Renton dentist Bobby Virk, a contender for state representative from the 11th Legislative District, ran into trouble with the U.S. Labor Department for violating the rules surrounding a foreign guest-worker visa program.

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Renton dentist Bobby Virk has generated a buzz with his campaign for state representative from the 11th District.

An Indian immigrant who moved to the U.S. in 1995, Virk has scored key Democratic endorsements and raised $202,000 — more than any other legislative candidate in the state — thanks in part to enthusiastic support from the Indian American community.

But Virk’s India connections also helped land him in trouble with the U.S. Department of Labor after his sponsorship of a guest-worker visa for a dentist and family friend turned sour.

Virk’s dental practice is one of only about 40 employers in the U.S. now suspended from participating in the H-1B guest-worker visa program due to legal violations, according to the Labor Department.

In a January federal-court settlement, Virk, who also goes by Mahadeep Virk, agreed to pay the government more than $44,000 in back wages and civil penalties to end the long-running case.

In an interview Friday, Virk acknowledged mistakes but said he’d been misled by the family friend, Oshmi Dutta, whom he’d hired and formed a business partnership with, only to see their relationship fall apart in a money dispute.

“This is one of the most painful memories, one of the worst memories of my life,” said Virk, 40, who co-owns more than a dozen dental clinics.

The mess started after Virk hired Dutta in 2002 under the H-1B visa program, which allows U.S. businesses to employ skilled foreign workers in certain specialties, including medicine.

The H-1B visas are highly regulated, and Dutta was legally required to remain an employee of Virk and be paid wages of at least $108,000 a year.

Nevertheless, Virk and Dutta soon struck a different arrangement. They became partners in two dental clinics in Oregon, where Dutta moved to run the businesses. Instead of being paid regular wages, Dutta received a share of revenue from the clinics.

In 2005, the pair had a falling out over management of the businesses. Dutta filed a complaint with the Labor Department, alleging he had not been properly paid as required under his H-1B agreement.

Virk disputed the claim, saying Dutta had been amply compensated through their business partnership. But the government rejected that argument.

Roberta Sondgeroth, an investigator with the Labor Department, found Virk had failed to pay regular wages to Dutta as required by the H-1B rules.

Virk also failed to cooperate with the investigation by turning over complete payroll records, Sondgeroth reported.

The Labor Department ruled that Virk owed more than $300,000 in back wages to Dutta.

Virk challenged that decision in federal court, arguing the government had taken an absurdly narrow view of the law. After all, his attorneys noted, Dutta had received $143,000 more through the business partnership than he was required to have been paid under H-1B rules.

In January, after a federal judge made it clear he didn’t think Dutta was owed the massive back wages, the government settled the case at a big discount.

Virk agreed to pay just over $40,000 — an amount that corresponded to payroll taxes he would have covered for Dutta had he paid him as an employee. Virk was also fined $4,250 and acknowledged his two-year debarment from the H-1B program, from September 2010 to September 2012.

Dutta couldn’t be reached for comment for this story.

Deanne Amaden, a spokeswoman for the Labor Department, said employers are held responsible for obeying the H-1B rules “to ensure there isn’t abuse in the program.”

In a statement released by his campaign, Virk said he “learned valuable lessons about how to handle the very nebulous and unclear immigration laws we have in this country. Also, I learned the hard way that you don’t go into business with friends.”

Virk said he was not surprised when details of the dispute were anonymously circulated recently as the competition for endorsements heated up in the 11th Legislative District, which includes parts of South Seattle, Tukwila and Renton.

Three other Democrats are competing for the open seat being vacated by state Rep. Bob Hasegawa, D-Seattle, who is running for the open state Senate position in the 11th district.

They are Port of Seattle Commissioner Rob Holland, schoolteacher Steven Bergquist and former Port of Tacoma executive Stephanie Bowman.

Seattle Times researchers Miyoko Wolf and David Turim contributed

to this report.

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com.

On Twitter @Jim_Brunner.