In 31 minutes a hedge fund managed by Martin Shkreli in 2012 went from a roaring success to an empty shell, one of his investors told a jury.
Sarah Hassan, 27, who gave Shkreli $US300,000 ($389,880) to invest, said she got an email at 8:13 pm on September 9, 2012, saying she was up $US135,000, a return of 45 per cent. At 8:44 pm, Shkreli sent out a second email notifying Hassan and other investors he was shutting the fund down.
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"We went through operational mishaps," Shkreli said in the email. "There is no longer any cash in the funds."
Shkreli, who has been labelled "the most hated man in America" for having raised the price of potentially life-saving drug Daraprim by 5000 per cent through his company Turing Pharmaceutical, stands trial in US federal court.
The 34-year old is accused of operating his hedge funds like a Ponzi scheme. He took his clients' money without their permission and used it to start Retrophin, according to the prosecution. Shkreli's also accused of fleecing $US11 million of the drug company's assets to pay off investors who'd lost money in the funds.
Hassan told jurors in Brooklyn, New York, that she invested with Shkreli and his MSMB Capital on the recommendation of her father's friend, who described Shkreli as "a rising star in the hedge fund world."
Her father is Fred Hassan,the former chief executive officer of pharmaceutical giant Schering-Plough, the managing director of private equity firm Warburg Pincus and the ex-chairman of contact lense maker Bausch & Lomb.
Shkreli claimed MSMB Capital had about $US40 million of assets under management in early 2011 when Hassan made her investment.
![Martin Shkreli as he left court with his attorney Benjamin Brafman on Thursday.](http://web.archive.org./web/20170702055113im_/https://www.fairfaxstatic.com.au/content/dam/images/g/x/1/s/r/1/image.related.articleLeadwide.620x349.gx1qdu.png/1498786504914.jpg)
In reality, the fund had about $US700 in December 2010, according to prosecutors. For months, Shkreli claimed the fund's returns were outperforming the S&P; 500 Index, Hassan said.
Felt betrayed
Hassan said she felt "betrayed" when she learned the fund was closing and the money was gone, even though she ultimately made a $US2.7 million profit after selling all her Retrophin holdings.
It took a year for her to get cash and a portion of the Retrophin shares from Shkreli, though.
Shkreli at one point apologised in an email to Hassan for the delay in returning her money, saying, "I understand this has not been the most transparent or straightforward process. I wish I had been more transparent."
Hassan insisted Shkreli "kind of forced upon me" more than 58,000 shares of Retrophin to settle.
"They were forced upon you?" Shkreli's lawyer Benjamin Brafman asked her on cross-examination. "At the end of the day you made a hefty profit."
"Yes, even more than I asked for," Hassan said.
BloombergÂ
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