New Jersey Health Care CEO Charged in $200 Million Fraud

[nitpicker]

https://www.nbcnewyork.com/investigations/Health-Care-CEO-Parmjit-Paul-Parmar-Constellation-Fraud-Million-482829161.html

New Jersey Health Care CEO Charged in $200 Million Fraud

By Jonathan Dienst

Published at 2:47 PM EDT on May 16, 2018

The CEO of a New Jersey health care billing company was arrested by the FBI Wednesday on charges he orchestrated a $200 million fraud on unsuspecting investors. Parmjit "Paul Parmar, the one-time CEO of Constellation Healthcare Technologies, is accused of falsely inflating the value of the firm as officers looked to take the publicly traded company private. Parmar, 48, of Colts Neck, is charged with securities fraud and conspiracy. Part of the alleged scheme involved purchases of nonexistent entities and then funneling those millions into separate accounts, prosecutors said.

The FBI said in addition to creating sham acquisitions, Parmjit also helped oversee the falsification of bank records, list phony customers and misrepresent earnings to investors. One fake company was called “MDRX Billing,” an Ohio-based company prosecutors said never existed and alone was a $28 million dollar rip-off.

Two financial officers – Sotirios “Sam” Zaharis, 51 of Weehawken and Ravi Chivukula, 44 of Freehold, were also charged. They are believed to be overseas in India and could not be reached for comment. An attorney for Parmar -- who is expected to appear in Newark federal court Wednesday afternoon -- could not immediately be reached.
(snip)

Constellation had been publicly listed on the London Stock Exchange’s Alternative Investment Market. Investigators said the scheme ran from 2015 through 2017. Constellation eventually filed for bankruptcy and all three executives left the firm in 2017.

[nitpicker]

1. Link to the DoJ PR

https://www.justice.gov/opa/pr/former-ceo-cfo-and-director-health-care-services-company-charged-elaborate-300-million

(snip)
The complaint alleges that to present a positive picture of the company’s financial wealth, the defendants allegedly sought to raise tens of millions of dollars in the public markets, purportedly to fund Company A’s acquisitions of various operating subsidiaries. In reality, a number of those entities either did not exist or had only a fraction of the operating income attributed to them. The conspirators allegedly funneled the proceeds of these secondary offerings through bank accounts they controlled and used the money for a variety of purposes that had nothing to do with acquiring the purported targets. The money was instead used to make it appear as if the operating subsidiary had substantial customer revenue when, in fact, the funds were simply transfers of the money that had been raised in the secondary offering. The defendants allegedly went to great lengths to make it appear that these funds were revenue, concocting phony customers and altering bank statements to make it appear as if the funds were coming from customers.

The conspirators allegedly:
•Created fictitious operating companies that Company A purportedly acquired in sham acquisitions;
•Falsified and fabricated bank records of subsidiary entities in order to generate a phony picture of Company A’s revenue streams;
•Generated fake income streams and phony customers of Company A and its subsidiaries; and
•Made material misrepresentations and omissions to the private investment firm and others.

The defendants’ alleged actions caused the private investment firm and others to value Company A at more than $300 million for purposes of financing the transaction to take the company private.
(snip)

[no_hypocrisy]

2. Damn, I was hoping it was Bob Hugin (Celgene)

[whathehell]

3. Greedy, greedy..