Three former executives of a publicly traded medical-billing company were charged Wednesday, accused of creating phony customers, subsidiaries and acquisitions to make the business appear more attractive to investors before taking it private.
The executives formerly ran Constellation Healthcare Technologies Inc., a Central Islip, N.Y., company that was publicly traded on the London Stock Exchange’s Alternative Investment Market. Constellation declared bankruptcy in March, claiming it had assets of $10 million to offset liabilities of nearly $500 million.
Permjit “Paul” Parmar, 48, of Colts Neck, New Jersey; Sotirios “Sam” Zaharias, 51, of Weehawken, New Jersey; and Ravi Chivukula, 44, of Freehold, New Jersey, are each charged with one count of conspiracy to commit securities fraud and one count of securities fraud, the U.S. Department of Justice said Wednesday.
FBI agents arrested Mr. Parmar on Wednesday morning, while Mr. Zaharais and Mr. Chivukula remain at large, according to the Justice Department.
The defendants sought to raise of tens of millions of dollars from public offerings to purchase companies that either did not exist or only had a fraction of the revenue Constellation claimed, according to court documents. Money raised for the acquisitions was allegedly funneled to bank accounts controlled by the defendants, the Justice Department said.
Prosecutors said not only did the trio create phony companies, but also falsified banks records, made up subsidiaries and fake customers to inflate the value of those transactions.
Separately, the Justice Department filed a civil complaint seeking forfeiture of our properties Mr. Parmar owns or controls, including a house in Colt’s Neck and three apartments in New York City. The U.S. Securities and Exchange Commission also filed a civil compliant Wednesday against the defendants.