News and Press Releases

Incline Village Doctor Pleads Guilty to Tax Evasion

April 16, 2002

Reno, Nev. - United States Attorney Daniel G. Bogden and Assistant Attorney General for the United States Department of Justice Tax Division Eileen J. O'Connor announced that Elliott Schmerler, a resident of Incline Village, Nevada, pled guilty yesterday in the United States District Court in Reno before Judge Edward C. Reed, Jr. to the federal crime of tax evasion for the year 1995.

According to the Plea Memorandum, from 1994 through 1998, Dr. Schmerler used his medical practice, Lakeview Medical Associates, and a Bahamian corporation he controlled, to pay more than $500,000 in personal expenses, which he did not report as income on his tax returns. As a result, Dr. Schmerler failed to pay the Internal Revenue Service more than $156,000 in individual income taxes. In addition, during 1997 and 1998, Dr. Schmerler failed to pay the Internal Revenue Service more than $26,000 in federal employment taxes, consisting of income, social security, and medicare taxes withheld from employees' salaries and related employer payroll and unemployment taxes.

The sentencing of Dr. Schmerler is scheduled for August 26, 2002, at 10 a.m. before Judge Reed. The maximum statutory penalty for tax evasion is five years imprisonment and a $250,000 fine. The actual sentence, however, will be dictated by the United States Sentencing Guidelines, which take into account a number of factors, and will be imposed at the discretion of the Court.

Eileen J. O'Connor, Assistant Attorney General for the Tax Division, said, "People who commit tax evasion are cheating their friends and neighbors, who are left to pick up their tab. In this case, the defendant also cheated his employees by not paying to the IRS the employment taxes he had withheld from their paychecks. It is a shame that a doctor -- a member of a respected profession and the beneficiary of so much of what this great nation provides -- would commit tax fraud."

Special Agents with the Internal Revenue Service conducted the investigation. Tax Division Trial Attorney Caryn D. Mark handled the prosecution.

Anyone who has information about suspected tax fraud should report it to the Internal Revenue Service tip line at 1-800-829-0433. The IRS also maintains a website which contains a warning notice to the public concerning abusive trust programs. The web site address is

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