Dr. Roland Borrasi chuckled as he told three doctors how he used kickbacks and cash bribes to shuttle unsuspecting nursing home residents into Chicago-area hospitals and psychiatric wards.

"Basically, I have a commodity; my commodity is nursing home patients," Borrasi explained.

He didn't know it at the time, but federal agents were secretly recording that meeting.

One of the doctors was wearing a wire as Borrasi matter-of-factly explained the mechanics of patient brokering to physicians in his medical group.

Those recordings, along with court documents and federal investigative reports obtained by the Tribune, describe a web of corruption in which hundreds of thousands of dollars flowed among doctors, nursing home executives and hospital administrators as the facility operators sought to fill their beds with a steady flow of destitute patients.

While taxpayers paid millions of dollars in fraudulent Medicaid and Medicare bills, one Alzheimer's patient was given inappropriate brain radiation treatments, a Borrasi associate told federal agents. A second patient, a disoriented elderly woman, was sent to an acute psychiatric ward after she refused to eat in her nursing home dining hall, another medical professional told federal agents.

"The fact that … greed subordinated the care of elderly and infirm patients who really needed it is horrific at best," federal prosecutors wrote in a court filing earlier this year after Borrasi was sentenced for accepting more than $500,000 in kickbacks to steer vulnerable patients. Prosecutors described "the scope and breadth of the bribes" as "extraordinary."

Borrasi, now serving a six-year stint in a Kentucky federal prison, declined to comment.

The illegal operation centered on Rock Creek Center, a now-shuttered psychiatric facility in southwest suburban Lemont. Also named but never charged in the federal probe were two of the state's largest nursing home chains, whose patients allegedly were used in the scheme, as well as executives from two well-known Chicago hospitals, Methodist and Loretto, which "paid Borrasi for patients," prosecutors wrote in a federal court filing. Federal anti-kickback laws prohibit facilities from offering payments or inducements in exchange for referring Medicaid or Medicare patients.

The crimes took place in 2002 and before, but it took federal agents years to uncover the conspiracy. Their investigative reports and transcripts of undercover recordings have surfaced only recently as the prosecutions near conclusion.

Advocates for the disabled such as ACLU attorney Benjamin Wolf believe similar patient-brokering schemes continue in Illinois today. Government-funded patients, Wolf said, "become a money machine" for the homes and hospitals alike.

Borrasi made himself the indispensible middleman in the patient-brokering racket: He worked at both nursing homes and hospitals and thus could shuttle hundreds of patients to maximize the facilities' profits. The brash medical group boss drove a Porsche, kept several mistresses and began wearing a bulletproof vest after being shot at close range in the parking lot of a nursing home in 2002, records show.

In addition to Borrasi, Rock Creek's CEO and its director of operations were sentenced for related crimes in recent months.

A fourth defendant, Dr. Naseem Chaudhry — a psychiatrist who worked as a consultant for Borrasi's medical group and also as medical director of Rock Creek — pleaded guilty Wednesday to one count of health care fraud. His sentencing is scheduled for August.

Federal agents have traced a cat's cradle of illicit payments, with money allegedly flowing to and from Borrasi through the medical group he owned and operated.

To ensure a steady stream of patients to their facilities, operators of hospitals and nursing homes paid Borrasi's medical group "stipends" that were really "bribes disguised as legitimate income," prosecutors said in court papers.

Four nursing homes linked to the Alden Management Services nursing home group, founded by Floyd Schlossberg, paid Borrasi's medical group stipends totaling $54,000 in 2002, according to records and interviews. Borrasi told his medical colleague and co-worker Abhin Singla that Alden nursing homes were paying him "in exchange for admitting patients" there, according to the federal investigative reports. Schlossberg and Alden representatives declined to comment.

Methodist Hospital of Chicago, on the North Side, paid Borrasi's group stipends of $8,267 in 2000, while Loretto Hospital, on the West Side, paid $12,500 in 2002, records and interviews show. Prosecutors said Borrasi had "payment-for-referral arrangements" at both places, but the facilities declined to comment.

Also paying Borrasi's medical group and serving as a source of patients, according to prosecutors and court exhibits, were nursing homes operated by Philip Esformes and his father, Morris Esformes. They and their companies have an ownership stake or management and consulting role in 28 nursing facilities in Illinois and Florida.

Three Esformes facilities paid Borrasi's group a total of $25,400 from 2000 to 2002, according to government records and interviews. Borrasi was medical director at Burnham Healthcare, for example, from approximately July 2000 through December 2002, and he continued to see patients there for several years afterward, records and interviews show.

Through their attorneys, Philip and Morris Esformes vigorously denied wrongdoing and said the payments to Borrasi "were market rate and ordinary and customary payments for services as medical director," adding that Borrasi did a good job.

"There is absolutely no evidence that these payments were tied into patient referrals," said attorney Michael Pasano.

Attorneys for the Esformeses say their clients have never been contacted by federal investigators regarding the patient-brokering allegations.

Government records raise questions about the quality of care provided by Borrasi's medical group at Esformes homes. At Burnham, for example, Borrasi knew two of his doctors were not visiting some patients, but he "fixed all the charts ... to conceal the fact that services were not provided," one of those doctors, Singla, told authorities.