CHICAGO (Associated Press) -
Raghuveer Nayak — a former campaign fund-raiser for U.S. Rep. Jesse Jackson Jr. and a key figure in the Rod Blagojevich scandal — has pleaded not guilty to fraud charges related to his outpatient surgery centers.
A judge set bond Wednesday for Nayak at $10 million. Nayak has agreed to post six properties in Indiana and Illinois and was released from custody immediately after a brief hearing in federal court.
He was accused of paying bribes and kickbacks to physicians for patient referrals and filing false federal income tax returns. FBI agents detained Nayak on Wednesday at his suburban Chicago home.
Nayak, who owns outpatient medical centers in Illinois and Indiana, was charged in a 19-count indictment with mail fraud, interstate travel in aid of racketeering and filing false income tax returns for 2005 to 2008.
"Over the course of the scheme, Nayak paid hundreds of thousands of dollars to different physicians in exchange for the referrals that the physicians had made or would make to Nayak's facilities," according to the indictment. "As Nayak intended, the physicians materially deceived their patients by not disclosing to the patients that their physicians were being paid to make referrals to Nayak's facilities."
Prosecutors are seeking $1.8 million in Nayak's "alleged fraud proceeds," including forfeiture of his Oak Brook home and two surgery centers. Authorities allege the fraud took place from 2000 to 2010.
While he was never charged and didn't testify during Blagojevich's corruption trials, Nayak's name has come up in connection with them. He has also been mentioned in a House Ethics Committee probe over Jackson's alleged ties to Blagojevich.
At the former governor's first corruption trial in 2010, prosecutors said that another Blagojevich fundraiser, Rajinder Bedi, was ready to testify that Jackson instructed Nayak to raise money for Blagojevich's campaign in exchange for an appointment to President Barack Obama's old Senate seat. Bedi did testify that he attended a meeting with Jackson and Nayak, but the judge barred jurors from hearing specifics.
Nayak was a major campaign contributor, giving nearly $500,000 to candidates between 2000 and 2008, according to the Illinois Campaign for Political Reform. About 40 percent of that amount went to Blagojevich, with the rest being contributed to a who's who of state and national political figures, most of them Democrats.
The group found that Nayak contributed about $12,000 between 1998 and 2008 to Jackson, with most of those contributions coming in $2,000 increments, the largest amount he was allowed by law to give to federal candidates per election cycle.
Nayak, a longtime friend of Jackson, also reportedly told the FBI that the congressman directed him to buy plane tickets for a woman described as Jackson's "social acquaintance." The issue came up on the campaign trail during Jackson's 2010 re-election and in the March primary, which the Democrat easily won. Jackson has since called it a personal matter that he and his wife have dealt with privately.
Jackson, who first won office in 1995, has not been charged and has repeatedly denied wrongdoing. He remains under investigation by the House Ethics Committee. Jackson's spokesman declined to comment Wednesday.
Former prosecutor Gil Soffer told FOX Chicago News that he doesn't believe the new charges against Nayak mean that prosecutors are trying to find a new route to Jackson.
"Your first instinct is to say, they're trying to squeeze him. They're trying to
apply leverage to get information related to the Blagojevich case," Soffer said. "But, after
giving it about three seconds thought, I don't think that's where it's going. I
think in many ways this may be a wrap up to that investigation and they're
closing out this loose end."
Nayak was represented at the hearing by Thomas McQueen, a Chicago attorney. He declined to comment about the charges after the hearing.
Blagojevich began serving a 14-year-old sentence on 18 corruption convictions in March.
