South Amboy Doctor Hid $3.6 Million to Avoid Income Taxes, State Says

South Amboy, NJ - A doctor here has been been accused of hiding approximately $3.6 million in income from his medical practice to evade taxes, the state attorney general said Monday.

Dr. Manoj Patharkar, 44, of South Amboy, (pictured) faces pending charges of conspiracy, money laundering, theft by deception and multiple counts of filing fraudulent tax returns and failure to pay taxes, the state said.

He is the owner of Pain Management Associates of Central Jersey in Edison and Prospect Pain Management Associates in Passaic.

Doctors paid to refer patients to Dr. Patharkar’s pain clinics

A Sayreville man, Mohammed Shamshair, 52, admitted Monday he helped the doctor evade about $327,000 in taxes owed to the state of New Jersey.

Shamshair also admitted he paid illegal cash kickbacks totaling as much as $1.56 million to 12 doctors, who were not named, on behalf of Patharkar. In return, the doctors would refer patients to one of Patharkar’s pain management clinics.

Doctor and his accountant made up “phantom employees” to reduce his income tax, state says

In the indictment charging Patharkar and Shamshair, the state alleged that Patharkar used two separate schemes to launder $3.6 million through his practices.

In the first scheme, Patharkar allegedly reduced his income tax obligations by fabricating the existence of employee payroll and wage expenses. Shamshair secured the personal identifying information of about 28 people, including Social Security numbers, names, dates of birth, and addresses. These 28 people became “phantom employees” for both practices.

To give the scheme a semblance of legitimacy, Patharkar allegedly issued at least 1,574 checks totaling $2,184,642 made payable or otherwise attributable to these 28 phantom employees.

In May 2015, Patharkar’s accountant, Irfan Raza, 45, of Valley Stream, N.Y., pleaded guilty to second-degree conspiracy for also assisting in the scheme by providing personal identifiers for the phantom employees. Raza, a certified public accountant, admitted to helping Patharkar and Shamshair launder the doctor’s income in exchange for a cut of the illicit funds.

Doctor failed to pay taxes on $1.4 million, state says

In the second scheme, Patharkar received approximately 4,310 checks totaling $1,413,511 from various companies and persons, including several national and regional insurance carriers, for medical services he provided. Patharkar allegedly deposited those checks into his personal bank accounts and did not claim those funds on his personal or corporate tax filings.