Indianapolis dermatologist convicted for filing false tax returns, concealing over $1.2 million in unreported income


Date: April 28, 2023


INDIANAPOLIS — David Gerstein of Hamilton County, Indiana, has been convicted after pleading guilty to submitting a false income tax return.

According to court documents, between 2017 and 2020 willfully underreported his taxable income by at least $1,200,000, as a result evaded $360,669 in income taxes that he owed.

Since 1997, Gerstein has been the sole owner of a dermatology practice in Indianapolis, Indiana, and reported his business income to the Internal Revenue Service on his personal tax return.

During his tax evasion scheme, Gerstein used several different methods to conceal his true income. Gerstein lied to his accountant and told them that all income from his medical practice flowed into a single business bank account, and only provided them with records from that account. In fact, Gerstein had other hidden accounts that he used to deposit business income, including checks from patients, payments from insurance providers, and payments via Venmo. He further concealed the existence of his hidden bank accounts by routinely breaking up cash deposits of more than $10,000 and making multiple cash deposits on the same day. This illegal practice, known as "structuring transactions," was intended to avoid the banks reporting these large cash deposits to the IRS. Gerstein continued to attempt to conceal the existence of some of his bank accounts even when interviewed by IRS- Criminal Investigation Agents.

"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," said Zachary A. Myers, United States Attorney for the Southern District of Indiana. "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."

"We hope that this conviction reinforces public confidence in our nation's tax system," said Justin Campbell, Special Agent in Charge of IRS-Criminal Investigation, Chicago Field Office. "The tax laws apply equally to everyone regardless of their income level. IRS-CI will continue to seek prosecution of high-income taxpayers that evade our tax laws. We would like to express our gratitude to the United States Attorney's Office for their support in the prosecution of this case."

IRS- Criminal Investigation investigated this case. The sentence was imposed by U.S. District Court Judge James P. Hanlon. Judge Hanlon also ordered that Gerstein be supervised by the U.S. Probation Office for 3 years, the first 6 months of which must be served at a residential re-entry center. Gerstein must also pay a fine of $95,000.

U.S. Attorney Myers thanked Assistant United States Attorney James Warden, who prosecuted this case.