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SEC defendant Patel pleads guilty in California

2022-07-12 20:25 ET - Street Wire

Also Street Wire (U-ARGW) Argus Worldwide Inc
Also Street Wire (U-VRSYF) VMS Rehab Systems Inc

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by Mike Caswell

Ontario lawyer Ashmit Patel has pleaded guilty to a criminal charge that he faces in the United States for the pump-and-dump of VMS Rehab Systems Inc., a supposed home health company listed on the OTC Markets. The government said that 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 the government.

Mr. Patel, 38, entered his guilty plea in an appearance on Monday, July 11, before a federal judge in San Diego. The judge permitted him to go free on $50,000 appearance bond. (All figures are in U.S. dollars.) While Canadians can face extraordinary release conditions in the U.S., Mr. Patel entered the country voluntarily, allowing prosecutors to avoid the often-lengthy Canadian extradition process.

The charge to which Mr. Patel pleaded guilty was one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years. In entering the plea, Mr. Patel admitted to the essential elements of the VMS Rehab pump-and-dump. According to his plea agreement, he acquired millions of shares, purportedly in exchange for legal services. As his co-accused manipulated the stock, he secretly unloaded his shares in the market. His activity generated an illegal $499,100 gain, the agreement states.

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