Martin Shkreli Adds Fraud Arrest to His Resume

Martin Shkreli being arrested

Both the Wall Street Journal and Bloomberg Business News announced the arrest today of Martin Shkreli, who was recently made famous for prescription drug price gouging. But what got him nailed today are charges of securities and wire fraud perpetrated against his former company Retrophin in an elaborate Ponzi scheme.

There’s no shortage of headlines about Shkreli’s antics in his quest to become a third-rate Bond villain. His current company, Turing Pharmaceuticals, exploited a loophole in the FDA approval process to freeze out any competition for the drug Daraprim and then raised the price by 5,000%. Last month he acquired the rights to the drug Benznidazole (an anti-parasitic) and appears set to do the same.

While trafficking in human suffering is not a new business model, Shkreli seems content to take it to absurd levels. This win-at-all-costs mentality often leads to criminal activity, as Self Focused people are always able to justify coloring outside the lines. In this particular case, Shkreli is charged with orchestrating a complicated shell game to rob his former company and use the ill-gotten funds to make payoffs to his hedge fund investors. Unfortunately, Shkreli appears to be another Bernie Madoff in the making. Thank goodness he has been stopped short in his tracks.

This is a prime example of the negative return on character. It’s easy to assign causation between the bad character habits of a guy like Shkreli and the destruction of value – for everyone – investors, customers, employees.

What seems difficult for many is to do the opposite and assign causation between good character habits and the creation of value. I conducted a seven year research study that demonstrates an observable, measurable and consistent relationship between the character habits of senior management and the creation of value – nearly five times more to the bottom line than people who are considered to have weak character.

Shkreli is far below the level of any of the CEOs in my study. In fact, he’d probably be diagnosed as a psychopath. Unfortunately, many people are still easy prey for a character like him.