SEC v. MARG PATEL; ROBERT HOROWITZ; and CHINTANKUMAR BHATT, No. 1:24-cv-06405, Eastern District of New York (Sept. 12, 2024) — Complaint

ANTONIA M. APPS
REGIONAL DIRECTOR
Sheldon L. Pollock
Judith A. Weinstock
Christopher M. Colorado
Suzanne M. Bettis
Heather Marshall Molavi
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street, Suite 20-100
New York, NY 10004-2616
212-336-9143 (Colorado)
[email protected]
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
-against-
MARG PATEL, ROBERT HOROWITZ, and
CHINTANKUMAR BHATT,
Defendants.
COMPLAINT
1:24-cv-06405
JURY TRIAL DEMANDED
Plaintiff Securities and Exchange Commission (“SEC”), for its Complaint against
Defendants Marg Patel (“Patel”), Robert Horowitz (“Horowitz”), and Chintankumar Bhatt
(“Bhatt”) (collectively, “Defendants”), alleges as follows:
SUMMARY
1.From at least February 2021 through August 2022, defendants—Patel, the former
chief executive officer of Medly Health, Inc. (“Medly”), a now-defunct privately held online
pharmacy company; Horowitz, Medly’s former chief financial officer; and Bhatt, Medly’s

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former head of Rx Operations—deceived investors about Medly’s business, including through
repeated false and misleading misrepresentations about Medly’s growth and revenues.
2. Medly was marketed to investors as a company that was disrupting the pharmacy
industry by providing a full-service online pharmacy experience, from the moment a doctor
wrote a prescription through delivery of the prescribed medication to the patient, that would limit
the need for brick-and-mortar locations and minimize the associated costs.  Investors were told
that Medly was succeeding wildly as the “nation’s fastest-growing digital pharmacy” with
exploding revenue growth.
3. In reality, much of Medly’s revenue and revenue growth was built on fake
prescriptions and accounting irregularities.
4. For years, Bhatt had been creating hundreds of fake prescriptions for high-dollar
medications in Medly’s internal pharmacy management system resulting in millions of dollars of
accounts receivable or revenue that was not real and that Medly would never receive.
5. At the same time, Medly restricted its U.S.-based accounting and finance
employees from that internal Medly system—including the raw data showing the fake
prescriptions and resulting fake revenue—and required those employees to outsource and rely on
analyses of that data by an India-based subsidiary, forcing the U.S.-based Medly teams to
incorporate financial information from the subsidiary that was replete with irregularities and
inaccuracies.
6. Despite these restrictions, several Medly employees discovered problems in
Medly’s financials and identified material revenue overstatements and they repeatedly notified
Patel and Horowitz of the irregularities and overstatements.

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7. Although Patel and Horowitz knew or recklessly disregarded that Medly’s
revenue numbers were wrong and materially overstated, they each used those inflated numbers to
educate potential investors about Medly’s business and, based on false and misleading financial
statements, persuaded those investors to buy more than $170 million worth of Medly stock and
convertible notes.
8. By April 2022, the scheme began to unravel.  At the urging of Medly’s Board of
Directors (the “Board”), Horowitz was demoted and he resigned soon thereafter.  When Bhatt’s
fake prescriptions and Medly’s other accounting issues became known by many within the
company, the Board fired Patel.  Bhatt also resigned.  Medly’s business quickly deteriorated and
it filed for Chapter 11 bankruptcy protection in December 2022 and, in April 2023, converted
that action to a Chapter 7 liquidation.  Those who had invested in Medly lost their entire
investment.
VIOLATIONS
9. By virtue of the foregoing conduct and as alleged further herein, Patel and
Horowitz violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C.
§ 77q(a)] and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C.
§ 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
10. By virtue of the foregoing conduct and as alleged further herein, Bhatt violated
Sections 17(a)(1) and 17(a)(3) of the Securities Act [15 U.S.C. § 77q(a)(1) and (3)], and Section
10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R.
§ 240.10b-5(a) and (c)].  Bhatt further aided and abetted Patel’s and Horowitz’s violations of
Securities Act Section 17(a)(2) [15 U.S.C. § 77q(a)(2)] and Section 10(b) of the Exchange Act
[15 U.S.C. § 78j(b)] and Rule 10b-5(b) thereunder [17 C.F.R. § 240.10b-5(b)].

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11. Unless Defendants are restrained and enjoined, they will engage in the acts,
practices, transactions, and courses of business set forth in this Complaint or in acts, practices,
transactions, and courses of business of similar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
12. The SEC brings this action pursuant to the authority conferred upon it by
Securities Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b), 77t(d)] and Exchange Act Section
21(d) [15 U.S.C. § 78u(d)].
13. The SEC seeks a final judgment:  (a) permanently enjoining each Defendant from
violating, directly or indirectly, Securities Act Section 17(a) and Exchange Act Section 10(b) [15
U.S.C. §§ 77q(a) and 78j(b)], and Rule 10b-5 [17 C.F.R. § 240.10b-5]; (b) ordering Defendants
to disgorge all ill-gotten gains they received as a result of the violations alleged here and to pay
prejudgment interest thereon, pursuant to Exchange Act Sections 21(d)(3), 21(d)(5), and 21(d)(7)
[15 U.S.C. §§ 78u(d)(3), 78u(d)(5), 78u(d)(7)]; (c) ordering Defendants to pay civil money
penalties pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)] and Exchange Act Section
21(d)(3) [15 U.S.C. § 78u(d)(3)]; (d) permanently prohibiting each Defendant from serving as an
officer or director of any company that has a class of securities registered under Exchange Act
Section 12 [15 U.S.C. § 78l] or that is required to file reports under Exchange Act Section 15(d)
[15 U.S.C. § 78o(d)], pursuant to Securities Act Section 20(e) [15 U.S.C. § 77t(e)] and Exchange
Act Section 21(d)(2) [15 U.S.C. § 78u(d)(2)]; and (e) ordering any other and further relief the
Court may deem just and proper.
JURISDICTION AND VENUE
14. This Court has jurisdiction over this action pursuant to Securities Act Section
22(a) [15 U.S.C. § 77v(a)] and Exchange Act Section 27 [15 U.S.C. § 78aa].

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15. Defendants, directly and indirectly, have made use of the means or
instrumentalities of interstate commerce or of the mails in connection with the transactions, acts,
practices, and courses of business alleged herein.
16. Venue lies in this District under Securities Act Section 22(a) [15 U.S.C. § 77v(a)]
and Exchange Act Section 27 [15 U.S.C. § 78aa] because certain of the transactions, acts,
practices, and courses of business alleged herein occurred within this District.  Among other
things, Medly maintained its headquarters in Brooklyn, New York, where its employees,
including Defendants, regularly conducted business.
DEFENDANTS
17. Patel, age 36, is a resident of Staten Island, New York.  Patel co-founded Medly
and served as its CEO until August 2022, when Medly’s Board terminated him.  As CEO, Patel
was responsible for Medly’s operations; raising money from investors; and reviewing and
approving financial information for, and providing that information to, Medly’s Board and its
prospective and existing investors.  Patel was also a director of Medly’s India-based subsidiary,
Medly Software Systems LLP.  During the SEC’s investigation that preceded this action, Patel
invoked his Fifth Amendment privilege against self-incrimination, refused to produce documents
in response to an SEC subpoena, and refused to answer all substantive questions during sworn
testimony.
18. Horowitz, age 39, is a resident of Colts Neck, New Jersey.  Horowitz earned a
bachelor’s degree in finance and a master’s degree in business administration and previously
held Series 7, 63, and 65 securities representative and investment adviser licenses.  Between
approximately December 2019 and April 2022, Horowitz was Medly’s CFO.  In April 2022,
Horowitz was demoted to a role as Medly’s Executive Vice President of Finance & Accounting
and remained in that position until he resigned in July 2022.  In both roles, Horowitz managed

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Medly’s accounting and financial planning and analysis (“FP&A”) teams.  As CFO, Horowitz
was also responsible for drafting, reviewing, and approving financial information for, and
providing that information to, Medly’s Board and its prospective and existing investors.
19. Bhatt, age 38, is a resident of Monroe, New Jersey.  Between approximately
January 2019 and October 2022, Bhatt was Medly’s Head of Rx Operations.  Before Medly,
Bhatt was a long-time associate of Patel and of Patel’s family and had worked (and continues to
work) at other pharmacies in which Patel has an ownership stake.  During the SEC’s
investigation that preceded this action, Bhatt invoked his Fifth Amendment privilege against
self-incrimination, refused to produce documents in response to a SEC subpoena, and refused to
answer all substantive questions during sworn testimony.
RELEVANT ENTITIES
20. Medly Health, Inc. (“Medly”), formed in 2017 and incorporated in 2018 in
Delaware, had its principal place of business in Brooklyn, New York.  Medly was privately held
and purported to be a “full-service digital pharmacy platform” with same-day prescription
delivery.  Medly also maintained physical pharmacy locations and distribution centers.  Medly is
currently in bankruptcy proceedings under Chapter 7 of the U.S. Bankruptcy Code.
21. Medly Software Systems LLP (“Medly Software”), incorporated in 2019 in
India, is an entity registered to do business in India and with its principal place of business in
Pune, India.  Medly Software was a subsidiary of Medly.  During the relevant period, Medly
Software provided accounting, financial, and data analytics services to Medly, including through
Medly Software’s so-called “Business Intelligence Team” or “BI Team.”
22. Investor A is a venture capital firm that invested more than $60 million in Medly,
including more than $27 million in Medly’s Series C fundraising round.  Beginning in February
2019, Investor A held a seat on Medly’s Board.

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23. Investor B is a venture capital firm that invested approximately $5 million in
Medly, including approximately $1 million in Medly’s Series C fundraising round.  Beginning in
March 2019, Investor B had observer rights on Medly’s Board.
24. Investor C is a growth equity firm that invested more than $50 million in Medly,
including more than $20 million in Medly’s Series C fundraising round.  Beginning in March
2020, Investor C held a seat on Medly’s Board.
25. Investor D is a growth equity firm that invested more than $85 million in
Medly’s Series C fundraising round.  Beginning in May 2021, Investor D held a seat on Medly’s
Board.
26. Investor E is a venture capital firm that invested more than $10 million in
Medly’s Series C fundraising round.  Beginning in July 2021, Investor E had observer rights on
Medly’s Board.
27. Investor F is a venture capital firm that invested more than $10 million in
Medly’s Series C fundraising round.
28. Investor G is a venture capital firm that invested more than $7 million in Medly’s
Series C fundraising round.
29. Investor H is a venture capital firm that invested approximately $500,000 in
Medly’s Series C fundraising round.
30. Investor I is a growth equity firm that invested approximately $4.5 million in
Medly’s Series C fundraising round.
FACTS
I. MEDLY WAS OPERATED BY DEFENDANTS
31. Since before 2017, Patel and his family owned, in full or in part, several New
York-based pharmacies.  Patel served on the boards of directors of some of those pharmacies.

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32. In 2017, Patel, together with his brother, founded Medly to be a full-service
online pharmacy through which medical providers could submit prescriptions, patients could
have those prescriptions filled, and the prescribed medications would be delivered to the patients.
33. At its formation, Patel became Medly’s CEO.  In that role, Patel oversaw and
managed Medly’s operations and business development and Medly’s fundraising from investors,
among other things.
34. Patel and his brother initially funded Medly through $900,000 in unsecured loans,
and, at that time, Patel and his brother each owned more than forty percent of Medly.
35. Thereafter, Medly earned revenue by processing prescriptions from medical
providers and their patients, maintaining an inventory of medications, using that inventory to fill
prescriptions, validating patients’ insurance coverage, filing claims with health insurance
companies, delivering prescribed medications to patients, and obtaining payment from patients
and insurance companies.
36. Medly began significantly expanding its staff in 2018, growing from
approximately 120 employees at the end of that year to more than 380 employees by the end of
2019.  During that time, Medly also expanded its physical footprint, which included both
pharmacy locations and distribution centers, from New York and New Jersey to Pennsylvania.
37. In December 2018, Medly hired a long-time associate of Patel—who had worked
at multiple pharmacies associated with Patel and Patel’s family—to be a Medly Vice President
and its Director of Pharmacy and Compliance and, later, Medly’s Chief Compliance Officer
(“Medly CCO”).  In those roles, the Medly CCO oversaw Medly’s compliance with regulatory
requirements and internal policies and procedures, including concerning insurance claims and
data management.  The Medly CCO was also appointed to serve on Medly’s Board.

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38. In or around January 2019, Medly hired Bhatt as the Director of Rx Operations.
Later, Bhatt’s title changed to Head of Rx Operations.  In those roles, Bhatt oversaw Medly’s
prescription business operations, including Medly’s pharmacy management systems and
medication inventory management.
39. During his employment at Medly, Bhatt received options to purchase more than
one million shares of Medly common stock.
40. In December 2019, Medly hired Horowitz as its CFO.  In that role, Horowitz
analyzed the financial performance of Medly’s business operations and prepared financial
reports and forecasts for Medly’s Board and for actual and potential investors.  Horowitz also
made presentations concerning Medly’s financial performance to Medly’s Board and to actual
and potential investors, and he managed and was responsible for Medly’s accounting and FP&A
personnel.
41. During his employment at Medly, Horowitz received options to purchase more
than three and a half million shares of Medly common stock.
II. MEDLY CONDUCTED TWO INITIAL FUNDRAISING ROUNDS AND
INVESTORS IN THOSE ROUNDS JOINED MEDLY’S BOARD
42. Between March 2019 and May 2020, Medly conducted two fundraising rounds
from outside sources, its Series A and Series B fundraises.
43. In those fundraising rounds, each of which were private placements, Medly sold
preferred equity shares and notes that were convertible to preferred equity shares to outside
accredited investors for more than $75 million.
1

1
 In general, a private placement is an offering and/or sale of securities that is exempt from the
registration requirements of the federal securities laws and the Commission, including, for
example, because the offering and sale is only to accredited investors, among other requirements.

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44. Investor A, Investor B, and Investor C each invested in one or both of the Series
A and Series B rounds.  In connection with those investments, Investor A and Investor C each
obtained Board seats and Investor B obtained Board observer rights.
45. Based on the Series A fundraise, Medly’s valuation was approximately $50
million.  As of the subsequent Series B fundraise, Medly’s valuation had grown to approximately
$270 million.
III. MEDLY CREATED FAKE PRESCRIPTIONS AND CONCEALED FALSELY
INFLATED REVENUE
46. Since at least approximately January 2020, Medly’s operations and accounting
were plagued with issues that resulted in its financial statements being inaccurate, including due
to hundreds of fake prescriptions created by Bhatt in Medly’s systems.
47. Both Patel and Horowitz knew that Medly’s revenue numbers were inaccurate,
yet each used those inaccurate numbers to raise an additional more than $170 million from
outside investors in Medly’s subsequent Series C fundraising round.
A. Bhatt Created Fake Prescriptions and Medly Recognized Revenue
From Them.
48. Medly earned most, if not all, of its revenue by selling medications to fill
prescriptions, either from payments from health insurance companies or patients.
49. Medly used pharmacy management software called “PrimeRx.”
50. Through PrimeRx, Medly managed patient accounts, health insurance company
details, prescriptions, medication inventory, and billing to patients and health insurance
companies, among other things.
51. Within Medly, each employee’s access to and permissions within PrimeRx
depended on the employee’s role.  For example, some employees were permitted to view patient
profiles and those patients’ prescription needs, while others were not.  Similarly, some

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employees were permitted to create data within and delete data from PrimeRx, while others were
not.
52. Bhatt had full administrative-level access to PrimeRx features.
53. Starting no later than November 2020, Bhatt began creating entries in PrimeRx
for prescriptions that Medly had supposedly filled but that, in truth, did not actually exist and
were never filled by Medly.  These purported prescriptions—many of which were for high-
dollar, specialty medications—were fake.
54. In many instances, Bhatt entered the fake prescriptions to correspond with former
Medly patients who had been marked within Medly’s records as deceased.  In other instances,
Bhatt entered the fake prescriptions to correspond to fake patient profiles within PrimeRx that
Bhatt had also concocted and that did not belong to any actual person.
55. In total, from at least November 2020 through July 2022, Bhatt created hundreds
of fake prescriptions for high-dollar medications that Medly had supposedly (but had not
actually) filled and delivered, including medications that cost more than $172,000 each.
56. Bhatt then caused these fake prescriptions to appear as if they had been billed
within PrimeRx to health insurance companies.  The billing, like the prescriptions, was fake.
The companies to which the fake prescriptions had supposedly been billed either did not exist or
were not health insurance companies.  For example, within PrimeRx, Bhatt created a Bank
Identification Number or “BIN”—which health insurance plans use to process electronic
pharmacy claims—for two health insurance companies that did not exist and then Bhatt created
entries showing that the fake prescriptions had been “billed” to the BIN for these fake health
insurance companies.

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57. Bhatt also regularly created and disseminated within Medly, including to Patel
and Horowitz, reports showing Medly’s periodic operational and financial results that included
accounts receivable or revenue related to his fake prescriptions.
58. As Bhatt knew or recklessly disregarded, these fake prescriptions and the
purported payments that Medly supposedly received or was to receive related to them were
incorporated into Medly’s financial statements—indeed, Medly recognized millions of dollars of
revenue from them.
59. Bhatt also knew or recklessly disregarded that Medly was engaged in fundraising
from investors during the time he was creating the fake prescriptions and that financial
statements incorporating those fake prescriptions were provided to existing or potential Medly
investors.
60. Bhatt tried to conceal his fraudulent conduct.  He caused the majority of the fake
prescriptions to be associated with Medly’s three busiest pharmacy locations, where they might
be less conspicuous, and typically created the fake information within PrimeRx well outside of
normal working hours, when other Medly employees were less likely to see his manipulation
happening.  Bhatt then regularly revised the fake information he had input into PrimeRx,
including moving the fake prescriptions from one fake patient profile to another and from one
BIN number to another, to attempt to keep his conduct from being discovered.
61. Bhatt’s conduct was further obfuscated by the way in which Medly performed its
financial and accounting work and structured its financial and accounting teams.
62. Medly did not give many of its own accounting and FP&A personnel, based in the
United States, direct access to PrimeRx or the Medly operational and financial data maintained
therein.

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63. Rather, Medly required its accounting and FP&A personnel to rely on analyses of
that data by an India-based subsidiary, Medly Software.
64. Within Medly Software, the analyses were done by the so-called “Business
Intelligence” or “BI Team,” run by a long-time business partner of Patel, that regularly
coordinated with Bhatt and, unlike much of Medly’s own staff, had access to PrimeRx.  The BI
Team revised, aggregated, and analyzed PrimeRx data and created reports concerning Medly’s
financial performance.
65. For example, the BI Team used PrimeRx to review prescription and sales data
from Medly’s individual locations and distribution centers and on a consolidated basis; and to
aggregate and analyze that data to calculate Medly’s sales, inventory, and cost of goods sold.
The BI Team routinely overstated Medly’s revenue, including because it incorporated Bhatt’s
fake prescriptions and due to other irregularities and inaccuracies.
66. The BI Team sent its financial reports and analyses to Medly’s U.S.-based
accounting and FP&A personnel who, in turn, relied on those reports and analyses—which were
inaccurate—to create financial reports, statements, and forecasts for Medly’s Board and existing
and potential investors.
B. Before Medly’s Series C Fundraising Round, Patel and Horowitz Knew,
Or Recklessly Disregarded, that Medly’s Revenue was Overstated.
67. In late 2020, Investor C, while doing diligence related to a possible investment in
Medly, expressed concerns to Patel and Horowitz about a potential accounting irregularity:  a
substantial and growing debit balance in a Medly expense accrual account that was listed under
Medly’s Other Current Liabilities (“OCL”) line item.

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68. In general, OCL reflect liabilities that a company expects to pay within one year.
These liabilities are short-term in nature and are meant to include various types of liabilities that
do not fall under more specific categories like accounts payable or short-term debt.
69. An expense accrual account generally represents expenses a company has
incurred but has not yet paid.  This might include, for example, salary a company owes for a
particular time period but has not paid.  An expense accrual account is intended to ensure that
expenses are recognized in the period in which they occur even if paid later.
70. In accrual accounting, which Medly used, the entries in an expense accrual
account are generally credits on the company’s balance sheet, and not debits, because they are
amounts that have been earmarked for future payment and will be removed and reduced to zero
when paid.
71. Because an expense accrual account typically reflects a credit balance consisting
of the sum of expenses the company has incurred but has not yet paid, a debit balance in an
expense accrual account—like that noted by Investor C to Patel and Horowitz—is unusual and
can suggest an error in the financial statements.
72. In or around November 2020, after Investor C identified the potential issue with
the OCL account, Medly engaged multiple accounting firms to assist in “cleaning up” its
financial statements, including reviewing and reconciling Medly’s accounts and reviewing and
adjusting any errors in those financial statements.
73. Shortly thereafter, Horowitz told one of the accounting firms that he believed
Medly’s revenue numbers could be overstated by as much as twenty percent.
74. That accounting firm understood from Horowitz that Medly’s OCL line item was
being used as a “plug,” i.e., a line item to record the difference between revenue Medly included

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in its financial statements, on the one hand, and revenue that was actually supported by Medly’s
cash and accounts receivable, on the other hand.
2
  Thus, this “plug” concealed material errors in
Medly’s financial statements, including concerning its revenue.
75. As discussed below, certain other personnel from Medly’s accounting and FP&A
teams also recognized that the OCL and expense accrual account line items (i.e., the “plug”)—
and the substantial growth of those line items over time—were unusual and, in late 2020 and
early 2021, they began to try to obtain and analyze the underlying data.  Those employees
determined that the BI Team had been reporting Medly revenue in amounts that were
significantly higher than Medly’s actual revenue as calculated from Medly’s raw data.
76. In January 2021, a senior analyst on Medly’s FP&A team (“FP&A Senior
Analyst”) obtained raw data from PrimeRx from another employee who had access to that
system.  The FP&A Senior Analyst compared the raw PrimeRx data against the BI Team’s prior
financial reports and determined that the BI Team had repeatedly overstated Medly’s revenue.
77. The FP&A Senior Analyst told Horowitz about these overstatements and also that
the FP&A Senior Analyst understood, based on their analysis of the BI Team’s overstatements,
that Medly, too, had been overstating revenue.  The FP&A Senior Analyst also told Horowitz
that Medly should not fundraise based on the overstated revenue and asked Horowitz to
communicate that to Patel.

2
 In or around December 2020, Medly reported to its Board that it had reversed approximately
$1.8 million of revenue from early 2020 purportedly related to uncollected copayments.  The
impact of the accounting irregularities and fake prescriptions alleged herein were exponentially
larger than this reported change.

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78. In February 2021, the FP&A Senior Analyst discussed the BI Team’s revenue
overstatements with both Patel and Horowitz and provided Patel with a specific example of how
the BI Team reports had led to incorrect revenue recognition.
79. Horowitz then told the FP&A Senior Analyst that Patel believed the FP&A Senior
Analyst had been “digging too much” into the discrepancies between the BI Team reports and
Medly’s raw financial data.
80. Also in or around February 2021, Horowitz instructed a Medly senior accountant
(“Senior Accountant”)—who had expressed concerns to Horowitz about the accuracy of
financial statements provided to Medly’s Board and investors—to track internally what Medly
employees believed were Medly’s accurate financial numbers, including revenue, separate from
the financial statements that were shown to Medly’s Board.
81. On March 2, 2021, Horowitz sent an email to both the Senior Accountant and
Medly’s Head of FP&A (“Head of FP&A”), expressly acknowledging “Revenue Concerns.”
In the email, Horowitz described his concern that Medly’s revenue numbers were inaccurate, that
he had discussed this concern with Patel more than six weeks earlier, and had recommended to
Patel that Medly “look to restate revenues based on these find[ing]s”—that is, that Medly revise
prior financial statements to correct the amount of revenue it had earned.
82. In that same email, Horowitz wrote,
The guidance I received from [Patel] was to stop and not alarm the
team.    He  had  requested  we  continue  with  this  accounting  practice
until our Series C fund raise was completed.  His concern was that
we did not “fully understand” the impacts of our hypothesis and that
we  should  not  further  “explore”  or  “spend  effort  analyzing”  this
potential issue until Q2 2021.
83. In the email, Horowitz instructed the Head of FP&A and the Senior Accountant to
have their teams continue to analyze Medly’s revenue overstatement, although both the Head of

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FP&A and the Senior Accountant believed Horowitz’s email and instruction were an attempt by
Horowitz to create a paper trail to avoid blame or liability if something with Medly went awry.
84. Later in March 2021, the Senior Accountant memorialized in a writing to
Horowitz several concerns the Senior Accountant had previously expressed about the way in
which Medly was run, including “an apparent disregard for the integrity of our books and
financial reporting” and “the reluctance to investigate and disclose a material misstatement in our
revenue while fundraising.”  That month, the Senior Accountant resigned.
IV. PATEL AND HOROWITZ RAISED FUNDS USING FALSE AND MISLEADING
FINANCIAL STATEMENTS
85. While Medly employees were uncovering and identifying significant inaccuracies
in Medly’s revenue, and informing Patel and Horowitz of those issues, Patel and Horowitz were
marketing and then closing Medly’s largest ever fundraising round, its Series C fundraise—and
Patel and Horowitz were using false and misleading financial statements to do so.
86. Medly began marketing the Series C fundraise in or around October 2020.  The
Series C fundraise had two closes, the first between May 2021 and February 2022, and a second
close between July and August 2022.
87. During the first close of the Series C round, Medly sold preferred equity shares, in
a private placement, to outside accredited investors for more than $164 million.
88. During the second close of the Series C round (also referred to as the Series C-1),
Medly sold additional preferred equity shares, also in a private placement, to outside accredited
investors for more than $7 million.
89. Based on the Series C round, Medly’s valuation was approximately $925
million—growth of more than 240 percent from its May 2020 fundraise.

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90. Before investors participated in the Series C fundraise, Patel and Horowitz made
and disseminated false and misleading statements to them about Medly’s financial performance,
including about revenue Medly had purportedly earned, but which it had not, in fact, earned.
Patel and Horowitz each knew or recklessly disregarded that these statements were false and
misleading.
A. Patel and Horowitz Had Critical Roles in the Series C Fundraise.
91. As Medly’s CEO and CFO, Patel and Horowitz each had critical roles in Medly’s
Series C fundraise.  Each reviewed, revised, and approved financial statements and presentations
for firms that were considering investments.  And each communicated directly with potential
investors to answer questions about Medly and its operational and financial performance.
92. As noted, Horowitz oversaw the Medly teams that created the financial
information that was incorporated into Medly’s financial statements and presentations that were
presented to potential investors, and Horowitz reviewed, revised, and approved that information,
including as it was incorporated into documents provided to potential investors.
93. Patel also reviewed, revised, and approved the information provided to potential
investors, including financial statements and presentations.  According to Horowitz, Patel was
intimately involved in and had significant influence over the documents and information that
Medly shared with those firms.
B. In May 2021, Medly Obtained Nearly $113 Million From Outside Investors.
94. On May 27, 2021, as part of the first close of its Series C fundraise, Medly raised
nearly $113 million from four outside investors—Investor A, Investor B, Investor C, and
Investor D.
95. Before those investments, Patel and/or Horowitz made false and misleading
statements to those four Investors, and disseminated false and misleading statements to them,

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including concerning Medly’s revenue.  Patel and Horowitz knew or recklessly disregarded that
these statements were false and misleading.
96. In November 2020, contemporaneous to Horowitz’s statement to Medly’s outside
accounting firm that he believed Medly’s revenue could be overstated by as much as twenty
percent, supra paragraph 73, Horowitz sent false financial information to an investor concerning
Medly’s revenue.
97. Specifically, in advance of a Medly Board meeting—and just as Medly was
beginning to market its Series C fundraising round—Horowitz sent Investor C, an existing
investor in Medly that had a seat on Medly’s Board, a presentation concerning Medly’s
performance which stated that, between January and September 2020, Medly had earned more
than $129 million in revenue, and that Medly had missed its revenue budget projection by only
$20 million or 13 percent.  As Horowitz knew or recklessly disregarded, those numbers were
wrong.  In fact, Medly had missed its revenue budget projections by more than $34 million or
approximately 23 percent.  And while the numbers from Horowitz said that Medly’s year-over-
year revenue growth for that period was 120 percent, it was actually under 100 percent.
98. In January 2021 (when the FP&A Senior Analyst had told Horowitz of material
revenue misstatements and warned him not to raise funds based on those numbers, supra
paragraphs 76-77), Horowitz sent additional financial information to Investor C that Horowitz
knew or recklessly disregarded was inaccurate.  In response to Investor C’s requests for updated
information about Medly’s performance, Horowitz sent Investor C financial statements that said
Medly had earned more than $169 million in revenue between January and November 2020,
representing year-over-year revenue growth for that period of nearly 120 percent.  Medly had
actually earned approximately $19 million less than Horowitz represented, a nearly thirteen

20
percent difference, and Medly’s revenue growth for the period was only approximately 94
percent.  Thus, Medly’s purported growth according to the information provided by Horowitz
was more than 26 percent higher than its actual growth.
99. Horowitz also sent false and misleading financial information to Investor A and
Investor C.  In April 2021, Investor A asked Horowitz for information about Medly’s financial
performance to be provided to Investor A’s investment committee as part of deciding whether to
make an additional investment in Medly.
100. In response, Horowitz sent financial statements to Investor A showing that Medly
had earned nearly $190 million in 2020, representing year-over-year revenue growth of 114
percent, which Horowitz knew or recklessly disregarded was false.  Medly had actually earned
less than $170 million, with year-over-year revenue growth approximately 23 percent lower than
the financials suggested.
101. Horowitz did not disclose to either Investor A or Investor C that he believed
Medly’s revenue was overstated or that he knew that Medly senior employees had identified
overstatements in Medly’s revenue.
102. For both Investor A and Investor C, the revenue numbers that Horowitz provided,
the accuracy of those numbers, and the fact that Horowitz was fully disclosing Medly’s financial
performance to date were important to their decisions to participate in the Series C fundraising
round.  In May 2021, both Investor A and Investor C participated in that round, investing
approximately $12.5 million and $20 million, respectively.
103. False and misleading financial information was similarly provided to Investor B
and Investor D before their decisions to participate in Medly’s Series C fundraise.

21
104. In February and April 2021—after Patel had been informed of Medly’s material
incorrect revenue recognition, e.g., paragraphs 77-82—Patel provided both Investor B and
Investor D with financial statements detailing Medly’s performance for 2020, which Patel knew
or recklessly disregarded were inaccurate.  Both Investors were considering investments in
Medly at the time, Investor B was considering adding to its existing investment and Investor D
was considering its first investment.
105. Like the financials provided by Horowitz to Investor A, the financial statements
Patel sent to Investor B and Investor D said that Medly had earned nearly $190 million in 2020
when, in fact, it had earned less than $170 million, and the financial statements overstated
Medly’s annual revenue growth for 2020 by approximately 23 percent.
106. Patel did not disclose to either Investor B or Investor D that he knew or recklessly
disregarded that Medly’s revenue was overstated, that Medly senior employees had identified
overstatements in Medly’s revenue to Patel, or that Patel had instructed Medly employees to stop
investigating those overstatements until Medly completed its Series C fundraise.
107. For both Investor B and Investor D, the revenue numbers that Patel provided, the
accuracy of those numbers, and the fact that Patel was fully disclosing Medly’s financial
performance to date were important to their decisions to participate in the Series C fundraising
round.  In May 2021, both Investor B and Investor D participated in that round, investing
approximately $1 million and approximately $79 million, respectively.
108. By raising funds in the Series C round, Medly—a resource-intensive business that
was burning through cash but that needed to create the appearance that it was growing
exponentially—was able to continue to operate; to pay salaries to Patel, Horowitz, and Bhatt, and

22
allow them to stay employed; and to increase the value of the Medly securities that Patel,
Horowitz, and Bhatt owned.
109. Indeed, Patel used the funds raised from investors, in part, to increase Medly’s
size and footprint, including acquiring a retail pharmacy chain that had twenty-eight brick-and-
mortar locations and more than 800 employees.  By the end of 2022, Medly would operate thirty-
two pharmacy distribution centers or locations throughout the United States.
C. Medly Personnel Continued to Raise Concerns Regarding the Accuracy of
Medly’s Financials.
110. While Medly’s Series C fundraise was ongoing, Medly employees continued to
identify material inaccuracies in Medly’s revenue, and to notify Patel and Horowitz of those
problems, but Patel and Horowitz continued to use the inflated revenue numbers to raise money
from investors.

111. In May 2021, an individual who is a Certified Public Accountant and Certified
Internal Auditor joined Medly to lead its accounting team (“Head of Accounting”).  Soon after
being hired, the Head of Accounting noted and began investigating significant inaccuracies in
Medly’s revenue.  However, the Head of Accounting found that they were unable to obtain
critical information from the BI Team related to the inaccuracies.
112. In August 2021, the Head of Accounting contacted the Ethics Hotline of the
Association of International Certified Professional Accountants (“AICPA”), a professional
accountants association, to seek advice.  AICPA advised the Head of Accounting to try to correct
the revenue overstatement and, if unable to do so, to resign from the company.
113. The Head of Accounting contacted Horowitz about their “major concern” that
revenue was incorrect.  Then, in October 2021, the Head of Accounting contacted Patel about
concerns that Medly was not making sufficient progress to correct the company’s historical

23
revenue overstatements, including due to obfuscation by the BI Team.  The Head of Accounting
told Patel specifically that revenue “restatements will be material to the shareholders, once we
determine the actual amounts based on [the BI Team’s] work.”
114. Days later, the Head of Accounting emailed Patel, Horowitz, and the head of the
BI Team, emphasizing the concern that Medly had not corrected its revenue numbers,
I’m starting to feel anxious about the amount of time this is taking,
and worried about the ramifications that come from not fixing such
an important issue on a timely basis—frankly, we have been working
on this since last April, and I feel like the deadline has been pushed
dozens  of  times.    This  is  concerning,  due  to  the  material  and
otherwise potentially important disclosure to investors based on this
issue which we still need to vet and finalize.
115. The Head of Accounting continued to investigate accounting discrepancies in the
following months and repeatedly contacted Patel about Medly’s “large” and “unresolved”
revenue overstatements.  When Patel and Horowitz failed to address those issues, the Head of
Accounting resigned.
116. During the time the Head of Accounting was repeatedly raising revenue
overstatement issues with both Patel and Horowitz, the FP&A Senior Analyst was also
continuing to identify inaccuracies in Medly’s revenue.
117. For example, the FP&A Senior Analyst prepared a written analysis of
discrepancies between revenue actually earned by two of Medly’s busiest pharmacy locations, on
the one hand, and reports provided by the BI Team for those locations, on the other hand,
demonstrating how the BI Team had overstated revenue earned at those locations by tens of
millions of dollars.  In August 2021, the FP&A Senior Analyst provided that analysis to
Horowitz and others.

24
D. Between July 2021 and December 2021, Medly Obtained An Additional
Approximately $45 Million From Outside Investors.
118. Between July and December 2021, also as part of the first close of the Series C
fundraise, Medly obtained an additional nearly $45 million from investors, including Investor A
and Investor D, each of which added to existing investments, and Investor E, Investor H, and
Investor I, which became Medly investors.
119. Before those investments, Patel and/or Horowitz made false and misleading
statements to those Investors, and disseminated false and misleading statements to them,
including concerning Medly’s revenue.  Patel and Horowitz knew or recklessly disregarded that
these statements were false and misleading.
120. Patel met with Investor E in February 2021 to solicit its investment in the Series C
fundraise.  After that meeting, and in response to Investor E’s request for financial information
necessary to decide whether to invest in Medly, Patel sent financials that—like those described
above sent to Investor A, Investor B, and Investor D, e.g., supra paragraphs 100 and 105—
overstated Medly’s 2020 revenue by at least $20 million and overstated Medly’s annual revenue
growth for 2020 by approximately 23 percent.
121. Horowitz then sent inaccurate financials to Investor A, which he knew or
recklessly disregarded were false and misleading.  In June 2021, Investor A, who held a seat on
Medly’s Board and had already participated in each of Medly’s fundraising rounds, was
considering an additional investment in Medly and asked for updated financials.  In response,
Horowitz sent financials that said Medly had earned $21.5 million in revenue in January 2021,
representing year-over-year revenue growth for that month of nearly 80 percent.  That revenue
number was overstated by nearly ten percent and the financials Horowitz provided suggested that
Medly’s growth rate for the month was approximately 24 percent higher than if Horowitz had

25
provided Medly’s correct January 2021 revenues.  Those financials also overstated Medly’s
revenue for April 2021 and its year-over-year growth for that month in similar amounts.
122. In July 2021, Horowitz sent additional financials to Investor D that, like those
sent to Investor A, were false and misleading.  Indeed, they similarly overstated Medly’s revenue
growth for January and April 2021, which Horowitz knew or recklessly disregarded.
123. Relying on these financials from Horowitz and Patel, Investor A and Investor D
each added to their investments in Medly in the Series C, and Investor E made its first
investment.  In July 2021, Investor A and Investor E invested approximately $14.7 million and
$10 million, respectively.  Months later, Investor D also invested an additional $5 million.  For
Investor A, Investor D, and Investor E, the revenue numbers that Patel and Horowitz provided,
the accuracy of those numbers, and the fact that Patel and Horowitz were fully disclosing
Medly’s financial performance to date were important to their decisions to participate in the
Series C fundraising round.
124. Horowitz and Marg also provided financial information to Investor H and
Investor I in advance of their decisions to invest in Medly that Horowitz and Marg knew or
recklessly disregarded was false and misleading.
125. In May 2021, Investor H, which had previously provided Medly with debt
financing, asked Horowitz for updated details concerning Medly’s financial performance.
Horowitz responded by providing financial statements that overstated that performance, inflating
Medly’s revenue for the period from January 2020 through January 2021 by more than $22
million, an amount that accounted for nearly 70 percent of the “gross profits” those financials
said Medly had earned during that time.  After receiving that information—which Horowitz

26
knew or recklessly disregarded was inaccurate—Investor H decided to participate in the Series C
round, investing approximately $500,000.
126. Then, in July and August 2021, Marg solicited an investment in Medly’s Series C
round from Investor I.  In doing so, at the end of July 2021 and to facilitate Investor I’s
evaluation of a possible investment in Medly, Marg provided Investor I with access to Medly
financial statements via a data room.  Investor I accessed and analyzed a Medly investor deck
which it then discussed with Marg.  That deck overstated Medly’s 2020 revenue by more than
$20 million and overstated Medly’s quarterly revenue performance for each quarter of 2020 by at
least nine percent and by as much as fourteen percent.  Investor I then relied on this information
as part of its decision to participate in the Series C round, investing $4.5 million in Medly.
127. Before the investments by Investor A, Investor D, Investor E, Investor H, and
Investor I described above, neither Patel nor Horowitz disclosed to any of those Investors that
multiple senior Medly employees had discovered overstatements in Medly’s revenue and
irregularities in its accounting, that those employees had informed both Patel and Horowitz of
those issues, that Patel had instructed employees not to investigate those issues until Medly’s
Series C fundraise was completed, and that both Patel and Horowitz knew or recklessly
disregarded that Medly’s revenue was overstated.
E. Medly Employees Discovered Bhatt’s Fake Prescriptions.
128. Between November 2021 and January 2022, certain Medly employees also
uncovered hundreds of fake prescriptions that, unbeknownst to them, Bhatt had created and that
had resulted in millions of dollars of supposed revenue, and Patel learned of those employees’
discoveries.

129. In November 2021, a Medly accounting manager (“Accounting Manager”)
identified that Medly’s accounts receivable included many claims by Medly to health insurance

27
companies for large dollar prescriptions that were associated with a single BIN number (“BIN
A”).  The Accounting Manager then discovered that some patients associated with these claims
had been marked as deceased within Medly’s records.  By January 2022, the Accounting
Manager discovered similar unusual prescription claims associated with another BIN number
(“BIN B”).
130. The fake prescriptions that the Accounting Manager had identified, and which
Medly had supposedly billed to health insurance companies associated with BIN A and BIN B,
had accounted for at least $13 million of Medly’s purported revenue.
131. In mid-December 2021, shortly after Bhatt learned that Medly’s accounting team
was raising questions about BIN A, he logged into PrimeRx and changed the fake patient data
for numerous claims associated with that BIN number so that the claims were no longer tied to it
and would be more difficult for other Medly employees to identify.  As one example, Bhatt
moved some claims to new, fake patient profiles and associated them with BIN B or other health
insurance companies.
132. On January 4, 2022, after emails to Bhatt from other Medly employees had gone
unanswered, Medly’s Head of Accounting told Bhatt that claims to BIN A and BIN B had raised
“serious concerns.”  Bhatt emailed both the Head of Accounting and Patel acknowledging the
issue, but then tried to further conceal the fraudulent data by logging into PrimeRx and deleting
fake patient profiles and claims related to BIN A and BIN B.
F. In February 2022, Medly Obtained Millions of Additional Dollars
From Outside Investors.
133. In late 2021 and early 2022, Patel continued to solicit investments in Medly as
part of the Series C round, using false and misleading Medly financials to do so.

28
134. For example, in December 2021, Patel met with Investor G about investing in
Medly and provided a deck purportedly showing Medly’s quarterly performance and revenue
growth from the third quarter of 2017 through the third quarter of 2021.  This deck
misrepresented Medly’s 2020 and 2021 performance, which Patel knew or recklessly
disregarded.  Like the information that Patel and Horowitz had sent to other potential Series C
investors, the deck overstated Medly’s revenue for 2020, inflating Medly’s revenue for every
quarter of 2020 by at least eight percent and as much as twelve percent.  The deck also
overstated Medly’s 2021 third quarter revenue by more than 33 percent.
135. Patel did not disclose to Investor G that multiple senior Medly employees had
discovered overstatements in Medly’s revenue and irregularities in its accounting, that Patel had
been informed of those issues, that he had instructed employees not to investigate those issues
until Medly’s Series C fundraise was completed, or that Patel knew or recklessly disregarded that
Medly’s revenue was overstated.
136. For Investor G, the revenue numbers that Patel provided, the accuracy of those
numbers, and the fact that Patel was fully disclosing Medly’s financial performance to date were
important to its decision to participate in the Series C fundraising round.  In February 2022,
Investor G invested over $6.8 million in that round.
G. In July and August 2022, Medly Obtained an Additional More Than
$7 Million From Outside Investors.
137. In July and August 2022, Medly conducted the second close of its Series C
fundraising round.  In that close, Medly obtained more than $7 million from outside investors,
including from Investor A, Investor C, Investor D, Investor E, Investor F, and Investor G.
138. Before those investments—and during the time that Medly was marketing its
Series C fundraising round but after issues regarding Medly’s overstated revenue had been

29
repeatedly identified to Patel and Horowitz—Patel and/or Horowitz made false and misleading
statements to those six Investors, and disseminated false and misleading statements to them,
including concerning Medly’s revenue.  Patel and Horowitz knew or recklessly disregarded that
these statements were false and misleading.
139. In September 2021, Investor A asked Medly for updated details concerning its
financial performance.  Horowitz, as he had done previously, supra paragraphs 105 and 121, sent
Investor A financial statements that overstated Medly’s revenue for 2020 by more than $20
million and overstated Medly’s annual revenue growth for 2020 by approximately 23 percent.

140. In October 2021, when Investor C was considering an additional investment in
Medly’s Series C fundraising round, Horowitz sent financial statements that included Medly’s
supposed financial performance for the first half of 2021 but which were also false and
misleading—they also overstated Medly revenue by many millions of dollars.
141. Then, in advance of Medly’s November 2021 Board meeting, Patel sent the Board
and Board observers—including representatives of Investor A, Investor C, and Investor D—
a deck that also overstated Medly’s 2020 revenue, inflating Medly’s quarterly revenue for every
quarter of 2020 by at least nine percent and as much as fourteen percent.
142. In April 2022, Patel sent Investor C and Investor D a deck purporting to reflect
Medly’s latest financial data that inflated both Medly’s January 2022 and February 2022
revenue, overstating the February revenue by more than $4.6 million or nearly fourteen percent.
143. In July 2022, Investor A asked Patel for an investor presentation and Patel sent a
deck to Investor A that continued to inflate Medly’s revenue.  The deck said that Medly had
earned nearly $190 million in revenue in 2020 and nearly $350 million in revenue in 2021

30
(inclusive of the revenue earned by the retail pharmacy chain Medly had acquired).  This
overstated Medly’s 2020 and 2021 revenue by a total of at least $35 million.
144. Patel and Horowitz knew or recklessly disregarded that the financial statements
they had provided to Investor A, Investor C, and Investor D were inaccurate.  Neither Patel nor
Horowitz disclosed to those Investors that senior Medly employees had discovered
overstatements in Medly’s revenue and irregularities in its accounting and had reported those
issues to Patel and Horowitz, that Patel had instructed employees to not investigate those issues
until Medly’s Series C fundraise was completed, or that Patel and Horowitz knew or recklessly
disregarded that Medly’s revenue was overstated.
145. In July and August 2022, after receiving the inaccurate financial information from
Patel and Horowitz in late 2021 and early 2022, Investor A, Investor C, and Investor D all
invested in the second close of Medly’s Series C fundraising round, investing $600,000,
$1 million, and $3.4 million, respectively.
146. As with their earlier investments, Investor A, Investor C, and Investor D viewed
the revenue numbers from Patel and Horowitz, the accuracy of those numbers, and the fact that
Patel and Horowitz were fully disclosing Medly’s financial performance to date as important to
their decisions to invest further in Medly.
147. Horowitz and Patel also deceived Investor E and Investor F with false and
misleading financials.  In August 2021, Horowitz sent those Investors financial statements,
which had been reviewed by Patel, that overstated Medly’s revenue from January 2020 through
July 2021 by more than $24 million or 7 percent.  The overstatement accounted for more than
half of the “gross profits” those financials said Medly had earned during that period.  In May

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2022, Patel sent both Investor E and Investor F purportedly updated financials with the same
false and misleading information about Medly’s supposed revenues.
148. Relying on those financial statements, Investor E and Investor F both invested
$200,000 in the second close of Medly’s Series C fundraising round.
149. Finally, Patel provided additional false and misleading financial statements to
Investor G related to the second close of Medly’s Series C fundraise.  Specifically, in January
2022, Patel sent multiple quarterly financial statements to Investor G with inaccurate revenue in
advance of Investor G’s decision to invest in Medly.  Those financial statements also overstated
Medly’s quarterly revenue for each quarter of 2020, including overstatements of quarterly
revenue by as much as fourteen percent.
150. For Investor G, the revenue numbers that Patel had provided, the accuracy of
those numbers, and the fact that Patel was fully disclosing Medly’s financial performance to date
were important to its decision to participate in the second close of Medly’s Series C fundraising
round.  In July 2022, Investor G invested $600,000 in that round.
151. Before their investments in the second close of Medly’s Series C round, neither
Patel nor Horowitz disclosed to Investor A, Investor C, Investor D, Investor E, or Investor F
what Patel and Horowitz knew or recklessly disregarded about Medly’s myriad accounting
problems and fraudulent revenue.
V. PATEL AND HOROWITZ MADE ADDITIONAL FALSE AND MISLEADING
STATEMENTS TO MEDLY’S BOARD AND BOARD OBSERVERS
152. Patel’s and Horowitz’s false and misleading statements to Medly’s Board and
Board observers, including when those entities were considering participating in Medly’s Series
C fundraising round, were not limited to overstatements of Medly’s revenue and revenue growth.

32
Those misstatements also concerned a loan obtained by Medly in exchange for Medly pledging
all of its accounts receivable.
153. In May 2021, Patel negotiated and caused Medly to enter a contract for a
factoring loan, a type of financing in which a business sells their actual or projected accounts
receivable or unpaid invoices in exchange for near-term funding.  As part of the loan, Medly
sold, or “pledged,” all of its accounts receivable to the lender.
154. Medly had, however, already sold those same accounts receivable to other lenders
and Patel had thus caused Medly’s receivables to be double-pledged, creating possible cash flow
problems for Medly and the potential for a serious default by Medly on its loans.
155. Horowitz knew about the May 2021 factoring loan at the time and that its terms
meant that Medly’s accounts receivable were double-pledged.
156. Neither Patel nor Horowitz disclosed the May 2021 factoring loan to Medly’s
Board or its existing or potential investors, including to those serving on the Board.  To the
contrary, both Patel and Horowitz provided financial statements and reporting to the Board and
other outside investors that hid the loan.
157. For example, in November 2021, while Medly was marketing its Series C
fundraise, Patel and Horowitz considered disclosing the factoring loan in a presentation to the
Board and the Board observers—which included representatives of several entities that later
made additional investments in Medly’s Series C, including Investor A, Investor C, Investor D,
and Investor E.
158. Instead, Patel and Horowitz decided to present Medly’s financials in a manner
that would conceal the May 2021 factoring loan, which they knew or recklessly disregarded was
false and misleading.

33
159. In that presentation, Patel and Horowitz deliberately combined the amount of the
factoring loan with other Medly debt and labeled it as “A/R Revolver,” which made it appear as
if Medly had one line of credit, as opposed to multiple lines of credit from multiple lenders.  By
lumping the May 2021 factoring loan in with another line of credit, rather than disclosing it to
the Board, Patel and Horowitz concealed that Medly’s accounts receivable had been double-
pledged.
VI. AT THE BOARD’S URGING, HOROWITZ WAS DEMOTED
160. By at least early 2022, Medly investors who also served on Medly’s Board were
concerned with Horowitz’s inadequate explanations about apparent irregularities and
discrepancies in Medly’s financials.
161. Given these concerns, in April 2022, the Board urged Patel to remove Horowitz
as Medly’s CFO, and Patel removed Horowitz from that role.
162. However, Patel then moved Horowitz to another supervisory role, as Medly’s
Executive Vice President of Finance & Accounting, and gave him extra compensation.  In
Horowitz’s new role he continued to be responsible for overseeing Medly’s FP&A and
accounting personnel, and critical to the review, revision, and approval of financial information
for the Board and investors.
163. Although the role was a demotion, Patel increased Horowitz’s salary and
renegotiated the terms of a $200,000 loan that Medly had previously made to Horowitz to make
the terms more favorable to Horowitz, including making the loan forgivable if Horowitz
remained employed at Medly until June 2022.  Then, in June 2022, Patel forgave the entirety of
the loan.
164. Medly’s by-laws required that its Board review and approve loans to employees,
like the loan to Horowitz and its subsequent amendment, but neither Patel nor Horowitz

34
disclosed to Medly’s Board that Patel had caused Medly to loan $200,000 to Horowitz, that Patel
modified the terms to favor Horowitz after Horwitz was removed as Medly’s CFO, or that Patel
forgave the loan—and the Board never approved those actions.
165. The next month, July 2022, Horowitz resigned from Medly.
VII. MEDLY EMPLOYEES UNCOVERED MILLIONS OF DOLLARS OF
ADDITIONAL FAKE PRESCRIPTIONS
166. Between approximately January 2022 and August 2022, several Medly employees
discovered and reported to Patel overstatements in Medly’s revenue and the fact that Medly had
improperly recognized revenue for fake prescriptions.
167. In early 2022, two Medly regional managers observed what they believed was
unusual revenue in several monthly BI Team reports.  In those reports, the regional managers
each noted that Medly’s revenue appeared to increase substantially in the last few days of each
month.  Based on a discussion with Patel in April 2022, one of the regional managers concluded
that at least one of the revenue spikes was designed to cause Medly to appear to meet its monthly
revenue target.
168. Both regional managers investigated the revenue spikes within PrimeRx, and the
patient profiles and insurance companies to which the revenue spikes purportedly related.  They
determined that the monthly revenue spikes were caused by hundreds of fake prescriptions
linked to an insurance code called “EXPINS” and that EXPINS was not associated with a
legitimate health insurance company.
169. In late July 2022, the regional managers informed their supervisor that they had
discovered that for the period between January 1, 2022, and June 8, 2022, more than 600
prescriptions processed through a single Medly pharmacy location were illegitimate, associated
with EXPINS, and had generated millions of dollars in purported revenue.

35
170. That supervisor then separately reviewed PrimeRx data and determined that,
between November 2021 and July 2022, Medly had recognized more than $67 million in revenue
associated with EXPINS.  On July 29, 2022, the supervisor emailed Patel, Medly’s General
Counsel, and Medly’s CCO about the EXPINS issue, telling them, “something doesn’t look right
with our revenue numbers.”
171. Subsequently, other employees reviewed PrimeRx and EXPINS-related data and
discovered claims for millions of dollars in fraudulent revenue that Medly had recognized in
2021 and 2022.  Those employees pointed Patel and Medly’s CCO to these fake prescriptions
and revenue issues.  Immediately thereafter, Bhatt deleted hundreds of EXPINS-related
prescriptions and changed the insurance codes for other claims to associate them within Medly’s
systems with legitimate insurance companies.
172. Despite knowing or recklessly disregarding for years that Medly’s revenue had
been overstated and having been told about the EXPINS scheme and its further distortion of
Medly’s actual revenue to the tune of tens of millions of dollars, Patel tried to hide it from the
Board.  He told certain of the Board members only that Medly had located some errant
prescriptions that had been misbilled and that would affect about $2 million of Medly’s profit.
173. In fact, as Patel knew or recklessly disregarded, Medly’s problem was orders of
magnitude larger:  it had recognized more than $70 million in fake revenue.
174. Even after the EXPINS issue was widely known, Patel continued to try to raise
funds from investors using the fake revenue numbers, including sending a prospective investor
information about Medly that overstated Medly’s revenue for 2020 and 2021 by tens of millions
of dollars.  That prospective investor decided not to invest.

36
VIII. MEDLY’S BOARD TERMINATED PATEL AND MEDLY ENTERED
BANKRUPTCY
175. On August 18, 2022, Medly’s Board informed Patel that it had scheduled a
special meeting for the following day.
176. Patel immediately contacted Medly’s drug vendor and renegotiated Medly’s
existing contract with the vendor—under which Patel had personally guaranteed Medly’s debt to
the vendor—to cause the vendor to use funds owed to Medly for insurance rebates to pay a
portion of Medly’s outstanding debt.  Then, the vendor withdrew at least $1.8 million from
Medly’s credit operating account to pay down Medly’s debt.  As a result, Patel personally
guaranteed far lower amounts owed by Medly to the vendor.
177. On August 19, 2022, the Board terminated Patel from Medly.  That day, the
Board also removed the CCO and suspended him from Medly.
178. The Board then retained outside counsel to investigate potentially fraudulent
conduct, including Medly’s fraudulently inflated revenue.  When that law firm contacted Bhatt in
October 2022, he resigned from Medly.
179. On December 9, 2022, Medly filed for Chapter 11 bankruptcy protection.
180. Subsequently, Medly sold all of its assets for approximately $19 million, far less
than the more than $100 million in debt it owed and a fraction of its purported more than $900
million valuation at the time of its Series C fundraise.
181. In April 2023, Medly converted its Chapter 11 bankruptcy filing to a Chapter 7
liquidation.
182. Investors in Medly’s Series C fundraise (and all other outside investors in Medly
equity and convertible notes) lost the full value of their investments.

37
FIRST CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)
(Patel and Horowitz)
183. The SEC re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 182.
184. Patel and Horowitz, directly or indirectly, singly or in concert, in the offer or sale
of securities and by the use of the means or instruments of transportation or communication in
interstate commerce or the mails, (i) knowingly or recklessly have employed one or more
devices, schemes or artifices to defraud, (ii) knowingly, recklessly, or negligently have obtained
money or property by means of one or more untrue statements of a material fact or omissions of
a material fact necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading, and/or (iii) knowingly, recklessly, or negligently
have engaged in one or more transactions, practices, or courses of business which operated or
would operate as a fraud or deceit upon the purchaser.
185. By reason of the foregoing, Patel and Horowitz, directly or indirectly, singly or in
concert, have violated and, unless enjoined, will again violate Securities Act Section 17(a) [15
U.S.C. § 77q(a)].
SECOND CLAIM FOR RELIEF
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder
(Patel and Horowitz)

186. The SEC re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 182.
187. Patel and Horowitz, directly or indirectly, singly or in concert, in connection with
the purchase or sale of securities and by the use of means or instrumentalities of interstate
commerce, or the mails, or the facilities of a national securities exchange, knowingly or
recklessly have (i) employed one or more devices, schemes, or artifices to defraud, (ii) made one

38
or more untrue statements of a material fact or omitted to state one or more material facts
necessary in order to make the statements made, in light of the circumstances under which they
were made, not misleading, and/or (iii) engaged in one or more acts, practices, or courses of
business which operated or would operate as a fraud or deceit upon other persons.
188. By reason of the foregoing, Patel and Horowitz, directly or indirectly, singly or in
concert, have violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15
U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
THIRD CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)(1) and (3)
(Bhatt)

189. The SEC re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 171 and 178 through 182.
190. Bhatt, directly or indirectly, singly or in concert, in the offer or sale of securities
and by the use of the means or instruments of transportation or communication in interstate
commerce or the mails, (i) knowingly or recklessly has employed one or more devices, schemes
or artifices to defraud, and/or (ii) knowingly, recklessly, or negligently has engaged in one or
more transactions, practices, or courses of business which operated or would operate as a fraud
or deceit upon the purchaser.
191. By reason of the foregoing, Bhatt, directly or indirectly, singly or in concert has
violated and, unless enjoined, will again violate Securities Act Section 17(a)(1) and (3) [15
U.S.C. § 77q(a)(1), (3)].

39
FOURTH CLAIM FOR RELIEF
Violations of Exchange Act Section 10(b) and Rule 10b-5(a) and (c) Thereunder
(Bhatt)
192. The SEC re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 171 and 178 through 182.
193. Bhatt, directly or indirectly, singly or in concert, in connection with the purchase
or sale of securities and by the use of means or instrumentalities of interstate commerce, or the
mails, or the facilities of a national securities exchange, knowingly or recklessly (i) employed
one or more devices, schemes, or artifices to defraud, and/or (ii) engaged in one or more acts,
practices, or courses of business which operated or would operate as a fraud or deceit upon other
persons.
194. By reason of the foregoing, Bhatt, directly or indirectly, singly or in concert, has
violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]
and Rules 10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5(a) and (c)].
FIFTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Securities Act Section 17(a)(2)
(Bhatt)
195. The SEC re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 171 and 178 through 182.
196. As alleged above, Patel and Horowitz violated Securities Act Section 17(a)(2) [15
U.S.C. § 77q(a)(2)].
197. Bhatt knowingly or recklessly provided substantial assistance to Patel and
Horowitz with respect to their violations of Securities Act Section 17(a)(2) [15 U.S.C.
§ 77q(a)(2)].
198. By reason of the foregoing, Bhatt is liable pursuant to Securities Act Section
15(b) [15 U.S.C. § 77o(b)] for aiding and abetting Patel’s and Horowitz’s violations of Securities

40
Act Section 17(a)(2) [15 U.S.C. § 77q(a)(2)] and, unless enjoined, Bhatt will again aid and abet
these violations.
SIXTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Exchange Act Section 10(b) and Rule 10b-5(b)
(Bhatt)
199. The SEC re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 171 and 178 through 182.
200. As alleged above, Patel and Horowitz violated Exchange Act Section 10(b)
[15 U.S.C. § 78j(b)] and Rule 10b-5(b) [17 C.F.R. § 240.10b-5(b)] thereunder.
201. Bhatt knowingly or recklessly provided substantial assistance to Bhatt and
Horowitz with respect to their violations of Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and
Rule 10b-5(b) [17 C.F.R. § 240.10b-5b] thereunder.
202. By reason of the foregoing, Bhatt is liable pursuant to Exchange Act Section 20(e)
[15 U.S.C. § 78t(e)] for aiding and abetting Patel’s and Horowitz’s violations of Exchange Act
Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5(b) [17 C.F.R. § 240.10b-5(b)] thereunder and,
unless enjoined, Bhatt will again aid and abet these violations.
PRAYER FOR RELIEF
 WHEREFORE, the SEC respectfully requests that the Court enter a Final Judgment:
I.
Permanently enjoining Defendants and their agents, servants, employees and attorneys
and all persons in active concert or participation with any of them from violating, directly or
indirectly, Securities Act Section 17(a) and Exchange Act Section 10(b) [15 U.S.C. §§ 77q(a)
and 78j(b)], and Rule 10b-5 [17 C.F.R. § 240.10b-5].

41
II.
Ordering Defendants to disgorge all ill-gotten gains they received directly or indirectly,
with pre-judgment interest thereon, as a result of the alleged violations, pursuant to Exchange
Act Sections 21(d)(3), 21(d)(5), and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), 78u(d)(7)];
III.
Ordering Defendants to pay civil monetary penalties under Securities Act Section 20(d)
[15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)];
IV.
Permanently prohibiting each Defendant from serving as an officer or director of any
company that has a class of securities registered under Exchange Act Section 12 [15 U.S.C. §
78l] or that is required to file reports under Exchange Act Section 15(d) [15 U.S.C. § 78o(d)],
pursuant to Securities Act Section 20(e) [15 U.S.C. § 77t(e)] and Exchange Act Section 21(d)(2)
[15 U.S.C. § 78u(d)(2)]; and
V.
Granting any other and further relief this Court may deem just and proper.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

42
JURY DEMAND
 The Commission demands a trial by jury.

Dated:  New York, New York
September 12, 2024
     /s/ Antonia Apps               .
ANTONIA M. APPS
REGIONAL DIRECTOR
Sheldon L. Pollock
 Judith A. Weinstock
Christopher M. Colorado
Suzanne M. Bettis
Heather Marshall Molavi
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street
Suite 20-100
New York, NY 10004-2616
212-336-9143 (Colorado)
[email protected]

ANTONIA M. APPS 
REGIONAL DIRECTOR 
Sheldon L. Pollock 
Judith A. Weinstock 
Christopher M. Colorado 
Suzanne M. Bettis 
Heather Marshall Molavi 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
100 Pearl Street, Suite 20-100 
New York, NY 10004-2616 
212-336-9143 (Colorado)
[email protected]

UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

-against-

MARG PATEL, ROBERT HOROWITZ, and 
CHINTANKUMAR BHATT,    

Defendants.  

COMPLAINT 

1:24-cv-06405

JURY TRIAL DEMANDED 

Plaintiff Securities and Exchange Commission (“SEC”), for its Complaint against 

Defendants Marg Patel (“Patel”), Robert Horowitz (“Horowitz”), and Chintankumar Bhatt 

(“Bhatt”) (collectively, “Defendants”), alleges as follows: 

SUMMARY 

1. From at least February 2021 through August 2022, defendants—Patel, the former

chief executive officer of Medly Health, Inc. (“Medly”), a now-defunct privately held online 

pharmacy company; Horowitz, Medly’s former chief financial officer; and Bhatt, Medly’s 

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former head of Rx Operations—deceived investors about Medly’s business, including through 

repeated false and misleading misrepresentations about Medly’s growth and revenues. 

2. Medly was marketed to investors as a company that was disrupting the pharmacy 

industry by providing a full-service online pharmacy experience, from the moment a doctor 

wrote a prescription through delivery of the prescribed medication to the patient, that would limit 

the need for brick-and-mortar locations and minimize the associated costs.  Investors were told 

that Medly was succeeding wildly as the “nation’s fastest-growing digital pharmacy” with 

exploding revenue growth. 

3. In reality, much of Medly’s revenue and revenue growth was built on fake 

prescriptions and accounting irregularities.   

4. For years, Bhatt had been creating hundreds of fake prescriptions for high-dollar 

medications in Medly’s internal pharmacy management system resulting in millions of dollars of 

accounts receivable or revenue that was not real and that Medly would never receive.   

5. At the same time, Medly restricted its U.S.-based accounting and finance 

employees from that internal Medly system—including the raw data showing the fake 

prescriptions and resulting fake revenue—and required those employees to outsource and rely on 

analyses of that data by an India-based subsidiary, forcing the U.S.-based Medly teams to 

incorporate financial information from the subsidiary that was replete with irregularities and 

inaccuracies.   

6. Despite these restrictions, several Medly employees discovered problems in 

Medly’s financials and identified material revenue overstatements and they repeatedly notified 

Patel and Horowitz of the irregularities and overstatements. 

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7. Although Patel and Horowitz knew or recklessly disregarded that Medly’s 

revenue numbers were wrong and materially overstated, they each used those inflated numbers to 

educate potential investors about Medly’s business and, based on false and misleading financial 

statements, persuaded those investors to buy more than $170 million worth of Medly stock and 

convertible notes. 

8. By April 2022, the scheme began to unravel.  At the urging of Medly’s Board of 

Directors (the “Board”), Horowitz was demoted and he resigned soon thereafter.  When Bhatt’s 

fake prescriptions and Medly’s other accounting issues became known by many within the 

company, the Board fired Patel.  Bhatt also resigned.  Medly’s business quickly deteriorated and 

it filed for Chapter 11 bankruptcy protection in December 2022 and, in April 2023, converted 

that action to a Chapter 7 liquidation.  Those who had invested in Medly lost their entire 

investment.  

VIOLATIONS 

9. By virtue of the foregoing conduct and as alleged further herein, Patel and 

Horowitz violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. 

§ 77q(a)] and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. 

§ 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

10. By virtue of the foregoing conduct and as alleged further herein, Bhatt violated 

Sections 17(a)(1) and 17(a)(3) of the Securities Act [15 U.S.C. § 77q(a)(1) and (3)], and Section 

10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R. 

§ 240.10b-5(a) and (c)].  Bhatt further aided and abetted Patel’s and Horowitz’s violations of 

Securities Act Section 17(a)(2) [15 U.S.C. § 77q(a)(2)] and Section 10(b) of the Exchange Act 

[15 U.S.C. § 78j(b)] and Rule 10b-5(b) thereunder [17 C.F.R. § 240.10b-5(b)].  

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11. Unless Defendants are restrained and enjoined, they will engage in the acts, 

practices, transactions, and courses of business set forth in this Complaint or in acts, practices, 

transactions, and courses of business of similar type and object.   

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

12. The SEC brings this action pursuant to the authority conferred upon it by 

Securities Act Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b), 77t(d)] and Exchange Act Section 

21(d) [15 U.S.C. § 78u(d)].  

13. The SEC seeks a final judgment:  (a) permanently enjoining each Defendant from 

violating, directly or indirectly, Securities Act Section 17(a) and Exchange Act Section 10(b) [15 

U.S.C. §§ 77q(a) and 78j(b)], and Rule 10b-5 [17 C.F.R. § 240.10b-5]; (b) ordering Defendants 

to disgorge all ill-gotten gains they received as a result of the violations alleged here and to pay 

prejudgment interest thereon, pursuant to Exchange Act Sections 21(d)(3), 21(d)(5), and 21(d)(7) 

[15 U.S.C. §§ 78u(d)(3), 78u(d)(5), 78u(d)(7)]; (c) ordering Defendants to pay civil money 

penalties pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)] and Exchange Act Section 

21(d)(3) [15 U.S.C. § 78u(d)(3)]; (d) permanently prohibiting each Defendant from serving as an 

officer or director of any company that has a class of securities registered under Exchange Act 

Section 12 [15 U.S.C. § 78l] or that is required to file reports under Exchange Act Section 15(d) 

[15 U.S.C. § 78o(d)], pursuant to Securities Act Section 20(e) [15 U.S.C. § 77t(e)] and Exchange 

Act Section 21(d)(2) [15 U.S.C. § 78u(d)(2)]; and (e) ordering any other and further relief the 

Court may deem just and proper.  

JURISDICTION AND VENUE 

14. This Court has jurisdiction over this action pursuant to Securities Act Section 

22(a) [15 U.S.C. § 77v(a)] and Exchange Act Section 27 [15 U.S.C. § 78aa].  

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15. Defendants, directly and indirectly, have made use of the means or 

instrumentalities of interstate commerce or of the mails in connection with the transactions, acts, 

practices, and courses of business alleged herein. 

16. Venue lies in this District under Securities Act Section 22(a) [15 U.S.C. § 77v(a)] 

and Exchange Act Section 27 [15 U.S.C. § 78aa] because certain of the transactions, acts, 

practices, and courses of business alleged herein occurred within this District.  Among other 

things, Medly maintained its headquarters in Brooklyn, New York, where its employees, 

including Defendants, regularly conducted business. 

DEFENDANTS 

17. Patel, age 36, is a resident of Staten Island, New York.  Patel co-founded Medly 

and served as its CEO until August 2022, when Medly’s Board terminated him.  As CEO, Patel 

was responsible for Medly’s operations; raising money from investors; and reviewing and 

approving financial information for, and providing that information to, Medly’s Board and its 

prospective and existing investors.  Patel was also a director of Medly’s India-based subsidiary, 

Medly Software Systems LLP.  During the SEC’s investigation that preceded this action, Patel 

invoked his Fifth Amendment privilege against self-incrimination, refused to produce documents 

in response to an SEC subpoena, and refused to answer all substantive questions during sworn 

testimony. 

18. Horowitz, age 39, is a resident of Colts Neck, New Jersey.  Horowitz earned a 

bachelor’s degree in finance and a master’s degree in business administration and previously 

held Series 7, 63, and 65 securities representative and investment adviser licenses.  Between 

approximately December 2019 and April 2022, Horowitz was Medly’s CFO.  In April 2022, 

Horowitz was demoted to a role as Medly’s Executive Vice President of Finance & Accounting 

and remained in that position until he resigned in July 2022.  In both roles, Horowitz managed 

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Medly’s accounting and financial planning and analysis (“FP&A”) teams.  As CFO, Horowitz 

was also responsible for drafting, reviewing, and approving financial information for, and 

providing that information to, Medly’s Board and its prospective and existing investors. 

19. Bhatt, age 38, is a resident of Monroe, New Jersey.  Between approximately 

January 2019 and October 2022, Bhatt was Medly’s Head of Rx Operations.  Before Medly, 

Bhatt was a long-time associate of Patel and of Patel’s family and had worked (and continues to 

work) at other pharmacies in which Patel has an ownership stake.  During the SEC’s 

investigation that preceded this action, Bhatt invoked his Fifth Amendment privilege against 

self-incrimination, refused to produce documents in response to a SEC subpoena, and refused to 

answer all substantive questions during sworn testimony. 

RELEVANT ENTITIES 

20. Medly Health, Inc. (“Medly”), formed in 2017 and incorporated in 2018 in 

Delaware, had its principal place of business in Brooklyn, New York.  Medly was privately held 

and purported to be a “full-service digital pharmacy platform” with same-day prescription 

delivery.  Medly also maintained physical pharmacy locations and distribution centers.  Medly is 

currently in bankruptcy proceedings under Chapter 7 of the U.S. Bankruptcy Code. 

21. Medly Software Systems LLP (“Medly Software”), incorporated in 2019 in 

India, is an entity registered to do business in India and with its principal place of business in 

Pune, India.  Medly Software was a subsidiary of Medly.  During the relevant period, Medly 

Software provided accounting, financial, and data analytics services to Medly, including through 

Medly Software’s so-called “Business Intelligence Team” or “BI Team.” 

22. Investor A is a venture capital firm that invested more than $60 million in Medly, 

including more than $27 million in Medly’s Series C fundraising round.  Beginning in February 

2019, Investor A held a seat on Medly’s Board. 

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23. Investor B is a venture capital firm that invested approximately $5 million in 

Medly, including approximately $1 million in Medly’s Series C fundraising round.  Beginning in 

March 2019, Investor B had observer rights on Medly’s Board. 

24. Investor C is a growth equity firm that invested more than $50 million in Medly, 

including more than $20 million in Medly’s Series C fundraising round.  Beginning in March 

2020, Investor C held a seat on Medly’s Board. 

25. Investor D is a growth equity firm that invested more than $85 million in 

Medly’s Series C fundraising round.  Beginning in May 2021, Investor D held a seat on Medly’s 

Board. 

26. Investor E is a venture capital firm that invested more than $10 million in 

Medly’s Series C fundraising round.  Beginning in July 2021, Investor E had observer rights on 

Medly’s Board. 

27. Investor F is a venture capital firm that invested more than $10 million in 

Medly’s Series C fundraising round. 

28. Investor G is a venture capital firm that invested more than $7 million in Medly’s 

Series C fundraising round. 

29. Investor H is a venture capital firm that invested approximately $500,000 in 

Medly’s Series C fundraising round. 

30. Investor I is a growth equity firm that invested approximately $4.5 million in 

Medly’s Series C fundraising round. 

FACTS 

I. MEDLY WAS OPERATED BY DEFENDANTS 

31. Since before 2017, Patel and his family owned, in full or in part, several New 

York-based pharmacies.  Patel served on the boards of directors of some of those pharmacies. 

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32. In 2017, Patel, together with his brother, founded Medly to be a full-service 

online pharmacy through which medical providers could submit prescriptions, patients could 

have those prescriptions filled, and the prescribed medications would be delivered to the patients. 

33. At its formation, Patel became Medly’s CEO.  In that role, Patel oversaw and 

managed Medly’s operations and business development and Medly’s fundraising from investors, 

among other things. 

34. Patel and his brother initially funded Medly through $900,000 in unsecured loans, 

and, at that time, Patel and his brother each owned more than forty percent of Medly. 

35. Thereafter, Medly earned revenue by processing prescriptions from medical 

providers and their patients, maintaining an inventory of medications, using that inventory to fill 

prescriptions, validating patients’ insurance coverage, filing claims with health insurance 

companies, delivering prescribed medications to patients, and obtaining payment from patients 

and insurance companies. 

36. Medly began significantly expanding its staff in 2018, growing from 

approximately 120 employees at the end of that year to more than 380 employees by the end of 

2019.  During that time, Medly also expanded its physical footprint, which included both 

pharmacy locations and distribution centers, from New York and New Jersey to Pennsylvania. 

37. In December 2018, Medly hired a long-time associate of Patel—who had worked 

at multiple pharmacies associated with Patel and Patel’s family—to be a Medly Vice President 

and its Director of Pharmacy and Compliance and, later, Medly’s Chief Compliance Officer 

(“Medly CCO”).  In those roles, the Medly CCO oversaw Medly’s compliance with regulatory 

requirements and internal policies and procedures, including concerning insurance claims and 

data management.  The Medly CCO was also appointed to serve on Medly’s Board. 

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38. In or around January 2019, Medly hired Bhatt as the Director of Rx Operations.  

Later, Bhatt’s title changed to Head of Rx Operations.  In those roles, Bhatt oversaw Medly’s 

prescription business operations, including Medly’s pharmacy management systems and 

medication inventory management. 

39. During his employment at Medly, Bhatt received options to purchase more than 

one million shares of Medly common stock. 

40. In December 2019, Medly hired Horowitz as its CFO.  In that role, Horowitz 

analyzed the financial performance of Medly’s business operations and prepared financial 

reports and forecasts for Medly’s Board and for actual and potential investors.  Horowitz also 

made presentations concerning Medly’s financial performance to Medly’s Board and to actual 

and potential investors, and he managed and was responsible for Medly’s accounting and FP&A 

personnel.   

41. During his employment at Medly, Horowitz received options to purchase more 

than three and a half million shares of Medly common stock. 

II. MEDLY CONDUCTED TWO INITIAL FUNDRAISING ROUNDS AND 
INVESTORS IN THOSE ROUNDS JOINED MEDLY’S BOARD 

42. Between March 2019 and May 2020, Medly conducted two fundraising rounds 

from outside sources, its Series A and Series B fundraises. 

43. In those fundraising rounds, each of which were private placements, Medly sold 

preferred equity shares and notes that were convertible to preferred equity shares to outside 

accredited investors for more than $75 million.1 

 
1 In general, a private placement is an offering and/or sale of securities that is exempt from the 
registration requirements of the federal securities laws and the Commission, including, for 
example, because the offering and sale is only to accredited investors, among other requirements. 

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44. Investor A, Investor B, and Investor C each invested in one or both of the Series 

A and Series B rounds.  In connection with those investments, Investor A and Investor C each 

obtained Board seats and Investor B obtained Board observer rights. 

45. Based on the Series A fundraise, Medly’s valuation was approximately $50 

million.  As of the subsequent Series B fundraise, Medly’s valuation had grown to approximately 

$270 million. 

III. MEDLY CREATED FAKE PRESCRIPTIONS AND CONCEALED FALSELY 
INFLATED REVENUE 

46. Since at least approximately January 2020, Medly’s operations and accounting 

were plagued with issues that resulted in its financial statements being inaccurate, including due 

to hundreds of fake prescriptions created by Bhatt in Medly’s systems.    

47. Both Patel and Horowitz knew that Medly’s revenue numbers were inaccurate, 

yet each used those inaccurate numbers to raise an additional more than $170 million from 

outside investors in Medly’s subsequent Series C fundraising round. 

A. Bhatt Created Fake Prescriptions and Medly Recognized Revenue  
From Them. 

48. Medly earned most, if not all, of its revenue by selling medications to fill 

prescriptions, either from payments from health insurance companies or patients.  

49. Medly used pharmacy management software called “PrimeRx.”   

50. Through PrimeRx, Medly managed patient accounts, health insurance company 

details, prescriptions, medication inventory, and billing to patients and health insurance 

companies, among other things. 

51. Within Medly, each employee’s access to and permissions within PrimeRx 

depended on the employee’s role.  For example, some employees were permitted to view patient 

profiles and those patients’ prescription needs, while others were not.  Similarly, some 

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employees were permitted to create data within and delete data from PrimeRx, while others were 

not.   

52. Bhatt had full administrative-level access to PrimeRx features.  

53. Starting no later than November 2020, Bhatt began creating entries in PrimeRx 

for prescriptions that Medly had supposedly filled but that, in truth, did not actually exist and 

were never filled by Medly.  These purported prescriptions—many of which were for high-

dollar, specialty medications—were fake.   

54. In many instances, Bhatt entered the fake prescriptions to correspond with former 

Medly patients who had been marked within Medly’s records as deceased.  In other instances, 

Bhatt entered the fake prescriptions to correspond to fake patient profiles within PrimeRx that 

Bhatt had also concocted and that did not belong to any actual person. 

55. In total, from at least November 2020 through July 2022, Bhatt created hundreds 

of fake prescriptions for high-dollar medications that Medly had supposedly (but had not 

actually) filled and delivered, including medications that cost more than $172,000 each. 

56. Bhatt then caused these fake prescriptions to appear as if they had been billed 

within PrimeRx to health insurance companies.  The billing, like the prescriptions, was fake.  

The companies to which the fake prescriptions had supposedly been billed either did not exist or 

were not health insurance companies.  For example, within PrimeRx, Bhatt created a Bank 

Identification Number or “BIN”—which health insurance plans use to process electronic 

pharmacy claims—for two health insurance companies that did not exist and then Bhatt created 

entries showing that the fake prescriptions had been “billed” to the BIN for these fake health 

insurance companies. 

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57. Bhatt also regularly created and disseminated within Medly, including to Patel 

and Horowitz, reports showing Medly’s periodic operational and financial results that included 

accounts receivable or revenue related to his fake prescriptions. 

58. As Bhatt knew or recklessly disregarded, these fake prescriptions and the 

purported payments that Medly supposedly received or was to receive related to them were 

incorporated into Medly’s financial statements—indeed, Medly recognized millions of dollars of 

revenue from them.   

59. Bhatt also knew or recklessly disregarded that Medly was engaged in fundraising 

from investors during the time he was creating the fake prescriptions and that financial 

statements incorporating those fake prescriptions were provided to existing or potential Medly 

investors. 

60. Bhatt tried to conceal his fraudulent conduct.  He caused the majority of the fake 

prescriptions to be associated with Medly’s three busiest pharmacy locations, where they might 

be less conspicuous, and typically created the fake information within PrimeRx well outside of 

normal working hours, when other Medly employees were less likely to see his manipulation 

happening.  Bhatt then regularly revised the fake information he had input into PrimeRx, 

including moving the fake prescriptions from one fake patient profile to another and from one 

BIN number to another, to attempt to keep his conduct from being discovered. 

61. Bhatt’s conduct was further obfuscated by the way in which Medly performed its 

financial and accounting work and structured its financial and accounting teams.   

62. Medly did not give many of its own accounting and FP&A personnel, based in the 

United States, direct access to PrimeRx or the Medly operational and financial data maintained 

therein.   

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63. Rather, Medly required its accounting and FP&A personnel to rely on analyses of 

that data by an India-based subsidiary, Medly Software. 

64. Within Medly Software, the analyses were done by the so-called “Business 

Intelligence” or “BI Team,” run by a long-time business partner of Patel, that regularly 

coordinated with Bhatt and, unlike much of Medly’s own staff, had access to PrimeRx.  The BI 

Team revised, aggregated, and analyzed PrimeRx data and created reports concerning Medly’s 

financial performance.   

65. For example, the BI Team used PrimeRx to review prescription and sales data 

from Medly’s individual locations and distribution centers and on a consolidated basis; and to 

aggregate and analyze that data to calculate Medly’s sales, inventory, and cost of goods sold.  

The BI Team routinely overstated Medly’s revenue, including because it incorporated Bhatt’s 

fake prescriptions and due to other irregularities and inaccuracies. 

66. The BI Team sent its financial reports and analyses to Medly’s U.S.-based 

accounting and FP&A personnel who, in turn, relied on those reports and analyses—which were 

inaccurate—to create financial reports, statements, and forecasts for Medly’s Board and existing 

and potential investors.   

B. Before Medly’s Series C Fundraising Round, Patel and Horowitz Knew, 
Or Recklessly Disregarded, that Medly’s Revenue was Overstated. 

67. In late 2020, Investor C, while doing diligence related to a possible investment in 

Medly, expressed concerns to Patel and Horowitz about a potential accounting irregularity:  a 

substantial and growing debit balance in a Medly expense accrual account that was listed under 

Medly’s Other Current Liabilities (“OCL”) line item. 

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68. In general, OCL reflect liabilities that a company expects to pay within one year.  

These liabilities are short-term in nature and are meant to include various types of liabilities that 

do not fall under more specific categories like accounts payable or short-term debt. 

69. An expense accrual account generally represents expenses a company has 

incurred but has not yet paid.  This might include, for example, salary a company owes for a 

particular time period but has not paid.  An expense accrual account is intended to ensure that 

expenses are recognized in the period in which they occur even if paid later. 

70. In accrual accounting, which Medly used, the entries in an expense accrual 

account are generally credits on the company’s balance sheet, and not debits, because they are 

amounts that have been earmarked for future payment and will be removed and reduced to zero 

when paid. 

71. Because an expense accrual account typically reflects a credit balance consisting 

of the sum of expenses the company has incurred but has not yet paid, a debit balance in an 

expense accrual account—like that noted by Investor C to Patel and Horowitz—is unusual and 

can suggest an error in the financial statements. 

72. In or around November 2020, after Investor C identified the potential issue with 

the OCL account, Medly engaged multiple accounting firms to assist in “cleaning up” its 

financial statements, including reviewing and reconciling Medly’s accounts and reviewing and 

adjusting any errors in those financial statements. 

73. Shortly thereafter, Horowitz told one of the accounting firms that he believed 

Medly’s revenue numbers could be overstated by as much as twenty percent. 

74. That accounting firm understood from Horowitz that Medly’s OCL line item was 

being used as a “plug,” i.e., a line item to record the difference between revenue Medly included 

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in its financial statements, on the one hand, and revenue that was actually supported by Medly’s 

cash and accounts receivable, on the other hand.2  Thus, this “plug” concealed material errors in 

Medly’s financial statements, including concerning its revenue. 

75. As discussed below, certain other personnel from Medly’s accounting and FP&A 

teams also recognized that the OCL and expense accrual account line items (i.e., the “plug”)—

and the substantial growth of those line items over time—were unusual and, in late 2020 and 

early 2021, they began to try to obtain and analyze the underlying data.  Those employees 

determined that the BI Team had been reporting Medly revenue in amounts that were 

significantly higher than Medly’s actual revenue as calculated from Medly’s raw data. 

76. In January 2021, a senior analyst on Medly’s FP&A team (“FP&A Senior 

Analyst”) obtained raw data from PrimeRx from another employee who had access to that 

system.  The FP&A Senior Analyst compared the raw PrimeRx data against the BI Team’s prior 

financial reports and determined that the BI Team had repeatedly overstated Medly’s revenue. 

77. The FP&A Senior Analyst told Horowitz about these overstatements and also that 

the FP&A Senior Analyst understood, based on their analysis of the BI Team’s overstatements, 

that Medly, too, had been overstating revenue.  The FP&A Senior Analyst also told Horowitz 

that Medly should not fundraise based on the overstated revenue and asked Horowitz to 

communicate that to Patel. 

 
2 In or around December 2020, Medly reported to its Board that it had reversed approximately 
$1.8 million of revenue from early 2020 purportedly related to uncollected copayments.  The 
impact of the accounting irregularities and fake prescriptions alleged herein were exponentially 
larger than this reported change. 

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78. In February 2021, the FP&A Senior Analyst discussed the BI Team’s revenue 

overstatements with both Patel and Horowitz and provided Patel with a specific example of how 

the BI Team reports had led to incorrect revenue recognition. 

79. Horowitz then told the FP&A Senior Analyst that Patel believed the FP&A Senior 

Analyst had been “digging too much” into the discrepancies between the BI Team reports and 

Medly’s raw financial data. 

80. Also in or around February 2021, Horowitz instructed a Medly senior accountant 

(“Senior Accountant”)—who had expressed concerns to Horowitz about the accuracy of 

financial statements provided to Medly’s Board and investors—to track internally what Medly 

employees believed were Medly’s accurate financial numbers, including revenue, separate from 

the financial statements that were shown to Medly’s Board. 

81. On March 2, 2021, Horowitz sent an email to both the Senior Accountant and 

Medly’s Head of FP&A (“Head of FP&A”), expressly acknowledging “Revenue Concerns.”  

In the email, Horowitz described his concern that Medly’s revenue numbers were inaccurate, that 

he had discussed this concern with Patel more than six weeks earlier, and had recommended to 

Patel that Medly “look to restate revenues based on these find[ing]s”—that is, that Medly revise 

prior financial statements to correct the amount of revenue it had earned. 

82. In that same email, Horowitz wrote, 

The guidance I received from [Patel] was to stop and not alarm the 
team.  He had requested we continue with this accounting practice 
until our Series C fund raise was completed.  His concern was that 
we did not “fully understand” the impacts of our hypothesis and that 
we should not further “explore” or “spend effort analyzing” this 
potential issue until Q2 2021.  

83. In the email, Horowitz instructed the Head of FP&A and the Senior Accountant to 

have their teams continue to analyze Medly’s revenue overstatement, although both the Head of 

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FP&A and the Senior Accountant believed Horowitz’s email and instruction were an attempt by 

Horowitz to create a paper trail to avoid blame or liability if something with Medly went awry.  

84. Later in March 2021, the Senior Accountant memorialized in a writing to 

Horowitz several concerns the Senior Accountant had previously expressed about the way in 

which Medly was run, including “an apparent disregard for the integrity of our books and 

financial reporting” and “the reluctance to investigate and disclose a material misstatement in our 

revenue while fundraising.”  That month, the Senior Accountant resigned. 

IV. PATEL AND HOROWITZ RAISED FUNDS USING FALSE AND MISLEADING 
FINANCIAL STATEMENTS 

85. While Medly employees were uncovering and identifying significant inaccuracies 

in Medly’s revenue, and informing Patel and Horowitz of those issues, Patel and Horowitz were 

marketing and then closing Medly’s largest ever fundraising round, its Series C fundraise—and 

Patel and Horowitz were using false and misleading financial statements to do so. 

86. Medly began marketing the Series C fundraise in or around October 2020.  The 

Series C fundraise had two closes, the first between May 2021 and February 2022, and a second 

close between July and August 2022. 

87. During the first close of the Series C round, Medly sold preferred equity shares, in 

a private placement, to outside accredited investors for more than $164 million. 

88. During the second close of the Series C round (also referred to as the Series C-1), 

Medly sold additional preferred equity shares, also in a private placement, to outside accredited 

investors for more than $7 million. 

89. Based on the Series C round, Medly’s valuation was approximately $925 

million—growth of more than 240 percent from its May 2020 fundraise. 

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90. Before investors participated in the Series C fundraise, Patel and Horowitz made 

and disseminated false and misleading statements to them about Medly’s financial performance, 

including about revenue Medly had purportedly earned, but which it had not, in fact, earned.  

Patel and Horowitz each knew or recklessly disregarded that these statements were false and 

misleading. 

A. Patel and Horowitz Had Critical Roles in the Series C Fundraise. 

91. As Medly’s CEO and CFO, Patel and Horowitz each had critical roles in Medly’s 

Series C fundraise.  Each reviewed, revised, and approved financial statements and presentations 

for firms that were considering investments.  And each communicated directly with potential 

investors to answer questions about Medly and its operational and financial performance. 

92. As noted, Horowitz oversaw the Medly teams that created the financial 

information that was incorporated into Medly’s financial statements and presentations that were 

presented to potential investors, and Horowitz reviewed, revised, and approved that information, 

including as it was incorporated into documents provided to potential investors. 

93. Patel also reviewed, revised, and approved the information provided to potential 

investors, including financial statements and presentations.  According to Horowitz, Patel was 

intimately involved in and had significant influence over the documents and information that 

Medly shared with those firms. 

B. In May 2021, Medly Obtained Nearly $113 Million From Outside Investors. 

94. On May 27, 2021, as part of the first close of its Series C fundraise, Medly raised 

nearly $113 million from four outside investors—Investor A, Investor B, Investor C, and 

Investor D. 

95. Before those investments, Patel and/or Horowitz made false and misleading 

statements to those four Investors, and disseminated false and misleading statements to them, 

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including concerning Medly’s revenue.  Patel and Horowitz knew or recklessly disregarded that 

these statements were false and misleading. 

96. In November 2020, contemporaneous to Horowitz’s statement to Medly’s outside 

accounting firm that he believed Medly’s revenue could be overstated by as much as twenty 

percent, supra paragraph 73, Horowitz sent false financial information to an investor concerning 

Medly’s revenue. 

97. Specifically, in advance of a Medly Board meeting—and just as Medly was 

beginning to market its Series C fundraising round—Horowitz sent Investor C, an existing 

investor in Medly that had a seat on Medly’s Board, a presentation concerning Medly’s 

performance which stated that, between January and September 2020, Medly had earned more 

than $129 million in revenue, and that Medly had missed its revenue budget projection by only 

$20 million or 13 percent.  As Horowitz knew or recklessly disregarded, those numbers were 

wrong.  In fact, Medly had missed its revenue budget projections by more than $34 million or 

approximately 23 percent.  And while the numbers from Horowitz said that Medly’s year-over-

year revenue growth for that period was 120 percent, it was actually under 100 percent. 

98. In January 2021 (when the FP&A Senior Analyst had told Horowitz of material 

revenue misstatements and warned him not to raise funds based on those numbers, supra 

paragraphs 76-77), Horowitz sent additional financial information to Investor C that Horowitz 

knew or recklessly disregarded was inaccurate.  In response to Investor C’s requests for updated 

information about Medly’s performance, Horowitz sent Investor C financial statements that said 

Medly had earned more than $169 million in revenue between January and November 2020, 

representing year-over-year revenue growth for that period of nearly 120 percent.  Medly had 

actually earned approximately $19 million less than Horowitz represented, a nearly thirteen 

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percent difference, and Medly’s revenue growth for the period was only approximately 94 

percent.  Thus, Medly’s purported growth according to the information provided by Horowitz 

was more than 26 percent higher than its actual growth.  

99. Horowitz also sent false and misleading financial information to Investor A and 

Investor C.  In April 2021, Investor A asked Horowitz for information about Medly’s financial 

performance to be provided to Investor A’s investment committee as part of deciding whether to 

make an additional investment in Medly.   

100. In response, Horowitz sent financial statements to Investor A showing that Medly 

had earned nearly $190 million in 2020, representing year-over-year revenue growth of 114 

percent, which Horowitz knew or recklessly disregarded was false.  Medly had actually earned 

less than $170 million, with year-over-year revenue growth approximately 23 percent lower than 

the financials suggested. 

101. Horowitz did not disclose to either Investor A or Investor C that he believed 

Medly’s revenue was overstated or that he knew that Medly senior employees had identified 

overstatements in Medly’s revenue. 

102. For both Investor A and Investor C, the revenue numbers that Horowitz provided, 

the accuracy of those numbers, and the fact that Horowitz was fully disclosing Medly’s financial 

performance to date were important to their decisions to participate in the Series C fundraising 

round.  In May 2021, both Investor A and Investor C participated in that round, investing 

approximately $12.5 million and $20 million, respectively. 

103. False and misleading financial information was similarly provided to Investor B 

and Investor D before their decisions to participate in Medly’s Series C fundraise. 

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104. In February and April 2021—after Patel had been informed of Medly’s material 

incorrect revenue recognition, e.g., paragraphs 77-82—Patel provided both Investor B and 

Investor D with financial statements detailing Medly’s performance for 2020, which Patel knew 

or recklessly disregarded were inaccurate.  Both Investors were considering investments in 

Medly at the time, Investor B was considering adding to its existing investment and Investor D 

was considering its first investment.   

105. Like the financials provided by Horowitz to Investor A, the financial statements 

Patel sent to Investor B and Investor D said that Medly had earned nearly $190 million in 2020 

when, in fact, it had earned less than $170 million, and the financial statements overstated 

Medly’s annual revenue growth for 2020 by approximately 23 percent. 

106. Patel did not disclose to either Investor B or Investor D that he knew or recklessly 

disregarded that Medly’s revenue was overstated, that Medly senior employees had identified 

overstatements in Medly’s revenue to Patel, or that Patel had instructed Medly employees to stop 

investigating those overstatements until Medly completed its Series C fundraise. 

107. For both Investor B and Investor D, the revenue numbers that Patel provided, the 

accuracy of those numbers, and the fact that Patel was fully disclosing Medly’s financial 

performance to date were important to their decisions to participate in the Series C fundraising 

round.  In May 2021, both Investor B and Investor D participated in that round, investing 

approximately $1 million and approximately $79 million, respectively. 

108. By raising funds in the Series C round, Medly—a resource-intensive business that 

was burning through cash but that needed to create the appearance that it was growing 

exponentially—was able to continue to operate; to pay salaries to Patel, Horowitz, and Bhatt, and 

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allow them to stay employed; and to increase the value of the Medly securities that Patel, 

Horowitz, and Bhatt owned. 

109. Indeed, Patel used the funds raised from investors, in part, to increase Medly’s 

size and footprint, including acquiring a retail pharmacy chain that had twenty-eight brick-and-

mortar locations and more than 800 employees.  By the end of 2022, Medly would operate thirty-

two pharmacy distribution centers or locations throughout the United States.   

C. Medly Personnel Continued to Raise Concerns Regarding the Accuracy of 
Medly’s Financials. 

110. While Medly’s Series C fundraise was ongoing, Medly employees continued to 

identify material inaccuracies in Medly’s revenue, and to notify Patel and Horowitz of those 

problems, but Patel and Horowitz continued to use the inflated revenue numbers to raise money 

from investors. 

111. In May 2021, an individual who is a Certified Public Accountant and Certified 

Internal Auditor joined Medly to lead its accounting team (“Head of Accounting”).  Soon after 

being hired, the Head of Accounting noted and began investigating significant inaccuracies in 

Medly’s revenue.  However, the Head of Accounting found that they were unable to obtain 

critical information from the BI Team related to the inaccuracies. 

112. In August 2021, the Head of Accounting contacted the Ethics Hotline of the 

Association of International Certified Professional Accountants (“AICPA”), a professional 

accountants association, to seek advice.  AICPA advised the Head of Accounting to try to correct 

the revenue overstatement and, if unable to do so, to resign from the company.  

113. The Head of Accounting contacted Horowitz about their “major concern” that 

revenue was incorrect.  Then, in October 2021, the Head of Accounting contacted Patel about 

concerns that Medly was not making sufficient progress to correct the company’s historical 

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revenue overstatements, including due to obfuscation by the BI Team.  The Head of Accounting 

told Patel specifically that revenue “restatements will be material to the shareholders, once we 

determine the actual amounts based on [the BI Team’s] work.”  

114. Days later, the Head of Accounting emailed Patel, Horowitz, and the head of the 

BI Team, emphasizing the concern that Medly had not corrected its revenue numbers, 

I’m starting to feel anxious about the amount of time this is taking, 
and worried about the ramifications that come from not fixing such 
an important issue on a timely basis—frankly, we have been working 
on this since last April, and I feel like the deadline has been pushed 
dozens of times.  This is concerning, due to the material and 
otherwise potentially important disclosure to investors based on this 
issue which we still need to vet and finalize. 

115. The Head of Accounting continued to investigate accounting discrepancies in the 

following months and repeatedly contacted Patel about Medly’s “large” and “unresolved” 

revenue overstatements.  When Patel and Horowitz failed to address those issues, the Head of 

Accounting resigned. 

116. During the time the Head of Accounting was repeatedly raising revenue 

overstatement issues with both Patel and Horowitz, the FP&A Senior Analyst was also 

continuing to identify inaccuracies in Medly’s revenue.   

117. For example, the FP&A Senior Analyst prepared a written analysis of 

discrepancies between revenue actually earned by two of Medly’s busiest pharmacy locations, on 

the one hand, and reports provided by the BI Team for those locations, on the other hand, 

demonstrating how the BI Team had overstated revenue earned at those locations by tens of 

millions of dollars.  In August 2021, the FP&A Senior Analyst provided that analysis to 

Horowitz and others. 

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D. Between July 2021 and December 2021, Medly Obtained An Additional 
Approximately $45 Million From Outside Investors. 

118. Between July and December 2021, also as part of the first close of the Series C 

fundraise, Medly obtained an additional nearly $45 million from investors, including Investor A 

and Investor D, each of which added to existing investments, and Investor E, Investor H, and 

Investor I, which became Medly investors. 

119. Before those investments, Patel and/or Horowitz made false and misleading 

statements to those Investors, and disseminated false and misleading statements to them, 

including concerning Medly’s revenue.  Patel and Horowitz knew or recklessly disregarded that 

these statements were false and misleading. 

120. Patel met with Investor E in February 2021 to solicit its investment in the Series C 

fundraise.  After that meeting, and in response to Investor E’s request for financial information 

necessary to decide whether to invest in Medly, Patel sent financials that—like those described 

above sent to Investor A, Investor B, and Investor D, e.g., supra paragraphs 100 and 105—

overstated Medly’s 2020 revenue by at least $20 million and overstated Medly’s annual revenue 

growth for 2020 by approximately 23 percent. 

121. Horowitz then sent inaccurate financials to Investor A, which he knew or 

recklessly disregarded were false and misleading.  In June 2021, Investor A, who held a seat on 

Medly’s Board and had already participated in each of Medly’s fundraising rounds, was 

considering an additional investment in Medly and asked for updated financials.  In response, 

Horowitz sent financials that said Medly had earned $21.5 million in revenue in January 2021, 

representing year-over-year revenue growth for that month of nearly 80 percent.  That revenue 

number was overstated by nearly ten percent and the financials Horowitz provided suggested that 

Medly’s growth rate for the month was approximately 24 percent higher than if Horowitz had 

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provided Medly’s correct January 2021 revenues.  Those financials also overstated Medly’s 

revenue for April 2021 and its year-over-year growth for that month in similar amounts. 

122. In July 2021, Horowitz sent additional financials to Investor D that, like those 

sent to Investor A, were false and misleading.  Indeed, they similarly overstated Medly’s revenue 

growth for January and April 2021, which Horowitz knew or recklessly disregarded. 

123. Relying on these financials from Horowitz and Patel, Investor A and Investor D 

each added to their investments in Medly in the Series C, and Investor E made its first 

investment.  In July 2021, Investor A and Investor E invested approximately $14.7 million and 

$10 million, respectively.  Months later, Investor D also invested an additional $5 million.  For 

Investor A, Investor D, and Investor E, the revenue numbers that Patel and Horowitz provided, 

the accuracy of those numbers, and the fact that Patel and Horowitz were fully disclosing 

Medly’s financial performance to date were important to their decisions to participate in the 

Series C fundraising round. 

124. Horowitz and Marg also provided financial information to Investor H and 

Investor I in advance of their decisions to invest in Medly that Horowitz and Marg knew or 

recklessly disregarded was false and misleading. 

125. In May 2021, Investor H, which had previously provided Medly with debt 

financing, asked Horowitz for updated details concerning Medly’s financial performance.  

Horowitz responded by providing financial statements that overstated that performance, inflating 

Medly’s revenue for the period from January 2020 through January 2021 by more than $22 

million, an amount that accounted for nearly 70 percent of the “gross profits” those financials 

said Medly had earned during that time.  After receiving that information—which Horowitz 

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knew or recklessly disregarded was inaccurate—Investor H decided to participate in the Series C 

round, investing approximately $500,000. 

126. Then, in July and August 2021, Marg solicited an investment in Medly’s Series C 

round from Investor I.  In doing so, at the end of July 2021 and to facilitate Investor I’s 

evaluation of a possible investment in Medly, Marg provided Investor I with access to Medly 

financial statements via a data room.  Investor I accessed and analyzed a Medly investor deck 

which it then discussed with Marg.  That deck overstated Medly’s 2020 revenue by more than 

$20 million and overstated Medly’s quarterly revenue performance for each quarter of 2020 by at 

least nine percent and by as much as fourteen percent.  Investor I then relied on this information 

as part of its decision to participate in the Series C round, investing $4.5 million in Medly. 

127. Before the investments by Investor A, Investor D, Investor E, Investor H, and 

Investor I described above, neither Patel nor Horowitz disclosed to any of those Investors that 

multiple senior Medly employees had discovered overstatements in Medly’s revenue and 

irregularities in its accounting, that those employees had informed both Patel and Horowitz of 

those issues, that Patel had instructed employees not to investigate those issues until Medly’s 

Series C fundraise was completed, and that both Patel and Horowitz knew or recklessly 

disregarded that Medly’s revenue was overstated. 

E. Medly Employees Discovered Bhatt’s Fake Prescriptions. 

128. Between November 2021 and January 2022, certain Medly employees also 

uncovered hundreds of fake prescriptions that, unbeknownst to them, Bhatt had created and that 

had resulted in millions of dollars of supposed revenue, and Patel learned of those employees’ 

discoveries. 

129. In November 2021, a Medly accounting manager (“Accounting Manager”) 

identified that Medly’s accounts receivable included many claims by Medly to health insurance 

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companies for large dollar prescriptions that were associated with a single BIN number (“BIN 

A”).  The Accounting Manager then discovered that some patients associated with these claims 

had been marked as deceased within Medly’s records.  By January 2022, the Accounting 

Manager discovered similar unusual prescription claims associated with another BIN number 

(“BIN B”).   

130. The fake prescriptions that the Accounting Manager had identified, and which 

Medly had supposedly billed to health insurance companies associated with BIN A and BIN B, 

had accounted for at least $13 million of Medly’s purported revenue.  

131. In mid-December 2021, shortly after Bhatt learned that Medly’s accounting team 

was raising questions about BIN A, he logged into PrimeRx and changed the fake patient data 

for numerous claims associated with that BIN number so that the claims were no longer tied to it 

and would be more difficult for other Medly employees to identify.  As one example, Bhatt 

moved some claims to new, fake patient profiles and associated them with BIN B or other health 

insurance companies.  

132. On January 4, 2022, after emails to Bhatt from other Medly employees had gone 

unanswered, Medly’s Head of Accounting told Bhatt that claims to BIN A and BIN B had raised 

“serious concerns.”  Bhatt emailed both the Head of Accounting and Patel acknowledging the 

issue, but then tried to further conceal the fraudulent data by logging into PrimeRx and deleting 

fake patient profiles and claims related to BIN A and BIN B. 

F. In February 2022, Medly Obtained Millions of Additional Dollars  
From Outside Investors. 

133. In late 2021 and early 2022, Patel continued to solicit investments in Medly as 

part of the Series C round, using false and misleading Medly financials to do so. 

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134. For example, in December 2021, Patel met with Investor G about investing in 

Medly and provided a deck purportedly showing Medly’s quarterly performance and revenue 

growth from the third quarter of 2017 through the third quarter of 2021.  This deck 

misrepresented Medly’s 2020 and 2021 performance, which Patel knew or recklessly 

disregarded.  Like the information that Patel and Horowitz had sent to other potential Series C 

investors, the deck overstated Medly’s revenue for 2020, inflating Medly’s revenue for every 

quarter of 2020 by at least eight percent and as much as twelve percent.  The deck also 

overstated Medly’s 2021 third quarter revenue by more than 33 percent. 

135. Patel did not disclose to Investor G that multiple senior Medly employees had 

discovered overstatements in Medly’s revenue and irregularities in its accounting, that Patel had 

been informed of those issues, that he had instructed employees not to investigate those issues 

until Medly’s Series C fundraise was completed, or that Patel knew or recklessly disregarded that 

Medly’s revenue was overstated. 

136. For Investor G, the revenue numbers that Patel provided, the accuracy of those 

numbers, and the fact that Patel was fully disclosing Medly’s financial performance to date were 

important to its decision to participate in the Series C fundraising round.  In February 2022, 

Investor G invested over $6.8 million in that round. 

G. In July and August 2022, Medly Obtained an Additional More Than 
$7 Million From Outside Investors. 

137. In July and August 2022, Medly conducted the second close of its Series C 

fundraising round.  In that close, Medly obtained more than $7 million from outside investors, 

including from Investor A, Investor C, Investor D, Investor E, Investor F, and Investor G. 

138. Before those investments—and during the time that Medly was marketing its 

Series C fundraising round but after issues regarding Medly’s overstated revenue had been 

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repeatedly identified to Patel and Horowitz—Patel and/or Horowitz made false and misleading 

statements to those six Investors, and disseminated false and misleading statements to them, 

including concerning Medly’s revenue.  Patel and Horowitz knew or recklessly disregarded that 

these statements were false and misleading. 

139. In September 2021, Investor A asked Medly for updated details concerning its 

financial performance.  Horowitz, as he had done previously, supra paragraphs 105 and 121, sent 

Investor A financial statements that overstated Medly’s revenue for 2020 by more than $20 

million and overstated Medly’s annual revenue growth for 2020 by approximately 23 percent. 

140. In October 2021, when Investor C was considering an additional investment in 

Medly’s Series C fundraising round, Horowitz sent financial statements that included Medly’s 

supposed financial performance for the first half of 2021 but which were also false and 

misleading—they also overstated Medly revenue by many millions of dollars. 

141. Then, in advance of Medly’s November 2021 Board meeting, Patel sent the Board 

and Board observers—including representatives of Investor A, Investor C, and Investor D—

a deck that also overstated Medly’s 2020 revenue, inflating Medly’s quarterly revenue for every 

quarter of 2020 by at least nine percent and as much as fourteen percent. 

142. In April 2022, Patel sent Investor C and Investor D a deck purporting to reflect 

Medly’s latest financial data that inflated both Medly’s January 2022 and February 2022 

revenue, overstating the February revenue by more than $4.6 million or nearly fourteen percent. 

143. In July 2022, Investor A asked Patel for an investor presentation and Patel sent a 

deck to Investor A that continued to inflate Medly’s revenue.  The deck said that Medly had 

earned nearly $190 million in revenue in 2020 and nearly $350 million in revenue in 2021 

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(inclusive of the revenue earned by the retail pharmacy chain Medly had acquired).  This 

overstated Medly’s 2020 and 2021 revenue by a total of at least $35 million. 

144. Patel and Horowitz knew or recklessly disregarded that the financial statements 

they had provided to Investor A, Investor C, and Investor D were inaccurate.  Neither Patel nor 

Horowitz disclosed to those Investors that senior Medly employees had discovered 

overstatements in Medly’s revenue and irregularities in its accounting and had reported those 

issues to Patel and Horowitz, that Patel had instructed employees to not investigate those issues 

until Medly’s Series C fundraise was completed, or that Patel and Horowitz knew or recklessly 

disregarded that Medly’s revenue was overstated. 

145. In July and August 2022, after receiving the inaccurate financial information from 

Patel and Horowitz in late 2021 and early 2022, Investor A, Investor C, and Investor D all 

invested in the second close of Medly’s Series C fundraising round, investing $600,000, 

$1 million, and $3.4 million, respectively. 

146. As with their earlier investments, Investor A, Investor C, and Investor D viewed 

the revenue numbers from Patel and Horowitz, the accuracy of those numbers, and the fact that 

Patel and Horowitz were fully disclosing Medly’s financial performance to date as important to 

their decisions to invest further in Medly. 

147. Horowitz and Patel also deceived Investor E and Investor F with false and 

misleading financials.  In August 2021, Horowitz sent those Investors financial statements, 

which had been reviewed by Patel, that overstated Medly’s revenue from January 2020 through 

July 2021 by more than $24 million or 7 percent.  The overstatement accounted for more than 

half of the “gross profits” those financials said Medly had earned during that period.  In May 

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2022, Patel sent both Investor E and Investor F purportedly updated financials with the same 

false and misleading information about Medly’s supposed revenues.   

148. Relying on those financial statements, Investor E and Investor F both invested 

$200,000 in the second close of Medly’s Series C fundraising round.   

149. Finally, Patel provided additional false and misleading financial statements to 

Investor G related to the second close of Medly’s Series C fundraise.  Specifically, in January 

2022, Patel sent multiple quarterly financial statements to Investor G with inaccurate revenue in 

advance of Investor G’s decision to invest in Medly.  Those financial statements also overstated 

Medly’s quarterly revenue for each quarter of 2020, including overstatements of quarterly 

revenue by as much as fourteen percent. 

150. For Investor G, the revenue numbers that Patel had provided, the accuracy of 

those numbers, and the fact that Patel was fully disclosing Medly’s financial performance to date 

were important to its decision to participate in the second close of Medly’s Series C fundraising 

round.  In July 2022, Investor G invested $600,000 in that round. 

151. Before their investments in the second close of Medly’s Series C round, neither 

Patel nor Horowitz disclosed to Investor A, Investor C, Investor D, Investor E, or Investor F 

what Patel and Horowitz knew or recklessly disregarded about Medly’s myriad accounting 

problems and fraudulent revenue. 

V. PATEL AND HOROWITZ MADE ADDITIONAL FALSE AND MISLEADING 
STATEMENTS TO MEDLY’S BOARD AND BOARD OBSERVERS 

152. Patel’s and Horowitz’s false and misleading statements to Medly’s Board and 

Board observers, including when those entities were considering participating in Medly’s Series 

C fundraising round, were not limited to overstatements of Medly’s revenue and revenue growth.  

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Those misstatements also concerned a loan obtained by Medly in exchange for Medly pledging 

all of its accounts receivable. 

153. In May 2021, Patel negotiated and caused Medly to enter a contract for a 

factoring loan, a type of financing in which a business sells their actual or projected accounts 

receivable or unpaid invoices in exchange for near-term funding.  As part of the loan, Medly 

sold, or “pledged,” all of its accounts receivable to the lender.   

154. Medly had, however, already sold those same accounts receivable to other lenders 

and Patel had thus caused Medly’s receivables to be double-pledged, creating possible cash flow 

problems for Medly and the potential for a serious default by Medly on its loans. 

155. Horowitz knew about the May 2021 factoring loan at the time and that its terms 

meant that Medly’s accounts receivable were double-pledged. 

156. Neither Patel nor Horowitz disclosed the May 2021 factoring loan to Medly’s 

Board or its existing or potential investors, including to those serving on the Board.  To the 

contrary, both Patel and Horowitz provided financial statements and reporting to the Board and 

other outside investors that hid the loan. 

157. For example, in November 2021, while Medly was marketing its Series C 

fundraise, Patel and Horowitz considered disclosing the factoring loan in a presentation to the 

Board and the Board observers—which included representatives of several entities that later 

made additional investments in Medly’s Series C, including Investor A, Investor C, Investor D, 

and Investor E. 

158. Instead, Patel and Horowitz decided to present Medly’s financials in a manner 

that would conceal the May 2021 factoring loan, which they knew or recklessly disregarded was 

false and misleading. 

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159. In that presentation, Patel and Horowitz deliberately combined the amount of the 

factoring loan with other Medly debt and labeled it as “A/R Revolver,” which made it appear as 

if Medly had one line of credit, as opposed to multiple lines of credit from multiple lenders.  By 

lumping the May 2021 factoring loan in with another line of credit, rather than disclosing it to 

the Board, Patel and Horowitz concealed that Medly’s accounts receivable had been double-

pledged. 

VI. AT THE BOARD’S URGING, HOROWITZ WAS DEMOTED 

160. By at least early 2022, Medly investors who also served on Medly’s Board were 

concerned with Horowitz’s inadequate explanations about apparent irregularities and 

discrepancies in Medly’s financials. 

161. Given these concerns, in April 2022, the Board urged Patel to remove Horowitz 

as Medly’s CFO, and Patel removed Horowitz from that role. 

162. However, Patel then moved Horowitz to another supervisory role, as Medly’s 

Executive Vice President of Finance & Accounting, and gave him extra compensation.  In 

Horowitz’s new role he continued to be responsible for overseeing Medly’s FP&A and 

accounting personnel, and critical to the review, revision, and approval of financial information 

for the Board and investors.   

163. Although the role was a demotion, Patel increased Horowitz’s salary and 

renegotiated the terms of a $200,000 loan that Medly had previously made to Horowitz to make 

the terms more favorable to Horowitz, including making the loan forgivable if Horowitz 

remained employed at Medly until June 2022.  Then, in June 2022, Patel forgave the entirety of 

the loan. 

164. Medly’s by-laws required that its Board review and approve loans to employees, 

like the loan to Horowitz and its subsequent amendment, but neither Patel nor Horowitz 

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disclosed to Medly’s Board that Patel had caused Medly to loan $200,000 to Horowitz, that Patel 

modified the terms to favor Horowitz after Horwitz was removed as Medly’s CFO, or that Patel 

forgave the loan—and the Board never approved those actions. 

165. The next month, July 2022, Horowitz resigned from Medly. 

VII. MEDLY EMPLOYEES UNCOVERED MILLIONS OF DOLLARS OF 
ADDITIONAL FAKE PRESCRIPTIONS 

166. Between approximately January 2022 and August 2022, several Medly employees 

discovered and reported to Patel overstatements in Medly’s revenue and the fact that Medly had 

improperly recognized revenue for fake prescriptions. 

167. In early 2022, two Medly regional managers observed what they believed was 

unusual revenue in several monthly BI Team reports.  In those reports, the regional managers 

each noted that Medly’s revenue appeared to increase substantially in the last few days of each 

month.  Based on a discussion with Patel in April 2022, one of the regional managers concluded 

that at least one of the revenue spikes was designed to cause Medly to appear to meet its monthly 

revenue target. 

168. Both regional managers investigated the revenue spikes within PrimeRx, and the 

patient profiles and insurance companies to which the revenue spikes purportedly related.  They 

determined that the monthly revenue spikes were caused by hundreds of fake prescriptions 

linked to an insurance code called “EXPINS” and that EXPINS was not associated with a 

legitimate health insurance company. 

169. In late July 2022, the regional managers informed their supervisor that they had 

discovered that for the period between January 1, 2022, and June 8, 2022, more than 600 

prescriptions processed through a single Medly pharmacy location were illegitimate, associated 

with EXPINS, and had generated millions of dollars in purported revenue. 

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170. That supervisor then separately reviewed PrimeRx data and determined that, 

between November 2021 and July 2022, Medly had recognized more than $67 million in revenue 

associated with EXPINS.  On July 29, 2022, the supervisor emailed Patel, Medly’s General 

Counsel, and Medly’s CCO about the EXPINS issue, telling them, “something doesn’t look right 

with our revenue numbers.” 

171. Subsequently, other employees reviewed PrimeRx and EXPINS-related data and 

discovered claims for millions of dollars in fraudulent revenue that Medly had recognized in 

2021 and 2022.  Those employees pointed Patel and Medly’s CCO to these fake prescriptions 

and revenue issues.  Immediately thereafter, Bhatt deleted hundreds of EXPINS-related 

prescriptions and changed the insurance codes for other claims to associate them within Medly’s 

systems with legitimate insurance companies. 

172. Despite knowing or recklessly disregarding for years that Medly’s revenue had 

been overstated and having been told about the EXPINS scheme and its further distortion of 

Medly’s actual revenue to the tune of tens of millions of dollars, Patel tried to hide it from the 

Board.  He told certain of the Board members only that Medly had located some errant 

prescriptions that had been misbilled and that would affect about $2 million of Medly’s profit.   

173. In fact, as Patel knew or recklessly disregarded, Medly’s problem was orders of 

magnitude larger:  it had recognized more than $70 million in fake revenue. 

174. Even after the EXPINS issue was widely known, Patel continued to try to raise 

funds from investors using the fake revenue numbers, including sending a prospective investor 

information about Medly that overstated Medly’s revenue for 2020 and 2021 by tens of millions 

of dollars.  That prospective investor decided not to invest. 

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VIII. MEDLY’S BOARD TERMINATED PATEL AND MEDLY ENTERED 
BANKRUPTCY 

175. On August 18, 2022, Medly’s Board informed Patel that it had scheduled a 

special meeting for the following day. 

176. Patel immediately contacted Medly’s drug vendor and renegotiated Medly’s 

existing contract with the vendor—under which Patel had personally guaranteed Medly’s debt to 

the vendor—to cause the vendor to use funds owed to Medly for insurance rebates to pay a 

portion of Medly’s outstanding debt.  Then, the vendor withdrew at least $1.8 million from 

Medly’s credit operating account to pay down Medly’s debt.  As a result, Patel personally 

guaranteed far lower amounts owed by Medly to the vendor. 

177. On August 19, 2022, the Board terminated Patel from Medly.  That day, the 

Board also removed the CCO and suspended him from Medly.   

178. The Board then retained outside counsel to investigate potentially fraudulent 

conduct, including Medly’s fraudulently inflated revenue.  When that law firm contacted Bhatt in 

October 2022, he resigned from Medly. 

179. On December 9, 2022, Medly filed for Chapter 11 bankruptcy protection.   

180. Subsequently, Medly sold all of its assets for approximately $19 million, far less 

than the more than $100 million in debt it owed and a fraction of its purported more than $900 

million valuation at the time of its Series C fundraise. 

181. In April 2023, Medly converted its Chapter 11 bankruptcy filing to a Chapter 7 

liquidation. 

182. Investors in Medly’s Series C fundraise (and all other outside investors in Medly 

equity and convertible notes) lost the full value of their investments. 

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FIRST CLAIM FOR RELIEF 
Violations of Securities Act Section 17(a) 

(Patel and Horowitz) 

183. The SEC re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 182. 

184. Patel and Horowitz, directly or indirectly, singly or in concert, in the offer or sale 

of securities and by the use of the means or instruments of transportation or communication in 

interstate commerce or the mails, (i) knowingly or recklessly have employed one or more 

devices, schemes or artifices to defraud, (ii) knowingly, recklessly, or negligently have obtained 

money or property by means of one or more untrue statements of a material fact or omissions of 

a material fact necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading, and/or (iii) knowingly, recklessly, or negligently 

have engaged in one or more transactions, practices, or courses of business which operated or 

would operate as a fraud or deceit upon the purchaser. 

185. By reason of the foregoing, Patel and Horowitz, directly or indirectly, singly or in 

concert, have violated and, unless enjoined, will again violate Securities Act Section 17(a) [15 

U.S.C. § 77q(a)]. 

SECOND CLAIM FOR RELIEF 
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder 

(Patel and Horowitz) 
 

186. The SEC re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 182. 

187. Patel and Horowitz, directly or indirectly, singly or in concert, in connection with 

the purchase or sale of securities and by the use of means or instrumentalities of interstate 

commerce, or the mails, or the facilities of a national securities exchange, knowingly or 

recklessly have (i) employed one or more devices, schemes, or artifices to defraud, (ii) made one 

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or more untrue statements of a material fact or omitted to state one or more material facts 

necessary in order to make the statements made, in light of the circumstances under which they 

were made, not misleading, and/or (iii) engaged in one or more acts, practices, or courses of 

business which operated or would operate as a fraud or deceit upon other persons. 

188. By reason of the foregoing, Patel and Horowitz, directly or indirectly, singly or in 

concert, have violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 

U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

THIRD CLAIM FOR RELIEF 
Violations of Securities Act Section 17(a)(1) and (3) 

(Bhatt) 
 

189. The SEC re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 171 and 178 through 182. 

190. Bhatt, directly or indirectly, singly or in concert, in the offer or sale of securities 

and by the use of the means or instruments of transportation or communication in interstate 

commerce or the mails, (i) knowingly or recklessly has employed one or more devices, schemes 

or artifices to defraud, and/or (ii) knowingly, recklessly, or negligently has engaged in one or 

more transactions, practices, or courses of business which operated or would operate as a fraud 

or deceit upon the purchaser. 

191. By reason of the foregoing, Bhatt, directly or indirectly, singly or in concert has 

violated and, unless enjoined, will again violate Securities Act Section 17(a)(1) and (3) [15 

U.S.C. § 77q(a)(1), (3)]. 

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FOURTH CLAIM FOR RELIEF 
Violations of Exchange Act Section 10(b) and Rule 10b-5(a) and (c) Thereunder 

(Bhatt) 

192. The SEC re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 171 and 178 through 182. 

193. Bhatt, directly or indirectly, singly or in concert, in connection with the purchase 

or sale of securities and by the use of means or instrumentalities of interstate commerce, or the 

mails, or the facilities of a national securities exchange, knowingly or recklessly (i) employed 

one or more devices, schemes, or artifices to defraud, and/or (ii) engaged in one or more acts, 

practices, or courses of business which operated or would operate as a fraud or deceit upon other 

persons. 

194. By reason of the foregoing, Bhatt, directly or indirectly, singly or in concert, has 

violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] 

and Rules 10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5(a) and (c)]. 

FIFTH CLAIM FOR RELIEF 
Aiding and Abetting Violations of Securities Act Section 17(a)(2) 

(Bhatt) 

195. The SEC re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 171 and 178 through 182. 

196. As alleged above, Patel and Horowitz violated Securities Act Section 17(a)(2) [15 

U.S.C. § 77q(a)(2)].  

197. Bhatt knowingly or recklessly provided substantial assistance to Patel and 

Horowitz with respect to their violations of Securities Act Section 17(a)(2) [15 U.S.C. 

§ 77q(a)(2)].  

198. By reason of the foregoing, Bhatt is liable pursuant to Securities Act Section 

15(b) [15 U.S.C. § 77o(b)] for aiding and abetting Patel’s and Horowitz’s violations of Securities 

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Act Section 17(a)(2) [15 U.S.C. § 77q(a)(2)] and, unless enjoined, Bhatt will again aid and abet 

these violations. 

SIXTH CLAIM FOR RELIEF 
Aiding and Abetting Violations of Exchange Act Section 10(b) and Rule 10b-5(b) 

(Bhatt) 

199. The SEC re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 171 and 178 through 182. 

200. As alleged above, Patel and Horowitz violated Exchange Act Section 10(b) 

[15 U.S.C. § 78j(b)] and Rule 10b-5(b) [17 C.F.R. § 240.10b-5(b)] thereunder. 

201. Bhatt knowingly or recklessly provided substantial assistance to Bhatt and 

Horowitz with respect to their violations of Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] and 

Rule 10b-5(b) [17 C.F.R. § 240.10b-5b] thereunder. 

202. By reason of the foregoing, Bhatt is liable pursuant to Exchange Act Section 20(e) 

[15 U.S.C. § 78t(e)] for aiding and abetting Patel’s and Horowitz’s violations of Exchange Act 

Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5(b) [17 C.F.R. § 240.10b-5(b)] thereunder and, 

unless enjoined, Bhatt will again aid and abet these violations. 

PRAYER FOR RELIEF 

 WHEREFORE, the SEC respectfully requests that the Court enter a Final Judgment: 

I. 

Permanently enjoining Defendants and their agents, servants, employees and attorneys 

and all persons in active concert or participation with any of them from violating, directly or 

indirectly, Securities Act Section 17(a) and Exchange Act Section 10(b) [15 U.S.C. §§ 77q(a) 

and 78j(b)], and Rule 10b-5 [17 C.F.R. § 240.10b-5]. 

  

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II. 

Ordering Defendants to disgorge all ill-gotten gains they received directly or indirectly, 

with pre-judgment interest thereon, as a result of the alleged violations, pursuant to Exchange 

Act Sections 21(d)(3), 21(d)(5), and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), 78u(d)(7)]; 

III. 

Ordering Defendants to pay civil monetary penalties under Securities Act Section 20(d) 

[15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)];  

IV. 

Permanently prohibiting each Defendant from serving as an officer or director of any 

company that has a class of securities registered under Exchange Act Section 12 [15 U.S.C. § 

78l] or that is required to file reports under Exchange Act Section 15(d) [15 U.S.C. § 78o(d)], 

pursuant to Securities Act Section 20(e) [15 U.S.C. § 77t(e)] and Exchange Act Section 21(d)(2) 

[15 U.S.C. § 78u(d)(2)]; and 

V. 

Granting any other and further relief this Court may deem just and proper.  

 

[REMAINDER OF PAGE INTENTIONALLY BLANK] 

  

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JURY DEMAND 

 The Commission demands a trial by jury.  

 
Dated: New York, New York 

September 12, 2024 

     /s/ Antonia Apps               . 

ANTONIA M. APPS  
REGIONAL DIRECTOR  
Sheldon L. Pollock 

 Judith A. Weinstock 
Christopher M. Colorado 
Suzanne M. Bettis 
Heather Marshall Molavi 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
100 Pearl Street  
Suite 20-100 
New York, NY 10004-2616 
212-336-9143 (Colorado) 
[email protected]  
  

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