Indian-American doctor sentenced for 46 months for tax evasion

Pradeep Srivastava, 50, a cardiologist was found guilty of evading more than USD 16 million in income tax for the 1998 and 1999 financial years and filing a false tax return for the year 2000.

This would be followed by three years of supervised release of Maryland-based Srivastava. US District Judge Roge W Titus has also entered an order of restitution against Srivastava in the amount of USD 16,110,160. Srivastava was convicted by a federal jury on October 8, 2009.

"Dr. Pradeep Srivastava's prosecution should serve as an example for anyone who considers cheating on their taxes," said United States Attorney Rod J Rosenstein.
"Doctors and professionals, like workers from all walks of life, have to pay their fair share of income taxes.

People who break these laws face serious felony charges, prison time and having to pay back all the taxes owed with interest and penalties," said Assistant Attorney General John A DiCicco. According to evidence presented at the six-day trial, Srivastava conducted a huge volume of trading in stocks and stock options.

During the "bull market" of the late 1990s, he earned more than USD 40 million in short-term capital gains, much of them from trading in stock options involving high-technology stocks such as America Online, Dell Computer, Yahoo, Qualcomm and Inktomi.

In preparation for filing his tax returns for 1998 and 1999, Srivastava provided his accountant with information about those trades that generated capital losses, but omitted providing information relating to the vast majority of his short-term capital gains.
Srivastava then filed tax returns which omitted those capital gains and, according to trial testimony, understated his tax due by USD 164,756 in 1998 and USD 16,179,567 in 1999.

The evidence proved that in 2000, the value of Srivastava’s portfolio collapsed and he incurred massive capital losses.

Disclosure of the full extent of those losses, however, would have potentially alerted the Internal Revenue Service to his massive, undisclosed short-term capital gains for 1998 and 1999, therefore, trial testimony showed that Srivastava filed a false tax return which understated his capital losses for 2000, an official media release said.

In a related investigation, in August 2007, Srivastava agreed to pay USD 476,000 to settle claims that he fraudulently billed Medicare and the Federal Health Employees Health Benefits Program over a three and a half year period.

According to the settlement agreement,the government contended that Srivastava committed multiple billing abuses from November 1, 1999 to May 31, 2003, including billing for services not rendered; "unbundling," a practise where a provider bills for multiple component parts of a procedure as opposed to billing one comprehensive CPT code; and up-coding, or billing for a service at a higher level than that which was furnished.