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An investor who put $ 300,000 US into one of “Pharma Bro” Martin Shkreli’s health care industry hedge fund testified Thursday that he reported eye-popping returns before abruptly shutting down the fund and ducking her demands to get her money back.
Prosecutors say the account shows she was a victim of a scam, even though she ultimately recouped the loss in a settlement with Shkreli.
“To hear over a year later that the cash was gone, it was upsetting,” Sarah Hassan testified as the first witness at Shkreli’s securities fraud trial in federal court in Brooklyn. “I saw that as being my cash. It was just not right.”
Shkreli, 34, became a pariah in 2015 after a drug company he founded, Turing Pharmaceuticals, spent $ 55 million US for the U.S. rights to sell a life-saving medicine called Daraprim and promptly raised the price from $ 13.50 to $ 750 per pill.
The spotlight intensified later that year with his arrest on charges — unrelated to Daraprim — focusing on a pair of failed hedge funds he started. After he lost investors’ money through bad trades, he secretly looted Retrophin, another pharmaceutical company where he was CEO, for $ 10 million US to pay back his disgruntled clients, prosecutors said.
Hassan told jurors she invested $ 300,000 US with Shkreli in 2011 after being told he was “a rising star in the hedge fund world” who managed $ 40 million US. She said she was “thrilled” when he reported she made nearly a $ 135,000 US profit.
But a year later, Shkreli told her that he was using all the assets in the fund to start up Retrophin. When she tried to get her investment back, he stalled for months before forcing her into a settlement for shares of the company and $ 400,000 US cash, she said.
Along with the price-gouging scandal, Shkreli has become notorious for bragging about himself and trolling critics on social media. But his lawyers portray him as a well-meaning nerd who succeeded at making rich investors even richer.