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United States v. Nayak

United States Court of Appeals, Seventh Circuit

October 20, 2014

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
RAGHUVEER NAYAK, Defendant-Appellant

Argued September 9, 2014

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 12 CR 447 -- Robert W. Gettleman, Judge.

For United States of America, Plaintiff - Appellee: Andrianna D. Kastanek, Attorney, Office of The United States Attorney, Chicago, IL.

For Raghuveer Nayak, Defendant - Appellant: Thomas K. McQueen, Attorney, Chicago, IL.

Before FLAUM, ROVNER, and HAMILTON, Circuit Judges.

OPINION

Flaum, Circuit Judge.

Raghuveer Nayak pled guilty to mail fraud after federal authorities learned that he had been secretly bribing physicians in exchange for referrals to his outpatient surgery centers. As permitted by his plea agreement, Nayak now appeals, claiming that his indictment was legally insufficient because the government did not allege that his conduct caused or was intended to cause tangible harm to any of the referring physicians' patients. Because actual or intended tangible harm is not an element of

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the offense of honest-services mail fraud, we affirm.

I. Background

Nayak owned multiple ambulatory surgery centers--also known as outpatient surgery centers--including two in Chicago: Rogers Park One-Day Surgery Center and Lakeshore Surgery Center. To attract business, he made under-the-table payments to physicians that referred patients to his centers. These bribes and kickbacks took multiple forms, including cash payments and payments to cover referring physicians' advertising expenses. Nayak instructed at least some of his collaborators not to report these payments on their tax returns.

After learning of the kickback scheme, the government indicted Nayak. It later filed a superseding information charging him with honest-services mail fraud, in violation of 18 U.S.C. § § 1341 and 1346, and obstruction of the administration of the tax system under 26 U.S.C. § 7212(a). Although both the indictment and the superseding information alleged that Nayak intended " to defraud and to deprive patients of their right to honest services of their physicians" through his scheme, neither alleged that Nayak caused or intended to cause any sort of tangible harm to the patients in the form of higher costs or inferior care. In fact, the government later represented to the district court that the scheme did not cause patients any physical or monetary harm.

In the district court, Nayak filed a motion to dismiss the mail fraud count, contending that the government needed to allege some form of actual or intended harm to the referring physicians' patients[1] as an element of the crime. The district court rejected this argument, finding that the case law in this circuit imposes no such requirement. Following the denial of his motion to dismiss, Nayak entered a conditional guilty plea to both counts of the superseding indictment. Pursuant to Federal Rule of Criminal Procedure 11(a)(2), Nayak reserved his right to appeal the district court's denial of his motion to dismiss the mail fraud charge. Exercising that ...


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