The Securities and Exchange Commission today announced fraud charges against three former Constellation Healthcare Technologies Inc. executives who falsified financial and other information they provided to a private firm in the course of negotiating the private firm’s acquisition of a majority stake in Constellation. Houston-based Constellation filed for bankruptcy in March, a little more than a year after the January 2017 acquisition.
According to the SEC’s complaint, the executives convinced a private firm to acquire a majority of Constellation’s equity and provided fake information, including financial statements for three fictitious subsidiaries supposedly acquired for more than $62 million. The complaint alleges that the former executives funded the sham acquisitions with stock sales in London and then diverted the proceeds to themselves. The complaint charges former Constellation chief executive Parmjit (Paul) Parmar, former chief financial officer Sotirios (Sam) Zaharis, and former company secretary Ravi Chivukula. In September 2017, amid concerns about Constellation’s financial condition, Parmar resigned and Zaharis and Chivukula were put on administrative leave.
“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.
In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Parmar, Zaharis, and Chivukula.
The SEC’s complaint, filed in U.S. District Court in New Jersey, charges Parmar, Zaharis, and Chivukula with violating the antifraud provisions of the federal securities laws. 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.
The SEC’s investigation, which is continuing, has been conducted by John O. Enright and Sheldon L. Pollock of the New York Regional Office and supervised by Lara S. Mehraban. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of New Jersey and the FBI.
Become a member of The Financial Analyst today. TFA publishes original opinion and news content on trending financial topics and breaking stories related to analysis and global markets. If you have a tip or a financial opinion to share get in touch to submit your story.