Feds probe alleged prison cellphone use by ‘Pharma Bro’

NEW YORK — Federal authorities said Friday they are investigating claims that Martin Shkreli has been running his pharmaceutical company from behind bars using a contraband smartphone.

The U.S. Bureau of Prisons told The Associated Press it has opened an inquiry into whether the man nicknamed the “Pharma Bro” violated prison rules forbidding inmates from conducting business and possessing cellphones.

Shkreli, 35, is serving a seven-year sentence for securities fraud at the Federal Correctional Institution at Fort Dix, New Jersey, a low-security prison complex about 40 miles (65 kilometres) from Philadelphia. He was found guilty of lying to investors in two failed hedge funds and cheating them out of millions.

The Wall Street Journal reported this week 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 a few weeks ago.

Shkreli’s defence attorney, Benjamin Brafman, declined to comment.

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The Bureau of Prisons said federal prisoners caught in possession of cellphones face up to an additional year behind bars if convicted. Shkreli also could face disciplinary sanctions within the prison if he is found to have conducted business.

“Like all correctional agencies, the BOP continues to tackle the problem of contraband being introduced into our facilities, including contraband cellphones,” the agency said in a statement to The AP. “The BOP continually evaluates and deploys as appropriate, contraband-detecting technologies, including walk-through metal detectors and whole-body imaging devices.”

Shkreli had been charged with eight counts of securities fraud, conspiracy to commit securities fraud and wire fraud, for his role managing MSMB Capital Management and MSMB Healthcare between 2009 and 2014.

The case was unrelated to the 2015 furor he caused when he raised the price by more than 5,000 per cent of a drug used to treat an infection that occurs in some AIDS, malaria and cancer patients.

Jim Mustian, The Associated Press