June 22, 2012
A Chicago-based Indian American who was involved in the Rod Blagojevich scandal and was once a fundraiser for Jesse Jackson Jr. has been arrested on bribery charges. Raghuveer Nayak was charged with bribing doctors to send patients to his surgery centers.
June 22, 2012
A Chicago-based Indian American who was involved in the Rod Blagojevich scandal and was once a fundraiser for Jesse Jackson Jr. has been arrested on bribery charges. Raghuveer Nayak was charged with bribing doctors to send patients to his surgery centers.
Raghuveer Nayak, a former fundraiser for U.S. Jesse Jackson Jr.and Rod Blagojevich and a key figure in the U.S. Senate seat scandal, was arrested at his Oak Brook home this morning and charged with bribing doctors to send patients to his surgery centers.
Nayak was charged with mail fraud, interstate travel in aid of racketeering and filing false income tax returns in a 19-count indictment, according to the U.S. attorney's office. Prosecutors are seeking $1.8 million in "alleged fraud proceeds," including forfeiture of Nayak's Oak Brook home, his Rogers Park One Day Surgery Center and his Lakeshore Surgery Center.
Nayak appeared briefly at a hearing at Dirksen U. S. District Courthouse this afternoon and pleaded not guilty. U.S. Magistrate Judge Maria Valdez ordered him released on an agreed bond of $10 million secured by six properties, including one in Oak Brook and one in Aurora.
Assistant U.S. Attorney Christopher Niewoehner told the judge Nayak has "rather significant assets" and ties to India. Nayak is due back in court next week. He left the courthouse without commenting.
Between 2000 and 2010, Nayak allegedly paid hundreds of thousands of dollars to physicians who would refer patients to Nayak's medical centers, the indictment alleges. "The physicians deceived their patients by not disclosing that they were being paid for making referrals to Nayak's facilities," the indictment charges.
After Nayak was questioned by federal agents in December 2008, prosecutors say he warned physicians not to speak with agents about the payments.
In Wednesday's indictment, federal prosecutors allege Nayak obtained cash, including money he used to bribe doctors, by giving "Individual A" more than $2 million in checks from his facilities between 2002 and December 2008, when Blagojevich was arrested. The indictment states that "Individual A" then kicked back to Nayak about 70 percent of that money.
During Blagojevich's trial, Rajinder Bedi, a onetime top fundraiser for Blagojevich who was friends with Nayak, testified that Nayak issued about $2 million in checks to a Bedi-owned company and that Bedi provided cash in return.
Bedi testified the cash he gave back totaled about $1.4 million, acknowledging to prosecutors that he understood Nayak was cheating on his taxes by making the payments.
"So you're also guilty to assisting him (Nayak) in tax evasion, aren't you," Blagojevich attorney Sheldon Sorosky asked Bedi during in cross-examination during Blagojevich's second trial.
"Yes," Bedi answered.
Nayak is accused of understating his gross income when he reported the following amounts to the IRS: $4,643,916 for 2005; $6,471,865 for 2006; $5,791,109 for 2007; and $9,362,647 for 2008.
Although he raised money for politicians for more than a decade, Nayak was little known publicly until late 2008, when his name surfaced as a connection between Blagojevich and U.S. Rep. Jesse Jackson Jr., who was seeking to replace Obama in the U.S. Senate.
Nayak was a longtime fundraiser for both Blagojevich and Jackson. The Tribune first reported on Dec. 12, 2008, that Nayak and Bedi privately told many of the more than two dozen attendees at an on Oct. 31, 2008, luncheon meeting attended by Blagojevich that the fundraising effort was aimed at supporting Jackson's bid for Senate.
Nayak has told federal investigators that Jackson asked him to raise campaign money for Blagojevich in hopes that the then-governor would appoint Jackson to the Senate seat vacated by Barack Obama, sources familiar with the investigation have told the Tribune.
In 2008, the Tribune reported that Nayak and a fellow Indian-American businessman had agreed to help Jackson's chances of replacing Obama by raising as much as $1.5 million for Blagojevich. Nayak was never charged in that investigation nor was he called to testify at Blagojevich's two trials.
There have been no signs of federal criminal authorities actively investigating the details of the Blagojevich-Nayak-Jackson connections for quite some time. If anything, Nayak's indictment on the hospital charges was seen as the latest indication that the Blagojevich investigation had drawn to a close.
The House Committee on Ethics announced late last year that it will continue investigating Jackson's efforts to be named to the Senate seat vacated by Obama. The committee also released a 2009 report by congressional investigators who said there was "probable cause" to believe Jackson directed or knew that his friend Nayak would try to trade cash for the Senate pick.
Jackson has steadfastly maintained he had no knowledge of any deal. A letter released by Jackson's lawyers, and sworn to by Jackson, called Nayak "incredibly misguided" and said the congressman is "deeply disappointed in his former friend."
Jackson has also said he did not violate House ethics rules when he had Nayak buy a plane ticket for a woman who had a secret relationship with the congressman. House ethics rules prohibit members from soliciting gifts of personal benefit.
Jackson told the Tribune editorial board that Nayak's purchase was "a friendly gesture" by "a close and dear friend of mine, one who knows members of my family, has worked with members of my family, has been a friend of our family's for a number of years."
The woman's travel was "not a personal benefit to me, I don't believe, under the House rules. A benefit to the person for whom he bought the ticket. He didn't buy tickets for me. Did I direct him? I did."
Jackson, who has been in congress for 17 years, won a Democratic primary campaign earlier this year.
As owner of several surgery centers in Chicago and Indiana, Nayak had long been a controversial and wealthy businessman who became a leader in Illinois' burgeoning Indian community.
Nayak's businesses have over the years needed the approval of state regulators and auditors and Nayak became a big campaign bundler and contributor, donating more than $779,000 to elected officials including Blagojevich, Attorney General Lisa Madigan and Obama from the late 1990s until his name surfaced in the Blagojevich scandal in late 2008.
Nayak's story was one of a man who overcame racism and near-poverty to launch his medical clinics, which years ago gained the attention of federal investigators who probed allegations of fraud at his clinics — allegations he vehemently denied.
The Tribune previously reported that after Nayak first opened several Chicago drug stores in the early 1980s, his businesses faced multiple audits by state and federal authorities. His name also came up repeatedly in one of the largest health-care fraud investigations in Illinois history.
That multi-year federal probe resulted in the shuttering of two hospitals — Doctors Hospital and Edgewater Medical Center — and the convictions of seven doctors and administrators. Nayak, who then owned a lab testing company called NR Laboratories as well as an outpatient surgery center, was among numerous individuals who came under scrutiny, the Tribune had reported.
Some of Nayak's associates and friends were convicted in the scheme, which included charges that two patients died from unnecessary procedures performed by doctors looking to collect fraudulent public aid checks.
A longtime friend, Dr. Ravi Barnabas, was sentenced to more than four years in federal prison in 2001 after pleading guilty to funneling $290,000 in kickbacks to doctors. State regulators suspended his doctor's license indefinitely. But the state's Medical Disciplinary Board later decided to give Barnabas his license back. When Barnabas was released from prison in 2004, Nayak hired him to work at one of his Chicago clinics, where he is still employed as a physician.
The Tribune also previously reported that in 1987, Nayak was suspended for 60 days from the state's public aid program after auditors concluded nearly 22 percent of billings at one of his pharmacies were fraudulent. In 1989, state auditors reported concerns that Nayak was giving free airline tickets to doctors who sent business to NR labs, which he has since sold. And in 2001, Nayak returned $20,000 in a federal Medicaid fraud lawsuit in Indiana.
At the time of the Tribune report, Nayak's attorney dismissed those problems as being little more than the common annoyances faced by health care professionals.
Nayak in 2007 said that together his businesses made about $60 million a year.
Courtesy: Tribune
