'Pharma Bro' in solitary confinement for alleged contraband phone use

Shkreli was moved to solitary confinement at the Fort Dix, New Jersey, facility on March 7.
Image: Former Turing Pharmaceutical CEO Martin Shkreli Convicted of Fraud
Martin Shkreli (C), former chief executive of Turing Pharmaceuticals, and his attorney Benjamin Brafman (2-R), talk to reporters at the United States federal courthouse in Brooklyn, New York on August 4, 2017. Shkreli, who was accused of defrauding his hedge fund investors and a pharmaceutical company, was convicted on three of eight counts of fraud.Justin Lane / EPA

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By Associated Press

Pharmaceutical honcho Martin Shkreli has been banished to solitary confinement amid allegations he was running his drug company from federal prison using a contraband smartphone, a person familiar with the matter told The Associated Press.

Shkreli was moved to solitary confinement at the Fort Dix, New Jersey, facility on March 7 and is likely to remain there while his alleged conduct is being investigated, the person said. The person wasn't authorized to discuss the matter publicly and spoke on condition of anonymity.

The U.S. Bureau of Prisons told the AP on March 8 that it was investigating whether Shkreli, known as the "Pharma Bro," violated prison rules forbidding inmates from conducting business and possessing cellphones.

That inquiry hasn't resulted in any charges within the agency's inmate discipline program, the person said, indicating that the matter may have been referred to federal prosecutors for potential criminal prosecution.

Shkreli's lawyer, Benjamin Brafman, declined to comment.

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The Bureau of Prisons said it does not release information on an individual inmate's conditions of confinement.

"The matter you reference is under investigation," the agency said in a statement. "When there are allegations of misconduct, they are thoroughly investigated and appropriate action is taken if allegations are sustained."

The U.S. Attorney's Office in Brooklyn, which prosecuted Shkreli's securities fraud case, declined to comment. The U.S. Attorney's Office in New Jersey also declined to comment.

Shkreli's move to solitary confinement was first reported by Forbes.

Shkreli, 36, is serving a seven-year sentence at a low-security prison complex about 40 miles (65 kilometers) from Philadelphia. He was convicted in August 2017 of lying to investors in two failed hedge funds and cheating them out of millions.

The Wall Street Journal reported last month that Shkreli has used a cellphone to call the shots at his drug company, Phoenixus AG, posting regularly to social media and even firing the company's chief executive.

The punishment for inmates caught with cell phones depends on how the case is handled.

If it's prosecuted in court, a conviction could tack on up to an extra year of prison time. Within the inmate discipline program, having a cellphone is considered a "greatest severity level" offense and carries sanctions ranging from loss to privileges to up to a year in solitary confinement.

In Shkreli's case, he could face more punishment if he's also found to have conducted business while locked up.

Other than the alleged cellphone flap, Shkreli has been pretty well behaved. His only other violations were for refusing an order and being absent from an assignment in May 2018, inmate disciplinary records show.

Shkreli's securities fraud case stemmed from his role managing MSMB Capital Management and MSMB Healthcare between 2009 and 2014. It was unrelated to the 2015 furor he caused when he raised the price by more than 5,000% of a drug used to treat an infection that occurs in some AIDS, malaria and cancer patients.