JESSE JACKSON, JR. (D-IL) FUNDRAISER ARRESTED BY THE FBI
OAK BROOK, Ill.— June 21, 2012
A man connected to former Governor Rod Blagojevich and Congressman Jesse Jackson, Jr. is expected to face a judge on Wednesday on charges of paying bribes and kickbacks.
Raghuveer Nayak was arrested at his home in Oak Brook Wednesday morning. He is accused of paying bribes and kickbacks to doctors who sent patients to his surgery centers.
Nayak appeared briefly at a hearing at Dirksen U. S. District Courthouse Wednesday 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.
Prosecutors are seeking $1.8 million in "alleged fraud proceeds," including forfeiture of Nayak’s home, his One Day Surgery Center in Rogers Park and his Lakeshore Surgery Center.
Between 2000 and 2010, Nayak allegedly paid hundreds of thousands of dollars to physicians who would refer patients to Nayak’s medical centers.
In one kickback scheme, Nayak paid one person, identified only as "Individual A," more than $2 million in checks drawn on his surgery centers' accounts. In return, "Individual A" gave Nayak cash equaling about 70 percent of the value of the checks, according to the indictment.
"Nayak allegedly indicated to his tax preparer that the checks to Individual A were for advertising and should be treated as a business expense on tax returns for Nayak and his facilities," the indictment states.
After he was questioned by federal agents in December 2008, Nayak warned physicians not to speak with agents about the payments.
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.
Nakak was a fundraiser for both Blagojevich and Rep. Jesse Jackson Jr.
Nayak told federal investigators that Jackson asked him to raise campaign money for Blagojevich in the hopes that the then-governor would appoint Jackson to the U.S. Senate seat vacated by Barack Obama, sources familiar with the investigation have told the Tribune.
Nayak was never charged in that investigation, and wasn't called to testify at Blagojevich's two trials.
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
