The former chief executive officer of a publicly traded healthcare services company admitted his role in a conspiracy to defraud investors in connection with the purchase or sale of the company’s securities, U.S. Attorney Alina Habba announced.
Parmjit Parmar, aka ‘Paul Parmar’, 55, of Colts Neck, New Jersey, pleaded guilty before U.S. District Judge Madeline Cox Arleo in Newark federal court to conspiracy to commit securities fraud.
According to documents filed in this case and statements made in court, from May 2015 through September 2017, Parmar and his conspirators, including Sotirios Zaharis, aka ‘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 approximately $82.5 million, and a consortium of financial institutions put up another $130 million, for a total of approximately $212.5 million.
The scheme utilised 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.
Parmar and the conspirators sought to raise tens of millions of dollars in the public markets, purportedly to fund Company A’s acquisitions of various operating subsidiaries.
In actuality, a number of those entities either did not exist or had only a fraction of the operating income attributed to them. The conspirators funnelled 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 conspirators went to great lengths to make it appear that these funds were revenue, concocting phoney customers and altering bank statements to make it appear as if the funds were coming from customers.
To perpetuate the scheme, Parmar and his conspirators also falsified and fabricated bank records of subsidiary entities in order to generate a phoney picture of Company A’s revenue streams and made material misrepresentations and omissions to the private investment firm and others.
Parmar and his conspirators’ actions caused victims to value Company A at more than $300 million for purposes of financing the transaction to take Company A private. The scheme was uncovered in September 2017, when Parmar and his 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.
The conspiracy to commit securities fraud charge Parmar has pleaded guilty to carries a maximum penalty of five years in prison and a $250,000 fine.
Pursuant to the terms of his plea agreement, Parmar has also agreed to the forfeiture of certain properties and the contents of several bank accounts, and the court must order that Parmar pay restitution to any victims of his offence.
