- The Washington Times - Wednesday, October 19, 2005

ASSOCIATED PRESS

A Potomac doctor has been indicted on federal charges of evading more than $16 million in taxes from money he made trading high-technology stocks in the late 1990s.

The three-count indictment against Pradeep Srivastava, 46, was unsealed Monday in U.S. District Court in Greenbelt.

Dr. Srivastava faces a maximum sentence of five years on each tax-evasion count and three years if convicted of filing a false tax return.

Prosecutors say Dr. Srivastava made more than $40 million in short-term capital gains during 1998 and 1999 by trading stocks and stock options.

However, he only reported his losses to the accountant who prepared his tax returns, thereby understating his tax obligation for the two years by about $16.3 million, prosecutors say.

Dr. Srivastava suffered severe losses when the values of his holdings collapsed in 2000, but understated his losses on his 2000 tax return to cover up his earlier earnings, prosecutors say.

Dr. Srivastava, a cardiologist with offices in Greenbelt and Oxon Hill, made most of the money by trading stock options — agreements to buy and sell shares in the future at a certain price.

The value of Dr. Srivastava’s portfolio peaked in January 2000 at about $187 million, and dropped by December 2000 to less than $500,000. As the market dropped, Dr. Srivastava lost about $10.8 million, according to the indictment.

The indictment doesn’t indicate, however, whether he lost all the money he made by trading the options, said Vickie LeDuc, a spokeswoman for the U.S. Attorney’s Office.

Many of the trades involved computer and technology stocks such as America Online, Dell Computer, Yahoo, Qualcomm and Inktomi.

One call option, an agreement to buy a stock at a certain price, for a company called CMGI Inc. netted $8.5 million, according to the indictment.

Miss LeDuc said it was premature to discuss Dr. Srivastava’s case, but prosecutors generally seek restitution, which in this case would be the payment of back taxes.

“Also, the [Internal Revenue Service] has civil remedies that they can pursue to seek the return of the money,” Miss LeDuc said.

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