Martin Shkreli, arrested Thursday on charges of securities fraud, has resigned from his CEO post at Turing Pharmaceuticals. In his stead, Turing appointed Chairman Ron Tilles, a longtime Shkreli associate who allegedly played a role in what the FBI called a "Ponzi-like" scheme at the pair's former company.
Shkreli, out of jail after posting a $5 million bond, is accused of illegally disbursing shares of Retrophin ($RTRX), where he was once CEO, to settle debts related to his defunct hedge fund. Prosecutors say Shkreli ran the fund, MSMB Healthcare, into the ground with a series of disastrous trades, declining to inform investors that he had lost their money. When some MSMB backers started asking for that money back, he folded the firm and founded Retrophin, gradually doling out the new company's shares to appease angry investors and avoid lawsuits, according to the FBI.
Tilles, who handled business development for Retrophin at the time, was not named in the indictment against Shkreli and has not been charged with any crime. But according to Retrophin, he played a role in helping Shkreli funnel shares of the company to defrauded MSMB investors.
In a $65 million lawsuit filed in August, Retrophin lays out a series of accusations that match up with the government's case against Shkreli, alleging that he used the company as a piggy bank to settle debts and pay off his friends. Tilles, the lawsuit claims, helped broker a truce with an MSMB investor who was threatening to sue Retrophin for the money Shkreli owed him. To placate him, Shkreli and his "close personal associates" drew up a sham consulting agreement, according to the lawsuit, guaranteeing the investor 66,000 shares of Retrophin and $200,000 of the company's cash with no expectation of any actual consulting.
Turing representatives didn't respond to an emailed request for comment on Tilles' role at Retrophin, and the company's voicemail inbox was full on Friday afternoon.
Shkreli is facing up to 20 years in prison for his actions at MSMB and Retrophin.
Turing, which made global headlines after acquiring an old drug and raising its list price 50-fold, was one of two companies Shkreli ran when he was arrested Thursday. He remains the listed CEO at KaloBios ($KBIO), a publicly traded firm he took over last month.
Tilles helped found Retrophin in 2011 and followed Shkreli to Turing in 2014. He is now running the company on an interim basis, according to a Turing statement.
"We wish to thank Martin for helping us build Turing Pharmaceuticals into the dynamic, research-focused company it is today," Tilles said in prepared remarks, "and wish him the best in his future endeavors."
- read Turing's statement