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Prominent US Modi supporter Dr. Akshay Desai in hiding, running from law in $25M defrauding case

Federal agents raid Universal Health Care headquarters Dr. Akshay Desai goes into hiding; investors lose $25 million

By A Correspondent, Indiatribune.com

St. Petersburg, FL: Indian American physicians and entrepreneurs, who invested over $25 million in Dr. Akshay Desai’s Health Care Group, Inc., are seething in anger after the company filed for bankruptcy. The Surat-born 55-year-old Dr. Desai, a high profile entrepreneur in Florida, who was a luminary of the Republic Party for his fundraising abilities and was closed to presidential contender Mitt Romeny, has gone underground according to report.

Dr. Desai, in an interview six months ago, had claimed: “My company is now doing business in 20 states and this year we are expecting revenue of $1.5 billion.”

The state documents portray Universal, as a company in deep financial distress and badly mismanaged. executives overstated assets and submitted “misleading financial statements” to the state and a major creditor, according to state documents released on March 28 by the Office of Insurance Regulation.

After Federal Bureau of Investigation agents on March 28 raided the headquarters of Universal Health Care Group Inc, in , , which has gone belly up and filed for bankruptcy throwing over a 1,000 employees out of work, the Department of Justice has called on the bankruptcy court to appoint a trustee for this major Medicare provider.

Guy G Gebhardt, a DOJ official and a US Trustee in Florida, in court documents filed on April 3, in the wake of the search-and-seizure warrant executed by the FBI as part of an investigation that federal laws may have been violated and criminal indictments are likely, reiterated that it was imperative that a trustee take over the reins of Universal.

He said he strongly believed there are grounds to suspect that the hierarchy of the company has committed fraud through false statements amounting to criminal conduct in its financial reporting.

The Miami investment group led by Miguel “Mike” Fernandez earlier had expressed interest in buying Universal, but backed away two days later without comment after seeing the presentation.

Universal listed its Advantage membership as 90,000, enrollees as 64,000. About 43 percent of the HMO members in Florida are patients, who require extra care — and bring in higher premiums from — because they have diabetes, lung disease or dementia.

A chart shows the company has brought in more than $1 billion in premiums a year, most of it from Medicare. Yet, according to another chart, the company lost $61 million in 2011 and $3 million last year.

Among some of the major investors in Universal were doctors Zach Zachariah, another longtime major Party fundraiser, who had ploughed in over $6 million, and Raj Gupta, who had invested over $4 million.

“He is going to pay for his mistakes because something is not right,’’ Dr. Gupta, a Fort Lauderdale physician, said. “He told me he can do whatever he wants and does not have to listen to me or any other investor.’’

Several other Indian American physicians, including Dr. Raghavendra Vijayanagar, founder and former chairman of the Indian American Republican Council, and several entrepreneurs, and even some academics had invested anywhere from $250,000 to $1 million each, and among them there was an overriding sense of deep disappointment and despondency, with one of them saying, “All the investors have been right-royally screwed.”

“Who the hell knows what he did with all the money,” one said. “Hundreds of millions of dollars and God only knows where the money went,” this investor said, adding, mockingly, “He was living larger then life, flying in private jets and talking big to Romney and all those people, and of course, nobody wants to talk to him now, and all the politicians have washed their hands of him.”

According to its Web site, Universal provided federal- funded entitlement insurance programs such as Medicare and Medicaid to nearly 200,000 customers in 19 states and had 40,000 Medicare and 60,000 Medicaid members in Florida alone, who were now in a quandary regarding the future of their health insurance.

The Tampa Bay Times reported that when the FBI agents raided the Universal headquarters on March 28, employees were ordered out and told to immediately get away from their computers.

The FBI raid was carried out during the same week that the bankruptcy court trustee had alleged “a pattern of dishonesty or gross mismanagement,” including “side deals” that benefited insiders, and had cited examples where more than $18.3 million had been transferred to a Universal subsidiary also founded by Dr. Desai and $2.2 million in “bonuses and other compensation” to company officers Desai, Patel and Ludy in addition to their salaries, also in 2012.

The trustee said that even as Universal was knee-deep in financial trouble, Desai had continued to draw a $900,000 salary and another $2.5 million or more in bonuses and other compensation in 2012.

After the FBI raid, Desai, who was easily accessible, couldn’t be reached and Zachariah, Gupta and others who had invested in Universal, said they could not reach him either and believed he had gone underground or may have left the country.

Starting in 2006, Universal’s Any, Any Any plan — members purportedly could see any doctor anywhere at any time — drew thousands of members but also complaints of false advertising, poor customer service and denied medical treatments. The company temporarily suspended enrollment, and in 2008 signed an agreement with state regulators to beef up reserves to handle the swelling volume of claims.

Over the next few years Universal continued to grow, eventually expanding to 23 states and serving 140,000 members. In 2010, it spent $9 million for a new headquarters on Central Avenue in St. Petersburg and another $750,000 for renovations.

It paid more than $500,000 for a 28th floor condo in nearby Signature Place, known for its sleek architecture and sweeping views of the waterfront. Employees joked that Universal needed the condo as temporary housing for the many executives who cycled through — the company had five chief financial officers in six years.

For the past three years, Medicare officials hammered Universal for poor quality, urging potential members to use caution before selecting it.

The first public notice that Universal was in serious financial trouble came in November when it agreed to stop selling Medicare policies in Georgia. That state’s insurance commissioner cited Universal’s net loss of $22.1 million in the first six months of the year as reason for the halt.

On Feb. 4, the Florida Office of Insurance Regulation deemed Universal nearly insolvent and accused executives of a broad pattern of financial mismanagement — including fraud and diversion of funds — under Desai’s leadership.

Two days later, Universal Health Care Group filed for bankruptcy, listing $50 million to $100 million in assets and $10 million to $50 million in liabilities. Among those to whom the company said it owes an “undetermined’’ amount: Desai and his wife, Seema.

The also said that Desai could not be reached and that “no one answered the door at his $2.6 million bay front Snell Isle mansion. A burgundy SUV and a dark silver Audi R8 sports car sat in the driveway, but the gates to the property were closed.

 

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