A passage back to India.

• Author: Mildenberg, David
• Position: Shady business deals of Indian trader Ponnapula Sanjeeva Prasad

A Greenville psychiatrist heads home after dealing his way into the world of Milken, failed S&Ls and BCCI.

Banker Kurt Lewin doesn't mince words about Dr. P.S. Prasad, a psychiatrist who gave up mending sick minds to cut slick business deals: "He was a con artist."

Nevertheless, Lewin understands why so many people were charmed by Prasad. "He had this facade that he was a good ol' Christian boy," Lewin says. "When he talked with you, he wanted you to think he was so sincere and friendly. But I always knew there was more to the book than the cover."

The book on Ponnapula Sanjeeva Prasad has a convoluted, twisted plot and many chapters, the last of which has yet to be written. Operating out of Greenville, an unlikely base for an Indian-born wheeler-dealer, he spent the '80s spinning a web of complicated transactions that brought him together with some of the most controversial figures in American business, including junk-bond king Michael Milken; crooked Texas S&L operators; and Bert Lance, Robert Altman and other key players in the scandal surrounding the Bank of Credit and Commerce International, better known as BCCI.

Because most of his major deals involved out-of-state businesses, he gained little notoriety in North Carolina. But his impact within the state was considerable: Prasad played a part in running a major North Carolina savings and loan into the ground, sticking two Tar Heel banks with more than $2.5 million in unpaid loans and destroying Cox Trailer Inc., a boat-trailer manufacturer that for 80 years was an institution in the tiny Pitt County town of Grifton.

Now Prasad's empire has crumbled, and even those investigating his affairs are unsure how much money he has. "He apparently just walked away from it," says Ernest Richardson, the trustee overseeing the Cox Trailer liquidation. "He's disappeared."

Treywick "Buzzy" Stubbs, a New Bern lawyer representing Prasad's company, says the 46-year-old psychiatrist is back in India with his wife and two daughters. They're evading angry litigants scattered across the country, including Derrick Cephas, New York's superintendent of banking, who alleges that Prasad fraudulently received $34 million in loans from BCCI -- more than any other U.S. citizen -- without any intention of paying it back. "There's so much flack here," Stubbs says, "I don't think he'll be back here tomorrow."

Many in Greenville still respect Prasad, who converted to Christianity before coming to the United States. They remember him as a generous supporter of Trinity Free Will Baptist church and his businessmen's prayer group. Few know much about Prasad, who attracted scant media attention. Most tend to think that Prasad got overleveraged and stumbled trying to do too much.

"Whatever he told us, you could hang your hat on it," says Max Ray Joyner, a Greenville insurance-agency owner and former chairman of the defunct North State Savings & Loan Association, of which Prasad was a major borrower and stockholder. "He never cost |North State~ any money that I know of. Highfliers reach a peak, and then they get bumped off. It happens all the time."

Others aren't so charitable. "He was a thief," contends Claire Sites, spokeswoman for the New York banking superintendent. "He owed more money to people than most of us will ever dream about in our lifetime." Adds Lewin, who worked for North State and its successor, Barclays Bank of North Carolina, from 1985 to 1989: "To say that Dr. Prasad's loans had no part in the demise of North State is like saying that atom booms didn't end World War II."

Prasad liked to tell why he moved from medicine to mortgages, recalls Mike Allison, his pilot from 1988 to 1990. Back in the early '80s, Allison says, Prasad "was making $55,000 a year at Walter Jones |Rehabilitation Hospital~ when he made a ridiculous, low-ball offer for a house on a Tuesday. For some reason, the sellers accepted his offer. So Dr. Prasad on that Friday agreed to sell the house to someone else. He made $70,000 on the deal, and he says he went home and told |wife~ Indrani that he was in the wrong business. That's what started all of this."

Medicine was Prasad's ticket to the United States. After graduating from Gandhi Medical College in India in 1970 and completing a residency in Binghamton, N.Y., he came to North Carolina in 1974 to work at John Umstead Hospital, the state psychiatric hospital in Butner. Eighteen months later, he moved to Greenville, where he became clinical director of the 76-bed Walter Jones alcohol-rehabilitation center. Like many physicians within an hour's drive of East Carolina University's new medical school, he received a clinical faculty appointment that put him in occasional contact with students and professors. " As a psychiatrist, he was considered a perfectly ethical person," says Dr. James Mathis, former chairman of the psychiatric department at the ECU medical school. "But once he was into the business world, it was said you'd better watch yourself when you were around him."

As an Indian with a thick accent trying to help North Carolinians overcome alcoholism, Prasad was at a disadvantage, says Ken Walker, assistant director of the Jones hospital. "He was a knowledgeable fellow, but I don't think he understood the culture of Eastern North Carolina very well." Mathis recalls asking a patient of Prasad's how her counseling was going. "She told me, 'Oh, we're doing fine. But, hell, I can't understand a word of what he says.'"

According to Walker, Prasad's commercial real-estate investments started with a small Greenville office building where the doctor had a part-time private practice. "He rented out all of the offices, then sold it for a profit, and he got hooked. From there, he was on his way."

Prasad bought his first motel, in Wrightsville Beach, followed by one in Greensboro, then one near Jekyll Island, Ga., his former colleague says. He also spent more than $300,000 renovating and expanding his two-story brick house to more than 6,500 square feet." At the time...