On Wednesday, May 16, 2018, it was announced that the former CEO, CFO and an executive director of a publicly traded health care services company had been charged with allegedly orchestrating a scheme to defraud investors and others out of hundreds of millions of dollars. 48-year-old Parmjit “Paul” Parmar of Colts Neck, New Jersey, 51-year-old Sotirios “Sam” Zaharis of Weehawken, New Jersey and 44-year-old Ravi Chivukula of Freehold, New Jersey were all charged with one count of conspiracy to commit securities fraud and one count of securities fraud.
The complaint alleges that from Mary 2015 through September 2017, the defendants created a scheme to defraud a private investment firm and others out of hundreds of millions of dollars in relation to the funding of a transaction to take a publicly traded company private. The company was traded publicly on the London Stock Exchange’s Alternative Investment Market.
The private investment firm provided roughly $82 million in equity and a consortium of financial institutions provided approximately $130 million in debt to fund the transaction. According to the complaint, the scheme utilized fraudulently methods to significantly inflate the value of the company and to convince others into believing that the company was worth much more than its actual value.
The United States has filed a separate civil complaint against the defendants. Further details can be found here.