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Fundraiser seeks immunity in Blagojevich probe
A key figure in Gov. Rod Blagojevich's alleged scheme to sell a U.S. Senate seat has sought immunity from federal authorities in return for his cooperation in their ongoing probe, the Tribune has learned.
Raghuveer P. Nayak, an Oak Brook businessman and political fundraiser, is the unnamed "Individual D" who prosecutors say was being squeezed by the governor for campaign cash in return for appointing U.S. Rep. Jesse Jackson Jr. to the Senate seat vacated by President-elect Barack Obama, sources said.
Investigators appeared at Nayak's Oak Brook home the morning the FBI arrested Blagojevich, the sources said. Nayak was among a number of people connected to the case who were contacted by federal agents that day.
Nayak has not been accused of wrongdoing and declined to comment. It is unclear what information he can provide to authorities, who said they had more work to do after moving quickly to interrupt the governor's alleged scheme.
The 54-year-old millionaire, who made his fortune in medical businesses, was until recently little-known outside Chicago's close-knit Indian community and the state's political fundraising circles.
But since the governor's Dec. 9 arrest, Nayak has emerged as a central figure in a scandal that has shaken the foundation of Illinois politics and thrust the state into a spotlight of national scorn.
The Tribune has reported that Nayak hosted an Oct. 31 luncheon where he discussed raising $1 million for Blagojevich to help persuade the governor to choose Jackson. The congressman's brother Jonathan appeared at a Nayak-sponsored fundraiser for the governor three days before Blagojevich was arrested.
The congressman has acknowledged speaking with Nayak about his desire for the Senate seat but said he did not endorse and was not aware of a fundraising effort to support his bid.
On Sunday evening, Jackson's lawyer, James Montgomery Sr., reacted to the news of Nayak's bid for immunity by saying, "If that is indeed the case, and if that cooperation relates to my client, then [Nayak] is trying to save his own skin. That's all I have to say."
Attempts to reach the congressman were unsuccessful Sunday.
Only Blagojevich and his chief of staff are charged in the federal complaint, which alleges the two-term Democrat put a price on many of his official actions. But federal prosecutors say the case epitomizes the worst excesses of a political system in which public officials raise money from people who want something from their government.
It is a system in which those who supply the money are never far from government's most powerful players. And that system wouldn't exist without people like Raghu Nayak.
Federal and state election reports show Nayak, his wife and his businesses for the last decade have donated more than $779,000 and raised hundreds of thousands more for candidates ranging from the Cook County Circuit Court clerk to President-elect Barack Obama. He has contributed primarily to Democrats but has given money to some Republicans as well.
Nayak also has been a notable contributor and fundraiser for three statewide officials who have been among the governor's harshest critics since the scandal broke—Atty. Gen. Lisa Madigan, Lt. Gov. Patrick Quinn and Treasurer Alexi Giannoulias.
People close to Nayak say the Indian emigre overcame racism and near-poverty to launch several successful businesses and become a well-respected leader in the state's growing Indian-American community.
Nayak, whose businesses have needed the approval of state regulators and auditors from various agencies over the years, also is a man long familiar to federal investigators interested in allegations of fraud at his medical clinics, allegations he has vehemently denied. He has never been charged.
Nayak and his longtime business attorney refused to discuss the Blagojevich case. But the attorney, Thomas Conley, said his client is "just a good guy" and an honest businessman who stepped up when "the Indian community recognized that it needed to have its interests heard by politicians."
Conley said Nayak enjoys political fundraising.
"He's into it, and it's good to know people like that," Conley said, "but we've raised money for winners and we've raised money for losers."
Many of the politicians Nayak has helped have begun to distance themselves in the wake of the disclosures of his alleged involvement in the Blagojevich scandal.
Madigan, who has received more than $42,000 from events Nayak has hosted or co-hosted, including one event at his house in 2006, said she hasn't sought any contributions from him since then.
"And we don't plan on seeking any in the future," she said.
Quinn said he had no reason to question Nayak's past support but said he was "a million miles away" from the current imbroglio surrounding the governor and Nayak.
"I'm carefully monitoring the situation," Quinn said.
A call to a Giannoulias spokesman was not returned.
Iftekhar Shareef, an Indian businessman who is among a regular group who attend Nayak fundraisers, said Nayak has always been motivated by generosity.
"He does it for the community. I don't think he does it for himself," said Shareef, who said he has attended about 20 Nayak events for various politicians, including Blagojevich and Jackson. "I don't think any of them missed a chance to be in his home."
Nayak's connections to the Jackson family go back years. Not only has he been a longtime political supporter of Rep. Jackson, he's traveled with the congressman's father, Rev. Jesse Jackson, to India and he's partnered with the congressman's brother, Jonathan, on a failed land deal. Records also show Jonathan Jackson's former cellular phone business used office space at a Gold Coast facility owned by Nayak.
Nayak's businesses have faced multiple audits by state and federal authorities since he first opened his Chicago drug stores in the early 1980s, according to interviews and records. In addition, his name came up repeatedly in one of the largest health-care fraud investigations in Illinois history.
Nayak was never charged in that case, or any other.
The multi-year federal probe resulted in the shuttering of two South Side 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.
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.
Conley said the "implications that Mr. Nayak was involved in any way with any improper activity is unfair."
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.
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.
A former Nayak employee, Dr. Tariq Butt, was on the state's Medical Disciplinary Board that later decided to give Barnabas his license back, according to state records.
Nayak was part of the Blagojevich transition team that recommended appointments to health care boards. But Conley said Nayak had nothing to do with Butt's appointment and exerted no influence with the governor, Butt or anyone else in the case.
Barnabas and Butt did not return calls for comment.
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.
"Nothing has ever gone beyond the initial inquiries," Conley said. "This is just a part of life for health care professionals. Aside from Indiana, he's never paid a dime back on all those audits and there are very few labs that can say that."
Nayak said last year that together his businesses make about $60 million a year. He also said his medical businesses no longer accept public aid.
"We don't want the hassles of the government coming into our business," he testified in a 2007 deposition for a civil lawsuit.
Tribune reporters Dan Mihalopoulos and Jeff Coen contributed to this report.