Desai accused of faking memory loss in bankruptcy case

The trustee in Dr. Dipak Desai's bankruptcy case this week accused the physician at the center of the hepatitis C outbreak of faking memory loss to duck key questions under oath about his finances.

Lawyers for the trustee, William Leonard, raised the allegation in court papers opposing Desai's move to put off next month's continuation of a sworn examination before creditors.

"The state of Nevada has determined the debtor to be a malingerer and faker, hiding behind a false shield of asserted incompetency," the lawyers wrote. "Until the debtor steps outside of his guise of incompetency and cooperates with his trustee in this case .... the trustee should be allowed to continue to press forward with his and with creditors questions at the still open and continuing meeting of creditors."

Desai, 62, claiming to be confused and suffering from memory loss, offered little information when Leonard and his lawyers grilled him for three hours on April 3 until the examination had to be cut short at the day's end.

Earlier this year, medical experts at Lake's Crossing, the state's mental health hospital in Sparks, found Desai competent to stand trial on criminal charges, concluding he had exaggerated cognitive impairments from two strokes.

Desai's criminal case was put on hold for 18 months until his competency was determined. He spent six of those months under steady observation at Lake's Crossing, a secure facility.

"Consistent with what the Lake's Crossing psychiatrists determined about Dr. Desai's malingering and feigning cognitive deficits, he demonstrated the behavior at the (creditors) meeting," Leonard's lawyers said in their court papers.

Lawyers for Nevada Mutual Insurance, Desai's medical insurance carrier, made that same argument this week in separate court papers alleging the physician was "attempting to avoid the burdens of bankruptcy by claiming not to remember details of his assets."

Chief Deputy District Attorney Mike Staudaher, who is prosecuting Desai in the criminal case, has previously said he also thinks Desai was faking his memory loss at the creditors examination.

Desai's April 3 testimony in U.S. Bankruptcy Court was his first in any legal proceeding since health officials broke the news in early 2008 about the hepatitis C outbreak at his clinics.

Toward the end of the examination, Desai's lead criminal attorney, Richard Wright, asserted the physician's Fifth Amendment rights against self-incrimination on five occasions and instructed Desai not to answer questions related to his criminal proceedings.

Desai appeared to display a lack of understanding of the bankruptcy process and the state of his financial affairs. He answered questions with the phrases, "I don't know," "I don't remember," and "I have no idea."

His bankruptcy lawyers contend there is no need to continue the creditors examination on June 12 because Desai can provide no meaningful testimony about his finances.

U.S. Bankruptcy Judge Mike Nakagawa is to hold a hearing on the issue on May 15.

Desai's criminal case in District Court, meanwhile, is moving forward. A hearing is set next week before District Judge Valerie Adair on his bid to get his June 2010 criminal indictment tossed out.

Desai and nurse anesthetists Keith Mathahs, 75, and Ronald Lakeman, 64, each face 28 felony charges, including racketeering, insurance fraud and neglect of patients. They are to stand trial on Oct. 22.

The charges, the result of one of the biggest investigations ever conducted by the Metropolitan Police Department, revolve around seven people who authorities say were infected with the potentially deadly hepatitis C virus at Desai's clinics in 2007.

Desai also faces a Nov. 20 federal trial before U.S. District Judge Gloria Navarro with his former clinic manager, Tonya Rushing, 44. Both are charged with one count of conspiracy and 25 counts of health care fraud.

Contact Jeff German at or 702-380-8135.