Desai seems confused in transcript

Dr. Dipak Desai, appearing to be confused and suffering from memory loss, offered little information about his finances when grilled under oath April 3 during a meeting of his creditors in U.S. Bankruptcy Court, a transcript shows.

It was the first time that Desai, 62, has testified in any legal proceeding since health officials broke the news in early 2008 about the hepatitis C outbreak.

The sworn testimony comes after state medical experts who evaluated Desai concluded in January that Desai exaggerated the effects of two strokes and was competent to face criminal charges stemming from the outbreak at his clinics.

Toward the end of the three-hour examination, Desai's lead criminal attorney, Richard Wright, asserted the embattled 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 when questioned by Bankruptcy Trustee William Leonard Jr. and his attorneys, James Hill and John Heisner. Desai answered questions throughout the examination with the phrases, "I don't know, I don't remember" and "I have no idea."

His bankruptcy lawyer, John Hansen, filed court papers this week seeking to put off the continuation of the examination on May 15, arguing Desai will be unable to offer meaningful testimony.

Hansen said it was "readily apparent" on April 3 that Desai couldn't provide useful information because of his "mental incapacity that not only involves severe memory loss, but the inability to even understand financial terms."

But Chief Deputy District Attorney Mike Staudaher, who is prosecuting Desai in the state's criminal case, questioned whether Desai was being truthful in his testimony.

"I'm not buying his answers," Staudaher said. "From reading through the transcript, it appears as though he's faking it once again."

Early in the examination, according to the 122-page transcript, Hill asked Desai about $800,000 he had in a Morgan Stanley investment account.

"Can you tell me, sir, at the time the bankruptcy petition was filed back in February 2010, what the Morgan Stanley account was and what kind of deposits were held there?" Hill asked.

"Who is Morgan Stanley? Who is he?" Desai responded.

"That's what I'm asking you," Hill said. "I'm trying to probe your knowledge and recollection."

"Your asking me, do I know him?" Desai responded. "I don't know him, Morgan Stanley, anybody named that."

"All right," Hill said. "So your testimony is as you sit here today, you don't recognize that account and you're not able to answer my questions with respect to deposits in that account?"

"I don't understand who is Morgan Stanley. I don't know," Desai responded.

Hill told Desai that Morgan Stanley was a financial institution and then moved on to another line of questioning.

When Hill asked Desai whether he had made any financial decisions within the last year about one of his business partnerships, Desai responded: "I don't have any money in my pocket, sir. I don't make any money. I don't go out. I don't buy anything."

Desai claimed to not recall any of his former business entities except for the Endoscopy Center of Southern Nevada, the lead clinic at the center of the 2007 hepatitis C outbreak.

He recalled that the clinic was closed, saying, "That's where I used to go to work."

Asked if he remembered his medical practice, Desai responded: "I don't recall. I know I was a doctor, and I know that I was told that I was a stomach doctor. But I don't recall more than that because everybody has tried to explain to me what I used to do and everything, and I say, 'What?' "

"OK, do you have any recollection of having treated patients?" Hill asked.

"No sir. I have no idea," Desai responded. "I can't see their faces in front of me. I'm trying to."

When Desai, once reported to be worth as much as $200 million, was asked when he first heard that his bankruptcy case had been filed for him, he responded, "I have no idea, sir. I have no money."

Hill asked Desai if any of his friends were holding money for him in the United State or outside the country.

"I have no friends," Desai responded. "Nobody comes to see me."

Desai appeared to have trouble answering a question about the furnishings in his $2 million home at the exclusive Red Rock Country Club.

"I don't know what you mean by that," he said. "I know ... I eat with spoon. I sleep in a bed. I use sofa, and there is the TV, which is not working."

Leonard this week filed court papers approving the sale of the home for $2 million.

Turning to another subject in the examination, Leonard asked Desai if he had any offshore bank accounts.

"No. What does offshore bank account mean?" Desai responded.

"Any bank account that is not in the United States."

"No sir."

Toward the end of the examination, Wright clashed with Leonard over a line of questioning.

"He has diminished capacity, if you all can't comprehend that yet," Wright said. "So I will answer it for him, and he won't answer it."

Later, Wright invoked the Fifth Amendment on Desai's behalf, as the questions turned to Desai's criminal liabilities.

Desai and nurse anesthetists Keith Mathahs, 75, and Ronald Lakeman, 64, were indicted in June 2010 on 28 felony charges, including racketeering, insurance fraud and neglect of patients. They are to stand trial Oct. 22 before District Judge Valerie Adair.

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.