2 Indian-origin men among 3 charged in USD 200 mn fraud in US

New York: Two Indian-origin men are among three people charged in the US for allegedly orchestrating a USD 200 million scheme to defraud investors and others out of hundreds of millions of dollars.

Parmjit "Paul" Parmar, 48, Ravi Chivukula, 44 and Sotirios "Sam" Zaharis, 51, all from New Jersey, are charged with conspiracy to commit securities fraud.

FBI special agents arrested Parmar on Wednesday near his home. Chivukula and Zaharis remain at large, Acting Assistant Attorney General John Cronan of the Justice Department's Criminal Division said. Parmar, Zaharis and Chivukula were formerly CEO, CFO and an executive director of a publicly traded health care services company.

According to the complaint unsealed, from May 2015 through September 2017, the defendants orchestrated an elaborate 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 private a company traded publicly on the London Stock Exchange's Alternative Investment Market.

To fund the transaction, the private investment firm put up approximately USD 82 million in equity, and a consortium of financial institutions provided another approximately USD 130 million in debt. The scheme allegedly utilised fraudulent methods to grossly inflate the value of the company and trick others into believing that it was worth substantially more than its actual value.

The complaint alleges that to present a positive picture of the company's financial wealth, the defendants allegedly sought to raise tens of millions of dollars in the public markets. In reality, a number of those entities either did not exist or had only a fraction of the operating income attributed to them.

The conspirators allegedly funnelled the proceeds of these secondary offerings through bank accounts they controlled and used the money for a variety of purposes that had nothing to do with acquiring the purported targets. The money was instead used to make it appear as if the operating subsidiary had substantial customer revenue when, in fact, the funds were simply transfers of the money that had been raised in the secondary offering.

The defendants allegedly went to great lengths to make it appear that these funds were revenue, concocting phony customers and altering bank statements to make it appear as if the funds were coming from customers.

Separately, the US filed a civil complaint seeking forfeiture of four properties that Parmar owns or controls, including a house in New Jersey and three apartments in New York City. The US Securities and Exchange Commission filed a civil complaint on Thursday against Parmar, Zaharis and Chivukula.