An Illinois doctor has been sentenced to 34 months in prison for committing health care fraud, hiding assets, and lying to the IRS about his ability to pay approximately $1.6 million in taxes, penalties, and interest.
Charges
According to court documents, Krishnaswami Sriram of Lake Forest, Illinois, was initially charged with one count of willfully attempting to evade and defeat the payment of approximately $1.6 million of individual income tax due, four counts of willfully making and subscribing a false Form 1040 for tax years 2013 to 2016, and five counts of willfully aiding, assisting in, procuring, counseling, or advising the preparation and presentation to the IRS false and fraudulent Forms 1040.
Guilty Plea
Sriram pleaded guilty to count one: willfully attempting to evade and defeat the payment of approximately $1.6 million of individual income tax due for the tax years 1997, 1998, 1999, 2001, and 2012.
Background
According to court documents, in 2010, the IRS sent Sriram a notice of deficiency for the tax years 1997, 1998, and 1999. A notice of deficiency is sometimes called a 90-day letter. If you want to challenge the proposed tax on the letter, you have 90 days from the date shown on your notice to file a petition with the Tax Court (those taxpayers outside the country have 150 days).
Sriram subsequently challenged those assessments in Tax Court. At Tax Court, the parties entered a stipulation. A stipulation is a formal written agreement between the taxpayer and the IRS regarding undisputed facts and documents relevant to the case. The purpose of a stipulation is to narrow the issues that need to be decided by the court at trial and streamline the process. In this case, the Tax Court ultimately affirmed the assessments for the years 1997, 1998, and 1999 of approximately $760,000.
Two months later, the feds alleged, Sriram quitclaimed two rental properties to two of his children. With a quitclaim deed, you can transfer property title without guaranteeing a clear title (this is different from a sale, where the title company would generally require you to resolve outstanding liabilities, like a lien, before transferring the title). However, Sriram continued to collect rents from and manage the properties.
In 2013, Sriram filed two petitions with the U.S. Tax Court, this time challenging the IRS’ attempts to collect. Again, at Tax Court, the parties entered a stipulation. This time, the Tax Court ultimately affirmed the assessments for the years 1997, 1998, and 1999—plus 2001—of approximately $1,636,884. The Tax Court also ordered the IRS to pause collection efforts while Sriram made alternative payment arrangements.
In 2014, Sriram filed an offer in compromise with the IRS. An offer in compromise allows you to settle your tax debt for less than the full amount you owe. The IRS considers the relevant facts and circumstances, including income and expenses.
The government alleged that Sriram lied on the application, including leaving out the rental properties, investment assets, and interests in foreign bank accounts (the feds alleged that he transferred approximately $700,000 from bank accounts he controlled in the United States to accounts in India).
In doing so, the government alleged, Sriram caused a loss to the government of more than $1.6 million.
Sentencing
After his plea, Sriram faced up to five years in prison. As part of his sentencing considerations, the government noted that he also admitted that his 1997 and 1998 personal tax returns were false, and that he committed medical fraud by fraudulently billing the Medicare and Medicaid health systems. Between 2012 and 2022, Sriram also submitted false Medicare billings for in-home physician care episodes that did not happen. Specifically, Sriram falsely claimed to provide care for Medicare beneficiaries on dates when those individuals were either deceased or living in inpatient facilities other than their homes. His false statements in medical records related to these episodes led to $136,980.36 in fraudulent billings to Medicare.
In his sentencing memorandum, lawyers for Sriram painted him as deeply unhappy. They allege that he struggled to please his parents and failed in his marriage. He faced his first criminal charge in 2001, resulting in the suspension of his medical license.
Ultimately, Sriram received a sentence of 34 months. In addition to his prison sentence, the court ordered Sriram to serve three years of supervised release and pay approximately $1.7 million in restitution to the United States.
Fraud Investigation
IRS Criminal Investigation (CI) investigated the case. CI is the sixth-largest law enforcement agency in the U.S. and is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations like tax fraud, narcotics trafficking, money laundering, public corruption, healthcare fraud, and identity theft. While other federal agencies also have investigative jurisdiction for money laundering and some Bank Secrecy Act violations, the IRS is the only federal agency that can investigate potential criminal violations of the tax code. The agency has 19 field offices located across the U.S. and 14 attaché posts abroad.