This story was updated at 7:55 p.m. on Dec. 17

Martin Shkreli may have become infamous for jacking up drug prices, but he was arrested Thursday morning for something more mundane — securities fraud.

The grand jury indictment, unsealed in a Brooklyn federal court, paints a disturbing picture and closely tracks an August lawsuit filed against Shkreli by Retrophin (RTRX), a drug company that Shkreli launched in 2011 but that ousted him last year amid allegations that he defrauded the company.

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“He essentially used his companies like a Ponzi scheme,” said Robert Capers, the US attorney for the Eastern District of New York, during a press conference on Thursday. “He used Retrophin like a personal piggybank.” Capers also accused Shkreli of using backdated documents and hiding records from investors and outside auditors.

Shkreli was released on $5 million bond late Thursday. He issued a statement through a spokesman, Craig Stevens, saying that he “strongly denies” the allegations and “is confident that he will be cleared of all charges.”

“It is no coincidence that these charges, the result of investigations which have been languishing for considerable time, have been filed at the same time of Shkreli’s high-profile, controversial and yet unrelated activities,” Stevens said. He added that federal authorities did not understand the “complex accounting matters” Shkreli used.

“At a press conference, the government suggested that Mr. Shkreli was involved in a Ponzi scheme. Ponzi victims do not make money, yet Mr. Shkreli’s investors enjoyed strong results,” Stevens said. “In summary, Mr. Shkreli expects to be fully vindicated.”

The tale began in 2009, when Shkreli and an unnamed co-conspirator convinced a few investors to put $700,000 in the MSMB Capital Management hedge fund he ran. Shkreli allegedly told the investors that independent auditors were hired, but the indictment says that was not true. The indictment also states that Shkreli never disclosed that he lost all the money in the Elea Capital fund he ran previously, or that he owed $2.3 million stemming from a lawsuit.

By November 2010, MSMB held about $700 in assets. But Shkreli managed to persuade four more individuals to invest a total of $2.5 million, having never been told of the losses, according to the indictment.

Meanwhile, MSMB bet against the stock of Orexigen Therapeutics, which was developing a prescription diet drug. But, as the indictment describes, the short-selling backfired and the hedge fund lost more than $7 million. There were other trading losses, too, court documents state — although Shkreli hid these losses from investors. One was told that MSMB had a 8.93 percent profit; another was informed that an original $400,000 investment grew to $509,500, the indictment claims.

Shkreli was also charged with withdrawing funds that exceeded the permitted fees. By late 2012, MSMB began settling debt for the Orexigen bet, and then proceeded to close out the fund. But the company allegedly told the original investors they nearly doubled their money.

And this was just one of the schemes outlined in the indictment.

Another involved soliciting about $5 million in a health care fund from investors without disclosing the mishaps and losses. Shkreli told a potential investor that the fund had $55 million in assets under management. But “at no point, from inception to liquidation, did the total amount of investments in MSMB Healthcare exceed $6 million,” the indictment states.

The feds also said that Shkreli misappropriated funds in order to repay debts owed by MSMB. For instance, he “improperly reclassified” a $900,000 investment by MSMB Healthcare in Retrophin as a loan, and he transferred money from a Retrophin bank account to the health care fund, according to court documents.

Then there was the way Shkreli reacted to an inquiry from the Securities and Exchange Commission, which was curious about his two funds. The indictment chronicles how Shkreli, his attorney, and others devised a scheme to fabricate an investment by MSMB Capital in Retrophin. They “engineered a series of fraudulent transactions that were backdated to the summer of 2012 to create the appearance of an investment by MSMB Capital prior to the SEC inquiry.”

By early 2013, Shkreli and his attorney, Evan Greebel, who was also indicted on Thursday, arranged for Retrophin to pay more than $3.4 million in cash and company stock to settle claims made by investors in the two MSMB funds. This was undertaken even though Retrophin was not responsible for making those payments, and the drug maker was never indemnified for the allegedly fraudulent settlement agreements.

The indictment charges Shkreli and Greebel with offering four investors “sham” consulting agreements instead of repaying their investments. They took this approach, the documents state, in order to avoid disclosures on financial statements and never properly informed the Retrophin board.

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