In August, Universal Health Care Group was crumbling. Regulators circled. Bankruptcy loomed. ¶ Still, founder and CEO Akshay Desai didn't publicly hint at any problems. ¶ "As a businessman, I know all too well what it takes to make it in the private sector," he bragged at the time. ¶ It was vintage Desai — supremely confident, selective with the facts. ¶ The 55-year-old son of Indian educators built Universal on smarts and ambition. He was charming when he needed to be, domineering when he wanted. One day he was persuading investors to part with tens of millions of dollars, the next he was berating employees to tears.
He rose high into the Republican fundraising ranks, dining with President George W. Bush at his Texas ranch.
Eventually he realized his dream: a $1.5 billion health care company, with more than 140,000 members in 23 states.
But his success was largely an illusion.
Last month, FBI agents raided the company. Regulators have accused Universal's leadership of fraud, embezzlement and diversion of funds, though they have not accused any individual of a crime.
Desai, through his Miami attorney, told the Times that his company "always acted in an ethical and legal fashion."
Interviews with dozens of employees and investors and a review of thousands of records reveal that Universal was in trouble almost from the start. And Desai may only have himself to blame.
He drove away top executives. He skirted rules. He declared that Universal members who asked for electric wheelchairs could use walkers instead. And it was Desai who pumped millions of dollars into six-figure BMWs, swank offices and executive bonuses as the company spiraled downward.
Rise of a power broker
For "Doc," as Desai is uniformly known, being a physician wasn't fulfilling enough; he yearned to be an entrepreneur.
After earning a medical degree in his native India, he headed to America for his residency and a master's degree in administrative medicine.
"In those days, in the '80s, it wasn't very sexy for doctors … to understand the business,'' Desai told the Times in 2011. "But I always felt that if you understand the complexity of health care, you could do better personally and professionally and contribute to society.''
Desai, a geriatrician, opened a practice in St. Petersburg because of its large elderly population. He soon began managing the practices of other doctors, and in 2003 started a health maintenance organization, Universal Health Care, for people on Medicare and Medicaid.
With his new company and big waterfront home, Desai quickly established himself in Tampa Bay's civic circles. He and his wife, Seema, hosted charity galas and contributed more than $800,000 to Republican causes and candidates.
President Bush named Desai to his Advisory Commission on Asian Americans and Pacific Islanders. Gov. Jeb Bush appointed him to the Board of Governors overseeing Florida's university system.
By 2006, Desai had the stature — and connections — to satisfy a major ambition: starting his own insurance company. Also called Universal Health Care, it would market Medicare Advantage plans that used federal dollars and members' enrollment fees to offer more services than regular Medicare. To get going, he needed investors.
Desai raised almost $60 million — half from a large hedge fund, the rest from his huge circle of friends, family and corporate heavyweights, including Tampa developer Al Austin and former Walter Energy CEO Don DeFosset.
Investors didn't mind, or didn't know, that Desai was embroiled in a legal fight with four doctors who claimed he had mismanaged their practices. Or that years before a judge had ordered him to pay $323,000 to another doctor who accused him of reneging on a shareholder agreement.
"I had known Dr. Desai through mostly Republican politics, got to like him and respect him,'' recalls Jim Holton, a Madeira Beach lawyer who invested $250,000. "A whole group of folks were investing and reviewed it and thought it made good sense at the time.''
Desai's new Medicare Advantage plan, "Any, Any, Any,'' was a huge hit. Members loved the promise that they could see any doctor anywhere at any time.
"He wanted, quite frankly," said Bruce Hoffman, a Universal compliance officer, "to be the biggest and the best.''
Desai's big ambitions soon caused big problems.
Hospitals and Universal members repeatedly complained about delayed payments and denied claims. A joke started making the rounds: The "Any, Any, Any Plan" meant Universal wasn't paying "any doctors, any hospitals or any agents."
Regulators weren't happy either.
As insurers grow, they must put aside more money to make sure they can pay claims. Universal wasn't doing that, at least not quickly enough.
In February 2007, Florida regulators declared Universal nearly insolvent. They ordered Desai to boost reserves by $11 million in less than a month or face liquidation.
Investors were stunned. Desai had never let on that there was a problem, said Abhijit Pandya, a Boca Raton computer science professor who invested $500,000.
"He had gone ahead and collected money from people without mentioning those concerns,'' Pandya said. "Within a month, there was a big uproar.''
Desai called a meeting of investors at the Tampa Airport Marriott hotel. Also present was Kiran Patel, founder of rival Tampa insurer WellCare Health Plans.
Patel offered to take over Universal and run it "right,'' Pandya recalled. But Desai, a teary-eyed Seema by his side, persuaded investors to stick with him.
"AK Desai was a very smooth talker,'' Pandya said. "Everybody felt sympathy. His wife was there crying in tears as if her own brother had lost money.''
Investor anger cooled. The state's effort to liquidate Universal stalled in court, buying Desai time to raise the money.
Desai had rescued his company. He was back in business.
Desai controlled almost all of Universal's stock. He answered to no one and spent as he liked.
He used a $275,000 salary to lure a marketing president from Arizona. He signed up sales directors at $80,000 a pop, plus bonuses for every new customer. The company paid $507,000 for a nearby condominium. Executives received $120,000 BMW 750 iLs as company cars.
He hired at least one manager with a glance at a resume.
"It was the fastest interview I ever had in my life,'' Hoffman said. "Less than two minutes.''
Desai invested his own money in a hotel-casino project on a Pacific island. He and Seema paid $1 million for a second house next to their multimillion marble and glass mansion on Tampa Bay. They hosted a huge party at Tropicana Field where hundreds of guests dined on curry, listened to Bollywood music and posed for photos with then-Gov. Charlie Crist, one of Desai's closest political pals.
Desai eventually moved Universal into two floors of a downtown St. Petersburg office building for $9 million, then spent $750,000 on renovations including an executive bathroom.
In his customary suit and tie, Desai presided over morning staff meetings at a long conference table.
"I would always marvel at how he would go down the table and hit 32 people in a row and ask them really specific questions on how things were going,'' Hoffman said. "He knew everything that was going on. Sometimes he was the smartest guy in the room.''
He was also demanding. Five chief financial officers cycled through in six years.
"Dr. Desai has always had a God complex," said Carol Hudson, a registered nurse who worked for Universal. "He could be very mean; yelling at people, throwing papers across a room, degrading and humiliating people in front of their co-workers."
Desai berated one senior marketing executive to the point the man was in tears.
"When I watched (Desai) tear him down, I just wanted to throttle him. It was so evil,'' said Dr. Edward Lowenstein, one of Universal's first medical directors.
Desai acknowledged he could be a tough boss. "With that said,'' he told the Times through his attorney, "my intentions were to see that my employees continued to better themselves at the office and in their personal lives.''
Desai's control extended to individual claims. He or a top lieutenant personally approved all hospital claims above $25,000 and physician claims above $2,500, employees said.
Lowenstein said he was shocked when Desai told him never to authorize the use of electric wheelchairs. Patients could either use walkers or find someone to push them around, Desai insisted.
"I knew from that moment this was a God-awful place,'' said Lowenstein, who left the company after two years.
'A gray area'
Some allegations were more serious.
Hoffman, the former Universal compliance officer, said he told Desai in 2009 that the company was skirting regulations and being too aggressive with marketing.
"I said, 'Doc, you either follow the rules or you don't,' '' Hoffman recalled. "He said, 'No, there's a gray area, it all depends on how you interpret it.' "
To make company finances look better, Universal executives directed employees to inflate how much money was in certain accounts, regulators said. Universal outsourced many services to a vendor in India without required state approval.
It also paid millions of dollars a year to Desai's medical practice and to another company he owned, American Managed Care, to handle claims and other services.
"That's the sort of thing that regulators might have concerns about,'' said Allan Baumgarten, an independent health market analyst. "How can it be an arm's length arrangement if one person is CEO of both companies?''
Meanwhile, Universal was alienating the very people it depended on — customers. Complaints poured in. For three years in a row, federal Medicare overseers gave Universal poor quality ratings, for long delays and frequent claim rejections.
Case in point: Wilma Keck, 80, of Spring Hill broke her hip, then developed serious heart problems while vacationing in Canada. Universal promised to pay all of her hospital and medical bills.
Instead, the company left Keck owing $21,632. She is paying it off $150 a month from her Social Security.
"They get so much from the government and they made out like bandits,'' Keck said.
'We're doing very well'
By early 2012, Universal was in free fall.
The company had lost $27 million in the previous year and the losses were getting worse. Florida insurance regulators fretted that the company was on the path to failure, emails show.
Desai, however, kept up his illusion of success.
He gave himself a $2.5 million bonus on top of his $900,000 salary and awarded $2.2 million in bonuses to other officers and directors.
"At the conference calls we had with Desai, he said, 'Oh, we're doing very well. Don't worry about your investment,' " said Donna Bailey of Ruskin, who invested $10,000 on the advice of a doctor who knew Desai.
Dr. Brad Pressley, a North Carolina dentist who put $200,000 into Universal, said Desai didn't return emails or phone calls, and other Universal executives were no help. Like others, he never got a dime back on his investment.
"It's been nothing but one lie and one failing after another," he said.
Desai was upbeat last April when Florida Chief Financial Officer Jeff Atwater, a fellow Republican, came to St. Petersburg to tour Universal's headquarters and chat about party politics.
"He felt (Universal) was growing and he was doing well and things were positive," Atwater said, adding he was unaware that other regulators had red-flagged the company.
In August, on the final day of the Republican National Convention in Tampa, Desai hosted a party at his home for several governors, including Rick Perry of Texas and Scott Walker of Wisconsin. He jetted around with Mitt Romney, the GOP presidential nominee, and bragged of his success at Universal.
Behind the facade, Desai was scrambling to sell the company. Regulators and Universal's lender, BankUnited, realized Universal managers had deceived them about the company's finances and weren't about to sign off on a sale. Instead regulators seized the company.
The collapse was complete when the FBI raided Universal's headquarters last month, during the same week that most of the remaining 800 employees were clearing out their desks.
Desai resigned as finance chairman of Florida's Republican Party and member of the state Board of Education. He put his second house in St. Petersburg up for sale for $1.8 million. But he brushed aside suggestions he might leave town.
"St. Petersburg-Tampa Bay is our home and our family has been well received by our local community for the past 24 years, through good and bad times," Desai said through his attorney. "We love our community and are staying."
Times researcher Connie Humburg contributed to this report. Susan Taylor Martin can be contacted at firstname.lastname@example.org Jeff Harrington can be contacted at email@example.com.