibility of a government witness.
Shkreli, 34, gained notoriety in 2015 when he raised the price of a life-saving drug by 5,000 percent as CEO of Turing Pharmaceuticals, sparking outrage among patients and US lawmakers.
He at times reveled in the negative publicity as he came to be known as "pharma bro" and his Twitter harassment of a journalist led to him being banned from the social media platform.
The charges he now faces stem not from his time at Turing, but from his management of MSMB Capital, another fund called MSMB Healthcare and Retrophin between 2009 and 2014.
Prosecutors say he deceived investors in the funds and eventually repaid them with money stolen from Retrophin.
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