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

What to Know
•The CEO of a NJ health care billing company was arrested by the FBI on charges he orchestrated a massive fraud on unsuspecting investors
•Two financial officers were also charged in the $200 million fraud
•A spokeswoman for Constellation Technologies declined to comment on the charges against the three former executives

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.

“The evidence suggests that the defendants simpy made up these customers (and the associated revenue) and then attempted to create real addresses for them by leasing office space in their names,” the criminal complaint stated.

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.
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[nitpicker]

1. From the DoJ PR

https://www.justice.gov/usao-nj/pr/former-ceo-cfo-and-directors-healthcare-services-company-indicted-elaborate-300-million

Former CEO, CFO And Directors Of Healthcare Services Company Indicted In Elaborate $300 Million Investment Fraud Scheme
Defendants Allegedly Inflated Company’s Value and Revenue to Defraud Investors

NEWARK, N.J. – The former CEO, CFO and two directors of a publicly traded healthcare services company were indicted today for allegedly orchestrating a widespread scheme to defraud investors and others out of hundreds of millions of dollars in connection with a merger transaction designed to convert the company into a private entity, U.S. Attorney Craig Carpenito announced.

Parmjit Parmar, a/k/a “Paul Parmar,” 48; Sotirios Zaharis, a/k/a “Sam Zaharis,” 51; Ravi Chivukula, 44; and Pavandeep Bakhshi, 41, are charged in a three-count indictment with conspiracy to commit securities fraud, securities fraud, and wire fraud. Parmar, Zaharis, and Chivukula were first charged by complaint in May 2018. Bakhshi was charged with the same offenses in a separate criminal complaint in September 2018, which was unsealed earlier this week following his arrest at JFK Airport after he arrived from London. Zaharis and Chivukula remain fugitives.
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From May 2015 through September 2017, Bakhshi and conspirators Parmjit Parmar, a/k/a “Paul Parmar,” Sotirios Zaharis, a/k/a “Sam Zaharis,” and Ravi Chivukula orchestrated an elaborate scheme to defraud a private investment firm and others out of hundreds of millions of dollars in connection with the funding of a transaction to take private a healthcare services company (Company A) traded publicly on the London Stock Exchange’s Alternative Investment Market. To fund the transaction, the private investment firm put up $82 million and a consortium of financial institutions put up another $130 million. The scheme utilized fraudulent methods to grossly inflate the value of Company A and trick others into believing that Company A was worth substantially more than its actual value.

To present a positive picture of the company’s financial wealth, the conspirators 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 from one of the offerings 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 conspirators 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.
• 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.

The alleged scheme was uncovered in September 2017, when the conspirators resigned from their positions with Company A or were terminated. On March 16, 2018, Company A and numerous of its affiliated entities filed for bankruptcy, attributing the company’s financial demise, in large part, to the fraud scheme.
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