By any measure, Pradeep Srivastava was a success story.
Born in India, Srivastava received a medical degree in London before moving to Maryland, where he established a reputation as a well-respected, unassuming, hardworking cardiologist. He bought a house in tony Potomac and made more than $40 million in the stock market.
Friends and associates said Srivastava never mentioned the huge windfall he'd made in technology stocks during the bull market of the late 1990s.
Federal prosecutors say he didn't tell the Internal Revenue Service, either.
Srivastava, 46, evaded paying more than $16 million in taxes by failing to report the millions he made in stock trading in the late 1990s, according to a federal indictment unsealed yesterday in U.S. District Court in Greenbelt.
The indictment accuses Srivastava of three counts of filing a false tax return and tax evasion, Maryland U.S. Attorney Rod J. Rosenstein said.
Srivastava, who has offices in Montgomery Village, Greenbelt and Oxon Hill, appeared before U.S. Magistrate Judge Jillyn K. Schulze in federal court in Greenbelt yesterday. He did not enter a plea during the brief hearing, and Schulze released him on his own recognizance, which Assistant U.S. Attorney Stuart A. Berman did not oppose.
Asked whether her client had any comment, Srivastava's attorney, Paula M. Junghans, said, "You'll see us in court."
"Anyone who thinks it is safe to evade taxes should think again, because the IRS and the Department of Justice are working to find tax cheats and send them to federal prison," Rosenstein said.
In 1998, Srivastava reported earning nearly $1.1 million, which translated to a tax burden of $406,213, according to the indictment.
But taking into account earnings from the stock market, Srivastava made more than $1.6 million that year, which meant a tax bill of $570,969, the indictment says.
Then in 1999, Srivastava reported to the IRS that he had earned $891,535 in income; the tax due on that was $326,209. But including his stock market earnings, Srivastava's income for that year was $41.8 million, and the tax was about $16.5 million, according to the indictment.
Many of Srivastava's short-term capital gains came from the sale of technology stocks and stock options, which are the right to buy or sell stock at a certain price.
For example, in 1999 Srivastava made nearly $2 million from the sale of America Online stock options and $457,555 from the sale of Yahoo stock options, the indictment says.
The value of his stock portfolio peaked in January 2000, around $187 million, prosecutors said. Then the technology stock market bubble burst, and the portfolio's value crashed. By December 2000, it was worth less than $500,000, the indictment says.
Federal prosecutors said disclosure of the full extent of those losses might have alerted the IRS to Srivastava's huge unreported short-term capital gains in 1998 and 1999. The first two counts of the indictment allege that Srivastava underreported his capital gains; the third count alleges he filed a false tax return in 2000, understating his capital losses.
Tax evasion carries a maximum penalty of five years in prison and a $250,000 fine; the maximum sentence for filing a false tax return is three years in prison.
Srivastava, his wife and their elementary school-age daughter live in a large, white brick, two-story house in the 9800 block of Bentcross Drive.
According to an online physician quality report, Srivastava is certified in cardiology and internal medicine by the American Board of Internal Medicine and has been subjected to no state or federal disciplinary actions.
Hector Collison, a next-door neighbor and fellow cardiologist, said he is giving Srivastava the benefit of the doubt regarding the criminal charges.
"Cardiology is very demanding. Sometimes he puts in 16-hour days, like I do," Collison said. "Sometimes when you get involved in your work, you leave your personal affairs unattended."
In addition to his three offices, Srivastava practices at Prince George's Hospital Center and Washington Adventist Hospital, Collison said.
According to Prince George's County Circuit Court records, Maryland filed a sales and use tax lien against Srivastava for more than $29,000 in 2000. That case is open, according to records.
Staff writer Allison Klein and staff researcher Meg Smith contributed to this article.