Doctor Accused of Tax Fraud

Parviz Berjis ran a lucrative medical practice in West Los Angeles and lived in a remodeled Spanish-style home in Brentwood. The Iranian-born physician had been practicing nearly two decades and offered medical and personal advice on Persian-language radio.

Los Angeles County prosecutors say tthat Berjis may have been a respected doctor but that he was also a massive tax cheat. Between 1998 and 2002, they allege, he failed to report $18.7 million in income. He now owes California $2.8 million in back taxes, interest and penalties, they say.

The case against Berjis is the first tangible result of a new strategy against suspected healthcare cheats. Instead of lengthy investigations that take enormous time and resources, prosecutors are seeking relatively simple tax evasion charges. Prosecutors filed the case against Berjis, 72, late last month. They said they plan to file five more cases in the next few months, including charges against two more doctors, two lawyers and a dentist.

“There are a certain number of crooked professionals who are basically stealing all of the money,” said Deputy Dist. Atty. Albert H. MacKenzie, who is heading up the new program. “It’s staggering.”

Prosecutors allege that Berjis billed insurance companies and state and federal agencies for millions of dollars in fraudulent services, then failed to report most of that income. But Berjis’ attorney, Harland Braun, said his client maintains that he paid his taxes and that he didn’t commit any fraud.

In addition, Braun said, the tax charges are unnecessary because his client already faces workers’ compensation and automobile insurance fraud charges. Braun said the state prison sentence Berjis faces if convicted is longer than his life expectancy; he has been diagnosed with cancer.

“To clutter up the courts with these types of cases is a complete waste of time,” Braun said. “I think it’s all a publicity stunt.”

To investigate a tax evasion case, MacKenzie starts with a suspect. Then he sends e-mails to insurance companies and state and federal agencies to determine how much money has been paid. MacKenzie forwards those results to state Franchise Tax Board investigators, who determine whether the suspect underreported the income -- or didn’t bother to file tax returns.

The technique is not new; it dates back to the days of gangster Al Capone. But prosecutors say it is rarely used and has the potential to catch big-time swindlers in a simple, straightforward way.

“What I am basically trying to do is connect the dots,” MacKenzie said. “I go around adding up how much money they’ve collected from all the honey pots they’re stealing from.... Surprise, surprise, I find it’s the same rats across the board.”

The suspects also are accused of billing state agencies for millions of dollars in services never provided, or for patients who do not qualify for benefits. In one case, a doctor received $3 million from Medicare alone in just 10 months. In another case, a doctor did not file tax returns for 20 years.

“This is the best technique I’ve ever found to cook their gooses,” MacKenzie said. “It works on crooked lawyers, medical doctors, chiropractors, dentists. It works across the board.”

The new prosecution program has been well received by insurance and tax officials.

In the past, the Department of Insurance would build a case against suspect doctors either by interviewing numerous patients and reviewing billings over a long period of time, or by posing as patients to determine whether doctors were billing for services that weren’t rendered. Both types of investigations required a lot of time, energy and staff. And the trials were long and complicated.

The new tactics are better and faster, said Kathy Scholz, bureau chief for the state Department of Insurance’s workers’ compensation antifraud program. Frequently, the tax fraud investigation leads to other crimes, such as money laundering and insurance fraud. “These guys are very, very greedy and they are doing a lot of different scams to take money,” she said.

Scholz said she expects other counties to follow Los Angeles County’s lead.

Franchise Tax Board spokesman Barry Gilbert said the process saves money because various agencies are working together, sharing information and not duplicating efforts.

Each year, $6.5 billion in state taxes goes uncollected. The new effort should help reduce that amount. Gilbert said the case against Berjis shows that there can be serious consequences for tax evasion.

“All income is generally taxable, including income derived from illegal activities,” Gilbert said. “We are trying to stress that tax evasion is not a victimless crime. Everyone pays for it in the end.”

Berjis has been charged with filing false income tax returns and failing to file returns. He could face up to nine years in prison if convicted.

In a separate workers’ compensation fraud case, Berjis is accused of helping to organize a scheme that netted millions of dollars in fraudulent payments. And in an automobile insurance fraud case, prosecutors alleged the doctor bilked insurance companies, the Automobile Club of California and the state by filing millions of dollars in fraudulent medical bills.

Los Angeles County Superior Court Judge Larry Paul Fidler has ruled that there is enough evidence to try Berjis for auto fraud. He is already awaiting trial on the workers’ compensation fraud case. The judge set bail for the three cases at $2 million.

“There is an overwhelmingly fraudulent medical mill going on,” Fidler said to Berjis in court. “Sort of equal opportunity. Doesn’t make any difference whether it’s automotive or workers’ comp. If it can be ripped off, it was.”

Members of Berjis’ family stated that people in his office took advantage of him.

“He is a very famous doctor in the Persian community and people have a lot of respect for him,” said one relative, who asked not to be identified. “He hasn’t done anything wrong; he was being set up by the D.A.”