Two Indian-Origin Men Among Three Charged Over $300 Million Investment Fraud in U.S.

Two Indian-origin men were among three men charged on May 16 in the United States for allegedly orchestrating a huge multi-million dollar investment scam. The three are accused of defrauding investors to the tune of $300 million in connection with funding of a merger transaction designed to convert their company into a private entity, the U.S. Department of Justice (DoJ) said in a statement.

New Jersey residents Parmjit “Paul” Parmar, 48, Ravi Chivukula, 44, and Sotirios “Sam” Zaharis, 51, were charged with one count of conspiracy to commit securities fraud and one count of securities fraud.

Parmar was the CEO of Constellation Healthcare Technologies while Zaharis and Chivukula were, respectively, the CFO and an executive director of  Constellation Healthcare Technologies, a publicly traded health care services company. Constellation was publicly listed on the London Stock Exchange’s Alternative Investment Market.

FBI special agents arrested Parmar near his home on May 16. Chivukula and Zaharis, however, remain at large, the statement said. The two are believed to be in India, NBC New York reported. Parmar is believed to own sprawling apartments in New York and other places.

According to the complaint, from May 2015 through September 2017, the three men conducted an elaborate scheme to defraud a private investment firm and others out of millions of dollars in connection with the funding of a transaction to take private Constellation Healthcare Technologies.

When a company is taken private all outstanding shares of a company’s stock is purchased by a company or a group of investors.

The complaint added that around June 2016, Parmar, Zaharis and Chivukula made a presentation to the private investment firm during which they portrayed the company as a growing force in the medical billing industry.

“To fund the transaction, the private investment firm put up approximately $82 million in equity, and a consortium of financial institutions provided another approximately $130 million in debt,” said the statement.

The scheme allegedly utilized fraudulent methods to grossly inflate the value of this company and trick others into believing that this company was worth substantially more than its actual value.

“The conspirators allegedly created fictitious operating companies that the company purportedly acquired in fraudulent acquisitions. They Falsified and fabricated bank records of subsidiary entities to generate a phony picture of the company’s revenue streams,” the statement said. The three men also generated fake income streams and phony customers of the company and its subsidiaries.

This caused the private investment firm and others to value the company at more than $300 million for purposes of financing the transaction to take the company private.

The alleged scheme was uncovered around September 2017, when the defendants resigned from their positions with the company. “On March 16, 2018, the company and numerous of its affiliated entities filed for bankruptcy, attributing the company’s financial demise, in large part, to the alleged fraud scheme,” the statement pointed out.