Colts Neck Man Admits Role In $212M Health Care Firm Fraud Scheme

COLTS NECK, NJ — The former CEO of a publicly traded healthcare services company has admitted to his role in an elaborate investment fraud scheme, U.S. Attorney Alina Habba said Wednesday.

Parmjit Parmar (AKA “Paul Parmar”), 55, of Colts Neck, pleaded guilty to conspiracy to commit securities fraud before U.S. District Judge Madeline Cox Arleo in Newark federal court, Habba said.

Alongside Parmar, Sotirios Zaharis (AKA “Sam Zaharis”) and Ravi Chivukula were also charged in the case, though authorities said the charges against Zaharis and Chivukula remain pending.

From May 2015 through September 2017, authorities accuse the three of orchestrating a 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 a healthcare services company (only identified as Company A) private, which was traded publicly on the London Stock Exchange’s Alternative Investment Market.

To fund the transaction, authorities said the private investment firm put up about $82.5 million, and a consortium of financial institutions put up another $130 million for a total of about $212.5 million.

The scheme used fraudulent methods to grossly inflate the value of Company A and trick others into believing that the company was worth more than its actual value, Habba said.

Authorities said Parmar and his accused co-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 didn’t exist or had only a fraction of the operating income attributed to them, Habba said.

The three are accused of funneling the proceeds of these secondary offerings through bank accounts they controlled and using the money for purposes that had nothing to do with acquiring the purported targets, authorities said.

Authorities said they then went to great lengths to make it seem like these funds were revenue, concocting phony customers and altering bank statements to make it appear as if the funds were coming from customers.

To perpetuate the scheme, authorities accused the three of falsifying and fabricating bank records of subsidiary entities to generate a phony picture of Company A’s revenue streams, and making misrepresentations and omissions to the private investment firm and others.

These actions led to victims valuing Company A at over $300 million for purposes of financing the transaction to take Company A private, Habba said.

The scheme was uncovered in September 2017, when Parmar, Zaharis, and Chivukula resigned from their positions with Company A or were terminated.

On March 16, 2018, Company A and multiple of its affiliated entities filed for bankruptcy, officials said, attributing the company’s financial demise, in large part, to the fraud scheme.

The conspiracy to commit securities fraud charge that Parmar has pleaded guilty to carries a maximum penalty of five years in prison and a $250,000 fine, Habba said.

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, according to authorities. The court must order that Parmar also pay restitution to any victims of his offense.

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