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by Mike Caswell

Federal prosecutors in California have requested an eight-month sentence for Ashmit Patel, the Ontario lawyer charged for the VMS Rehab Systems Inc. pump-and-dump. He was part of a group that boosted VMS and other listings with claims like "this stock could catapult by up to 155%." As those claims were going out, the group was secretly dumping hundreds of thousands of shares, some through unregistered offshore sales, according to prosecutors.

Sentencing is the only matter of substance remaining for Mr. Patel, as he pleaded guilty on July 11, 2022. He did so after voluntarily appearing in a California court, opting not to use the often-lengthy process of extradition from Canada. He has since been free on a $50,000 appearance bond. (All figures are in U.S. dollars.) The charge to which Mr. Patel pleaded guilty was one count of conspiracy to commit securities fraud.

With Mr. Patel's sentencing date approaching, prosecutors have set out what they see as an appropriate punishment, with their recommendation contained in a memorandum filed on Thursday, Jan. 11, in federal court in San Diego. In seeking the eight-month term, they say that Mr. Patel was a licenced lawyer who lied to a brokerage to deposit and trade shares as part of the scheme. With his training, he should have recognized that profiting from an artificially inflated price was wrong, the memorandum states. "Moreover, unlike other defendants who commit crime out of desperation, Defendant had the education and opportunity to legitimately earn significant income," prosecutors say.

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