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Healthcare Fraud A Recurring Theme

The Securities and Exchange Commission announces fraud charges against three former Constellation Healthcare Technologies executives. The complaint charges former Constellation chief executive Parmjit (Paul) Parmar, former chief financial officer Sotirios (Sam) Zaharis, and former company secretary Ravi Chivukula.

According to the SEC’s complaint, the executives convince a private firm to acquire the majority of Constellation’s equity. The Constellation executives achieve their goal through the falsification of financial information to the acquiring firm during the negotiation. Shortly thereafter, Constellation files for bankruptcy, not more than a year after the 2017 acquisition. Evidently, the transaction is nothing new, as Mr. Parmar is known for suspicious sham transactions.

Self Interest a Non-Player

At the end of 2017, a shareholder files a lawsuit against Constellation Health and Mr. Parmar claiming the company formation is “a sham, created to siphon assets… into the pocket of Parmar,” according to a court filing. Moreover, Destra Targeted Income Unit Investment Trust, on behalf of the holders of Constellation units, accuse Parmar of self-dealing:

“Paul Parmar, however, has diverted these CHT Shares, and other interests representing the CHT Shares, to himself, through a series of at least three sham corporate transactions by and among a labyrinth of Delaware limited liability companies that he forms and/or controls.”
Some of the fake information includes financial statements for fictitious subsidiaries, in excess of $62 million. Furthermore, the complaint alleges the former executives fund the bogus acquisitions with stock sales in London. Shortly thereafter, the executives divert the proceeds to themselves.

“Using phony balance sheets, doctored bank statements, and other fabrications to conceal the theft of investor monies, which we allege occurred in this case, will not go undetected or unpunished,” said Marc P. Berger, Director of the SEC’s New York Regional Office.

The SEC is seeking permanent injunctions, return of allegedly ill-gotten gains plus interest, civil penalties, and officer-and-director bars against the Parmar, Zaharis, and Chivukula.