Indian-American businessman arrested for bribery, tax fraud | india | Hindustan Times
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Indian-American businessman arrested for bribery, tax fraud

india Updated: Jun 21, 2012 00:25 IST

An Indian-American businessman, who was a former fund-raiser and key figure in the senate seat scandal of now jailed Chicago governor Rod Blagojevich, was arrested today on charges he paid bribes to physicians for patient referrals and filed false income tax returns.

Raghuveer Nayak, 57, was charged in a 19-count indictment that was returned by a federal grand jury last week and unsealed following his arrest, US Attorney for the Northern District of Illinois Patrick Fitzgerald said.

Nayak, a fundraiser for Blagojevich and Representative Jesse Jackson Jr, owned multiple area outpatient surgery centres in and around Chicago. He is scheduled to appear before Magistrate Judge Maria Valdez in US District Court.

During a 2008 meeting in a Chicago restaurant, Nayak allegedly promised to raise a million dollars for Blagojevich if Jesse Jackson Jr was appointed to the US Senate to replace President Barack Obama.

Blagojevich was convicted of trying to sell President Barack Obama's vacant senate seat. Nayak had also told the FBI that Jackson made a "pay-to-play" offer to get Blagojevich to appoint Jackson to fill the senate seat left vacant by Obama's election as US President.

Nayak was charged with 10 counts of mail fraud, five counts of interstate travel in aid of racketeering, and four counts of filing false income tax returns for the years 2005-2008.

The indictment seeks forfeiture of at least $1.8 million in alleged fraud proceeds, or substitute assets, including Nayak's Oak Brook, Illinois residence and two surgery centres.

In addition to those two facilities, Nayak owned and controlled health care-related businesses in Illinois and Indiana, according to the indictment.

Each count of mail fraud carries a maximum penalty of 20 years in prison and a maximum fine of $250,000 as well as mandatory restitution, while each count of filing a false income tax return carries a three-year maximum prison term and a $250,000 fine.

In addition, defendants convicted of tax offenses must pay the costs of prosecution and remain liable for any and all back taxes, as well as a potential civil fraud penalty of 75% of the underpayment plus interest.

According to the indictment, Nayak's facilities did not accept patients covered with public health insurance programmes, such as Medicare and Medicaid, and instead accepted patients insured by private health insurers, such as BlueCross BlueShield, or patients who agreed to pay the entire fees themselves.

Private insurers treated Nayak's facilities as "out-of-network" when paying bills submitted for patient services.

Between 2000 and December 2010, Nayak allegedly defrauded patients by paying and arranging to pay bribes and kickbacks in the form of cash and other hidden payments to physicians who would refer their patients to Nayak's facilities for medical treatment.

Nayak paid hundreds of thousands of dollars to different physicians in exchange for patient referrals, the charges allege. The physicians deceived their patients by not disclosing that they were being paid for making referrals to Nayak's facilities.

The indictment alleges that Nayak paid bribes and kickbacks to physicians to begin referring patients, and at other times he did so to ensure that they continued to refer patients to his facilities.

Nayak allegedly concealed the scheme by making payments in cash, disguising the payments as advertising, or by disguising the true purpose of the payments through fraudulent agreements and contracts, including contracts purporting to pay physicians for performing services that Nayak knew they had not provided.

Between 2002 and December 2008, Nayak allegedly obtained cash to pay bribes and kickbacks by giving 'Individual A' more than $2 million in checks drawn on his facilities' accounts and, in exchange, at Nayak's direction, the individual gave Nayak cash equaling approximately 70% of the value of the checks.

Nayak indicated to his tax preparer that the checks to the individual were for advertising and should be treated as a business expense on tax returns for Nayak and his facilities.

After he was interviewed by law enforcement agents in December 2008, Nayak allegedly took additional steps to hide the scheme by executing fraudulent contracts and by warning physicians not to speak with agents about the payments.

The tax counts allege that Nayak prepared false individual federal income tax returns that understated his true income. As a result, Nayak allegedly understated his gross income when he reported the following amounts: $4,643,916 for 2005; $6,471,865 for 2006; $5,791,109 for 2007; and $9,362,647 for 2008.