An Indianapolis dermatologist has been sentenced to three years of probation for underreporting at least $1.2 million in taxable income over a three-year period.
David Gerstein, 63, of Hamilton County, has also been ordered to pay $360,669 in restitution — the same amount of income taxes that he evaded between 2017 and 2020. A fine of $95,000 was also imposed.
Additionally, Gerstein must serve six months of his sentence in a halfway house, then provide 500 hours of free medical care following that.
Gerstein has been the sole owner of Meridian Dermatology since 1997. Court documents say that between 2017 and 2020, he underreported his taxable income by at least $1.2 million, thus evading $360,669 in income taxes that he owed.
Indiana Southern District Court Judge James P. Hanlon imposed the sentence Friday after Gerstein pleaded guilty in December.
“Every year, millions of Americans pay all the taxes they owe while criminals like this defendant lie and scheme to avoid paying their fair share,” U.S. Attorney for the Southern District of Indiana Zachary Myers said in a news release. “Wealthy tax cheats drive up taxes for law-abiding people and deprive us of the government services to which we are entitled.
“Willfully falsifying tax returns is not a victimless crime, and the sentence imposed today demonstrates that those who break the law will be held accountable. I applaud the Internal Revenue Service-Criminal Investigation for their efforts to uncover these schemes and we will continue to work together to enforce our laws on behalf of the American people.”
According to Myers’ office, Gerstein lied to his accountant and told them that all income from his medical practice flowed into a single business bank account and only showed them records from that account. But he had other hidden accounts that he used to deposit business income, including checks from patients, payments from insurance providers and payments via Venmo.
Additionally, Gerstein would routinely break up cash deposits of more than $10,000 and make multiple cash deposits on the same day to conceal the existence of his hidden bank accounts — a practice known as “structuring transactions” that is intended to avoid banks reporting large cash deposits to the IRS.
Gerstein continued to conceal some of his bank accounts even when interviewed by the IRS- Criminal Investigation Agents, the USAO said.
“We hope that this conviction reinforces public confidence in our nation’s tax system,” Justin Campbell, special agent in charge of IRS-Criminal Investigation, Chicago Field Office, said in a news release. “The tax laws apply equally to everyone regardless of their income level.”
Editor’s note: This article has been corrected.