A former healthcare company chairman in Massachusetts was convicted of multiple securities offenses. Avtar Singh Dhillon, the former chairman of Arch Therapeutics, Inc., received a four-month prison sentence, alongside a stipulated one-year supervised release, which includes six months of home detention, for his involvement in crimes related to the company’s securities. U.S. District Court Judge Allison D. Burroughs also ordered Dhillon to forfeit a substantial sum of over $1.4 million. The offenses include the willful nondisclosure of stock sales, aiding and abetting the sale of unregistered securities, and conspiracy related to non-disclosure of touting compensation, according to the U.S. Attorney's Office.
Dhillon, who hails from Long Beach, California, was found guilty of illicitly funneling 2.75 million shares through a company set up by his then attorney, Daniel V. Martinez, and proceeding to sell them off in the open market without any legal exemption. This act netted him over $1.3 million, which was primarily distributed to third parties for his benefit. Dhillon's failure to report these stock sales to the SEC and other pertinent authorities was deemed willful. Meanwhile, Martinez was handed down a lighter sentence of one year of probation and 100 hours of community service, in addition to monetary penalties.
In a separate but parallel conspiracy, Dhillon also navigated murky ethical waters by engaging in nondisclosure of compensation paid to a subscription newsletter analyst. This analyst was supposedly paid to positively highlight the securities offering of Emerald Health Pharmaceuticals (EHP), a San Diego Company with ties to Dhillon - both as a one-time board member and an indirect shareholder who stood to profit from the company's financial gains. EHP subsequently raised tens of millions of dollars in its securities offering.
The intricacies of these cases were navigated by U.S. Attorney Joshua S. Levy with the aid of Special Agent in Charge Jodi Cohen of the Federal Bureau of Investigation's Boston Office. Assistance was also gratefully acknowledged from the U.S. Securities & Exchange Commission's headquarters and its regional offices in Boston and Los Angeles. Assistant U.S. Attorney James R. Drabick was responsible for leading the prosecution in the Securities, Financial & Cyber Fraud Unit of this complex case.
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