Ex-Credit Suisse Bankers Arrested on US Charges Over $2bn Fraud Scheme

Corruption is Everywhere - but in a Swiss Bank? Say it ain't so!

The Credit Suisse logo in Geneva © Reuters / Denis Balibouse

Three former bankers of the second-largest bank in Switzerland, Credit Suisse Group AG, were arrested in London over an alleged connection to a $2bn Mozambique fraud scheme, according to US justice authorities cited by media.

The three suspects – former managing directors Andrew Pears and Surjan Singh, as well as the vice president in the global financing unit, Detelina Subeva – were charged with conspiring to violate US anti-bribery law, money laundering, and securities fraud in an indictment issued in a federal court in Brooklyn, New York, Reuters reported.

The three men were released on bail after their arrest in the British capital on Thursday but may face extradition to the US.

The bank itself was spared of the charges and says it was kept in the dark by its own staff.

“The indictment alleges that the former employees worked to defeat the bank’s internal controls, acted out of a motive of personal profit, and sought to hide these activities from the bank,” Credit Suisse said in a statement.

The arrests of the three former Credit Suisse employees came less than a week after the former finance minister of Mozambique was arrested in South Africa as part of the same case. Manuel Chang is now fighting extradition to the US. A fifth suspect was also arrested earlier this week.

Between 2013 and 2016, Credit Suisse and other banks arranged $2 billion loans for Mozambique state-owned companies. The loans were initially aimed at maritime projects and coastline protection in one of the poorest countries in the world, but instead were plundered, with at least $200 million diverted for bribes and kickbacks. The companies created to operate planned maritime projects were a cover for the suspects to enrich themselves.

The loans were partly concealed from international donors and creditors, including the International Monetary Fund. After they were disclosed in 2016, international aid was withdrawn, sending the nation into crisis. The state-owned companies missed more than $700 million in loan payments after defaulting in 2016 and 2017, according to the indictment.

A similar case has recently been brought against Wall Street giant Goldman Sachs. In December, Malaysia filed criminal charges against the US bank and two of its key bankers over its role in the multi-billion dollar scandal with 1MDB state fund. Kuala Lumpur wants $7.5 billion in reparations from Goldman Sachs, which it claims covered up the looting of the fund.

Pharma Bro now Prison Bro as Shkreli Sentenced to 7 Years

'Pharma Bro' Martin Shkreli gets 7 years

in securities fraud case

Judge ruled earlier this week that Shkreli would have to forfeit more than $7.3M

The Associated Press 

Martin Shkreli, who became notorious for raising the price of a life-saving drug by 5,000 per cent and trolling critics on the internet with his snarky "Pharma Bro" persona, was given a seven-year prison sentence on Friday for securities fraud.

Martin Shkreli, who became notorious for raising the price of a life-saving drug by 5,000 per cent and trolling critics on the internet with his snarky "Pharma Bro" persona, was given a seven-year prison sentence on Friday for securities fraud. (Seth Wenig/Associated Press)

The smirk wiped off his face, a crying Martin Shkreli was sentenced to seven years in prison for securities fraud Friday in a hard fall for the pharmaceutical-industry bad boy vilified for jacking up the price of a lifesaving drug.

Shkreli, the boyish-looking, 34-year-old entrepreneur dubbed the "Pharma Bro" for his loutish behaviour, was handed his punishment after a hearing in which he and his attorney struggled with limited success to make him a sympathetic figure. His own lawyer confessed to wanting to punch him in the face sometimes.

The defendant hung his head and choked up as he admitted to many mistakes and apologized to the investors he was convicted of defrauding. At one point, a clerk handed him a box of tissues.

"I want the people who came here today to support me to understand one thing: The only person to blame for me being here today is me," he said. "There is no conspiracy to take down Martin Shkreli. I took down Martin Shkreli."

In the end, U.S. District Judge Kiyo Matsumoto gave him a sentence that fell well short of the 15 years prosecutors wanted but was a lot longer than the 18 months his lawyer asked for. He was also fined $75,000 US.

Shkreli was found guilty in August of lying to investors in two failed hedged funds and cheating them out of millions. The case was unrelated to the 2015 furor in which he was accused of price-gouging, but his arrest was seen as rough justice by the many enemies he made with his smug and abrasive behavior online and off.

The judge insisted that the punishment was not about Shkreli's online antics or his raising the cost of the drug. "This case is not about Mr. Shkreli's self-cultivated public persona ... nor his controversial statements about politics or culture," Matsumoto said.

This courtroom sketch shows former pharmaceutical CEO Martin Shkreli, left, seated next to his lawyer Ben Brafman in U.S. federal court in New York on Friday. (Elizabeth Williams via Associated Press)

But she did say his conduct after the verdict made her doubt the sincerity of his remorse. She cited his bragging after the verdict that he would be sentenced to time served. And she quoted one piece of correspondence in which he wrote: "F—- the feds."

The judge ruled earlier that Shkreli would have to forfeit more than $7.3 million in a brokerage account and personal assets, including a one-of-a-kind Wu-Tang Clan album that he boasted of buying for $2 million.

Defense attorney Benjamin Brafman described Shkreli as a misunderstood eccentric who used unconventional means to make his defrauded investors even wealthier. He told the court that he sometimes wants to hug Shkreli and sometimes wants to punch him, but that his outspokenness shouldn't be held against him.

"It's like the kids today who hit send before they really understand what they texted," Brafman said.

Prosecutors rejected that notion.

"Mr. Shkreli is not a child," federal prosecutor Jacquelyn Kasulis said. "He's not a teenager who just needs some mentoring. He is a man who needs to take responsibility for his actions."

Shkreli became the face of pharmaceutical industry evil in 2015 when he increased by 5,000 percent the price of Daraprim, a previously cheap drug used to treat toxoplasmosis, a parasitic infection that can be fatal to people with the AIDS virus or other immune system disorders.

Shkreli seemed to treat the case like a big joke. After his arrest in December 2015, he taunted prosecutors, got kicked off of Twitter for harassing a female journalist, heckled Hillary Clinton from the sidewalk outside her daughter's home, gave speeches with the conservative provocateur Milo Yiannopoulos and spent countless hours livestreaming himself from his apartment.

He also infuriated members of Congress at a Capitol Hill hearing on drug prices when he repeatedly cited his Fifth Amendment right against self-incrimination. Afterward, he tweeted that the lawmakers were "imbeciles."

Last fall, the judge revoked his bail and threw him in jail after he jokingly offered his online followers a $5,000 bounty to anyone who could get a lock of Clinton's hair.

Pride goes before destruction, a haughty spirit before a fall. Prov 16:18.

'Pharma Bro’ Martin Shkreli Guilty of Fraud

© Spencer Platt / AFP

Eccentric former pharmaceutical CEO Martin Shkreli, dubbed “the most hated man in America,” has been convicted of fraud for deceiving investors in a pair of failing hedge funds. His defense team argued that his investors made hefty profits.

A New York jury deliberated for five days before finding Shkreli guilty of three out of eight counts against him. He was found guilty of securities fraud but not of conspiracy to commit securities fraud and conspiracy to commit wire fraud, AP reported.

Prosecutors in the five week trial accused Shkreli of repeatedly misleading investors about what he was doing with their money.

Shkreli, 34, told “lies upon lies,” including claiming he had $40 million in one of his funds at a time when it only had about $300 in the bank, Assistant US Attorney, Alixandra Smith said in closing arguments, reported AP.

Prosecutors said he kept making horrible stock picks which forced him to cook up schemes to recover millions in losses.

The federal trial “exposed Martin Shkreli for who he is really is – a con man who stole millions,” said another prosecutor, Jacquelyn Kasulis.

Shkreli, who comes from an Albanian family in Brooklyn, was arrested in 2015 on charges he looted Retrophin, another drug company he founded, of $11 million in stock and cash to pay back hedge fund investors.

Investors took the witness stand to accuse Shkreli of keeping them in the dark as his scheme unfolded.

Complicating the case however, was testimony from some wealthy financiers in Texas, who conceded that Shkreli’s scheme made them richer, in some cases doubling and even tripling their money on his company’s stock when it went public.

"Who lost anything? Nobody," defense attorney Ben Brafman said in his closing argument.

Some investors had to admit on the witness stand that partnering with Shkreli was "the greatest investment I've ever made," he added.

Shkreli came to national attention after he purchased rights to a life-saving drug, Daraprim, in 2014, where he promptly raised the price from $13.50 to $750 per pill, leading him to be referred to as “the most hated man in America” and “pharma bro.”

He faces as much as 20 years in prison.

Turing Pharma CEO Martin Shkreli Arrested in Securities Probe

Drug company executive was vilified for dramatically boosting drug prices

The best news I've heard all day

CBC News 

Martin Shkreli, chief executive officer of Turing Pharmaceuticals, exits federal court in New York on Dec. 17, 2015. Shkreli was arrested on alleged securities fraud related to Retrophin Inc., a biotech firm he founded in 2011. (Louis Lanzano/Bloomberg)

Pharmaceutical entrepreneur Martin Shkreli, vilified for buying up drug companies and then dramatically boosting the prices of some medications, has been charged by the FBI with securities fraud related to his former hedge fund and a drug company he once ran. 

Shkreli, 32, currently the CEO of Turing Pharmaceuticals, was taken into custody at his New York City home Thursday. 

The case relates to his dealings at two firms, including Retrophin Inc., a biopharmaceutical company that he founded and used to head. Shkreli's arrest also stems from his time as manager of hedge fund MSMB Capital Management.

A seven-count indictment unsealed in Brooklyn Federal Court charged Shkreli with:

Conspiracy to commit securities fraud.
Conspiracy to commit wire fraud.
Securities fraud. 

The indictment alleges Shkreli, among others, fraudulently induced people to invest in two separate funds, and misappropriated the assets of Retrophin to satisfy Shkreli's personal and unrelated professional debt obligations.

Shkreli "engaged in multiple schemes to ensnare investors through a web of lies and deceit," U.S. attorney Robert Capers said in a statement.

Retrophin sued Shkreli in August for $65 million US. The firm claimed Shkreli had used his control over Retrophin to enrich himself and pay off claims of investors in MSMB. Shkreli denied those allegations.

"Pride goes before a fall"

Increased drug price by 5,000%

The new allegations levelled at Shkreli on Thursday have nothing to do with the price-gouging accusations that turned him into a poster boy for corporate greed back in September.

Shkreli was widely vilified when he jacked up the price of Daraprim, a potentially life-saving anti-parasitic drug treatment, from $13.50 a pill to $750.

The drug is the only one that is approved for the treatment of toxoplasmosis, a disease that is most common among pregnant women, cancer patients and AIDS patients.

Faced with a firestorm of protest, he initially said his firm would lower the price. But Turing Pharmaceuticals later backed away from that promise.

It's pretty obvious what kind of character a person has when he holds sick people and government medical systems to ransom for the sake of personal gain. So it should not be surprising if he has no more regard for the law than he does for the welfare of the people who use his products.

With files from Reuters and The Associated Press