New York lawsuit again accuses Martin Shkreli of manipulation from behind bars
As part of Martin Shkreli’s efforts to continue running his biotech business from behind bars, a searing new lawsuit in New York says the “Pharma Bro” manipulated his company’s board of directors for his own personal gain.
Filed with the New York State Supreme Court just before Thanksgiving, two LLCs and three named shareholders of Phoenixus AG — the parent company of Switzerland-based Vyera Pharmaceuticals — say that Shkreli interfered with the board and Phoenixus’ top management structure by handpicking people he knew would operate in his interests.
This, the suit says, resulted in corporate waste and a breach of Phoenixus fiduciary duties. The four Shkreli confidants named in the litigation — Kevin Mulleady, Akeel Mithani, Jordan Walker and Averill Powers — are accused most notably of disseminating false and misleading financial reporting that harmed Phoenixus and its shareholders.
The lawsuit is the latest in a string of ongoing inquiries into Shkreli, who began serving a seven-year prison sentence for securities fraud in 2017 yet has still been linked to active efforts to box out competitors from efforts to formulate a generic version of Daraprim. The antimalarial drug is at the center of the price-gouging scandal that earned Shkreli the “Pharma Bro” nickname.
In January the FTC and New York’s attorney general launched a federal lawsuit against Shkreli, alleging that he effectively created a drug monopoly by raising Daraprim’s price by a factor of 56 from $13.50 to $750 per pill.
In August, the FTC revealed that Shkreli was actively coordinating an anticompetitive scheme from prison regarding Daraprim through communications with Vyera executives, including Mulleady.
The New York state suit appears to separately follow up on that discovery and Shkreli’s communications via prison devices that can be monitored and recorded. For Shkreli and Mulleady, losing either of the two suits could result in their disbarment from the pharmaceutical industry.
The November lawsuit in particular seeks federal oversight of Phoenixus, the appointment of new directors from an independent third party, as well as recovery of damages from the board members with connections to Shkreli.