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The Securities and Exchange Commission and the U.S. Attorney’s Office for the District of New Jersey charged three former executives of the medical billing company Constellation Healthcare Technologies with a fraud aimed at misleading a private company into acquiring a stake in Constellation.

According to the SEC, the executives – former Constellation CEO Parmjit “Paul” Parmar, former CFO Sotirios “Sam” Zaharis, and former company secretary Ravi Chivukula – provided the buyer with false information, including falsified financial statements for three non-existent subsidiaries.

The scheme is also alleged to have included falsified bank records, phony customer lists, and misrepresentation of earnings.

The acquisition went through in January 2017; Parmar resigned in September 2017, while Zaharis and Chivukula were put on administrative leave. Shortly afterward the company declared bankruptcy.

“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 Berger, director of the SEC’s New York Regional Office, in a statement.

The commission is charging the three executives with violating the antifraud provisions of the federal securities laws, and is seeking permanent injunctions, the return of proceeds of the alleged fraud, and bars on all three serving as officers or directors of public companies.

Parmar was arrested by FBI agents on May 16 and is due to appear in court on May 23; his lawyer was not immediately available for comment. Published reports suggested that the other two former executives were outside the country.

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Daniel Hood

Daniel Hood

Daniel Hood is editor-in-chief of Accounting Today and Tax Pro Today, and has covered the tax and accounting field for over 20 years.