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Raid an ill wind for doctor, a donor to Menendez

Democrats faces probe

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Prominent Florida eye doctor and political donor Salomon Melgen has never tried to hide his ties to politicians. In fact, he markets them.

"He has treated many well-respected individuals including presidents, governors, politicians, celebrities and actors," his website notes, adding that he even advises "domestic and foreign politicians" on health issues.

But Dr. Melgen's West Palm Beach practice faces an uncertain future after his office was raided by FBI this week, drawing renewed scrutiny to reports that first surfaced just before the November election that he supplied Democratic Sen. Bob Menendez of New Jersey with free air travel to the Dominican Republic and prostitutes.

Also participating in the raid were agents of the inspector general's office of the U.S. Department of Health and Human Services, who investigate fraud in Medicare and Medicaid, among other programs.

While Mr. Menendez, who is divorced, and the surgeon have called the allegations about the prostitutes, first reported by the Daily Caller website in November, false and politically motivated, the New Jersey lawmaker recently paid out more than $50,000 to reimburse Dr. Melgen for the airfare. And a lawyer for Dr. Melgen had no explanation Thursday for the federal raid on the doctor's ophthalmology office this week.

Mr. Menendez avoided reporters on Capitol Hill Thursday. Senate Majority Leader Harry Reid, Nevada Democrat, called Mr. Menendez, now the chairman of the Senate Foreign Relations Committee, a "friend" and an "outstanding senator," but added he did have any direct knowledge of the controversy swirling around his colleague.

"Any questions in this regard, direct to him. I don't know anything about it," Mr. Reid said, while describing the Daily Caller as "a source that has brought up a lot of non-issues."

Though a prolific political donor along Florida's "Treasure Coast" as well as a frequent presence at events with politicians, the Dominican-born Dr. Melgen has had his share of financial problems over the years, records show, even as he and his family have continued giving generously to Mr. Menendez and other elected officials of both parties.

Aside from a $11 million IRS tax lien, he's been entangled for much of the past decade in a web of federal and state civil lawsuits stemming from the loss of millions of dollars in one of the state's largest securities fraud cases.

According to court records, Dr. Melgen's company, SFM Holdings, was one of more than 170 investors who were bilked by the KL Group hedge fund, which resulted in long prison sentences for top executives at the fund.

In one of the lawsuits, SFM sued a bank that advisers used to steal more than $12 million from SFM.

Adding to Dr. Melgen's financial woes is an IRS lien for $11.1 million for years of unpaid taxes.

But Dean L. Willbur, Jr., an attorney for Dr. Melgen, said Thursday that "any issues concerning Dr. Melgen and the IRS have been fully resolved and satisfied."

He said, however, that Dr. Melgen hasn't been told why government agents raided his office.

"We are confident that Dr. Melgen has acted appropriately at all times," he said.

Mr. Menendez's office issued its own statement calling Dr. Melgen "a friend and political supporter" for many years. The statement also said Mr. Menendez had reimbursed Dr. Melgen for the cost of plane trips but disputed that he had any involvement with prostitutes in the Dominican Republic.

However, Mr. Menendez only paid back the doctor two years after the trips.

A nearby resident in the neighborhood where Dr. Melgen's office was raided this week said a sign on the door said the office was closed but would reopen on Friday.

Despite his money troubles, Dr. Melgen and his family members have doled out more than $426,000 in campaign donations since 1992, with a large portion going to Mr. Menendez or organizations with which the senator has been affiliated, according to the nonpartisan Center for Responsive Politics.

Dr. Melgen and family gave more than $30,000 to Mr. Menendez's campaign and nearly twice as much to the Democratic Senatorial Campaign Committee, which Mr. Menendez led from 2009 to 2011.

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