Tax Law Center Blog

A recent case serves as a clear illustration of the serious consequences that can result from tax and financial non-compliance, particularly for high-net-worth individuals with foreign assets. The case, which involved a combination of tax evasion and health care fraud, provides important tax lessons for professionals.

Summary of the Case

Dr. Krishnaswami Sriram, an Illinois physician, was found to have engaged in a scheme to evade approximately $1.6 million in taxes, penalties, and interest. According to court documents and statements, his tax evasion efforts included several key actions:

• Concealing Assets: He transferred two rental properties to his children’s names while continuing to control the properties and receive the income.
• Hiding Foreign Funds: He moved hundreds of thousands of dollars from his U.S. accounts to foreign bank accounts in India, which he did not disclose to the IRS.
• Submitting False Documents: As part of a fraudulent Offer in Compromise (OIC), he provided the IRS with incomplete financial statements that omitted his domestic investment account, foreign bank accounts, and rental properties.

The case was not limited to tax matters. Dr. Sriram also pleaded guilty to Medicare fraud by submitting false claims for services that were never provided.

Why the Tax Crimes Were Easier to Prove

While Dr. Sriram’s criminal conduct included both tax evasion and health care fraud, the tax crimes were arguably more straightforward for the government to prove. The tax evasion charges were centered on “affirmative acts” of fraud, which are specific steps taken to conceal assets and mislead the IRS. The government could demonstrate this through concrete evidence such as:

• Deeds and other property records showing the fraudulent transfer of real estate.
• Financial records and wire transfers proving the movement of funds to undisclosed foreign accounts.
• The fraudulent Offer in Compromise itself, which served as a direct statement of his false financial position.

In contrast, the health care fraud, while extensive, was more complex to quantify and prove in court. The government likely faced challenges in calculating the exact amount of fraudulent payments, and the evidence was a mix of witness testimony, circumstantial data, and extensive but sometimes inconclusive billing records. The clarity and directness of the tax evidence (such as the false OIC documents) provided a strong foundation for the government’s case.

The Outcome and Implications for Practitioners

On August 20, 2025, Dr. Sriram was sentenced to 34 months in prison and ordered to pay approximately $1.7 million in restitution. This outcome underscores several important points for tax professionals:

• Aggressive Enforcement: The case highlights the government’s coordinated and aggressive enforcement strategy. The IRS Criminal Investigation (CI) division often works in tandem with other federal agencies, such as the Department of Justice, to pursue taxpayers who engage in a pattern of deceit across multiple areas.
• Focus on International Assets: The government’s ability to uncover and prosecute the use of undisclosed foreign accounts and assets is a clear signal of enhanced international cooperation and data-sharing. Practitioners must be vigilant in ensuring clients are fully compliant with all international reporting obligations, including FBAR and FATCA.
• Criminal vs. Civil Penalties: The case serves as a reminder that deliberate “affirmative acts” of tax evasion, such as submitting fraudulent documents or concealing assets, can lead to criminal prosecution and incarceration, in addition to civil penalties.

This case reinforces the need for tax professionals to prioritize transparent and complete tax reporting for their clients, especially those with complex financial situations and international holdings.

Contact us for a consultation to learn more about how our firm can assist with your client’s complex tax matters, particularly those involving international reporting obligations and tax controversy.