June 25, 2002

OFFICE OF THE UNITED STATES ATTORNEY
SOUTHERN DISTRICT OF CALIFORNIA
San Diego, California

United States Attorney
Patrick K. O'Toole

For Immediate Release

NEWS RELEASE SUMMARY

Patrick K. O'Toole, United States Attorney for the Southern District of California, and Eileen J. O'Connor, Assistant Attorney General for the Tax Division, announced today that Dr. Rick A. Shacket, D.O., pled guilty before the Honorable Jeffrey T. Miller, U.S. District Court Judge, to the felony offense of conspiring to defraud the Internal Revenue Service by deceitful and dishonest means. Dr. Shacket participated in the tax fraud conspiracy with his former attorney, Russell D. Ward, from February 1994 through January 1999 resulting in a criminal tax loss of over $370,000. Dr. Shacket and Mr. Ward fraudulently diverted approximately $546,350 of Dr. Shacket's medical corporation's funds for Dr. Shacket's own use and benefit in 1994 through 1997. Dr. Shacket, owner and medical director of the Hemorrhoid Care Medical Clinic located at 7808 Clairemont Mesa Boulevard, in San Diego County, specializes in proctology and laser surgery. Russell Ward pled guilty to this same conspiracy on July 25, 2001, and is now serving his sentence in federal prison.

Dr. Shacket admitted that the conspiracy to defraud the United States and the Internal Revenue Service included Dr. Shacket willfully filing false corporate and individual tax returns for the years 1994 through 1997. Dr. Shacket and Mr. Ward created a sham corporation in Oregon called King Medical and a false identity for Dr. Shacket. The false identity Dr. Shacket used was Billy Daniel Ward, the missing and presumed dead brother of Russell Ward. Dr. Shacket used King Medical and the Billy Daniel Ward false identity to receive and hide from the IRS diverted corporate funds from Dr. Shacket's medical practice. Dr. Shacket fraudulently deducted the diverted funds on his corporate tax returns, and did not report his receipt of these funds on his personal tax returns. Dr. Shacket used these diverted funds to purchase personal assets, including purchasing a house in Del Mar, California, for approximately $342,500 in cashier's checks. Dr. Shacket, however, placed the title of his home in Del Mar in the name of his brother and Dr. Shacket's assumed identity to conceal the purchase of this home from the IRS. Moreover, Dr. Shacket also diverted an additional $150,000 of his medical corporation's funds in 1998 for his own use and benefit.

At the plea hearing Dr. Shacket paid $100,000 to the United States Treasury as an initial deposit of the taxes he owes to the Internal Revenue Service. In addition to the tax fraud, Dr. Shacket was previously charged with eleven counts of mail fraud and twelve counts of presenting false claims to the government related to Dr. Shacket's scheme to defraud Tricare Management Activity, formerly known as Civilian Health and Medical Program of the Uniformed Services ("CHAMPUS"). CHAMPUS is a federally funded medical benefits program administered by the United States Department of Defense to help pay for the civilian medical care rendered to spouses and children of active duty service personnel, retired service personnel and their spouses and children, and to the spouses and children of deceased service personnel. Dr. Shacket admitted that three different types of claims he submitted to CHAMPUS were erroneous under CHAMPUS's guidelines and policies and Dr. Shacket agreed to settle the matter civilly with CHAMPUS.

Dr. Shacket's sentencing is scheduled for October 25, 2002, at 9:00 a.m. before Judge Miller.

Patrick K. O'Toole, United States Attorney for the Southern District of California, stated: "This case demonstrates that professionals will not get away with tax fraud just because they have the ability to create a complicated scheme to divert their income."

Denise L. Rubin, Special Agent in Charge of IRS Criminal Investigation in San Diego stated: "Conspiracy to defraud the IRS is a serious crime. Dr. Shacket devised elaborate methods to conceal his income to intentionally evade his income taxes. IRS Agents used their financial investigative expertise to unravel his web of transactions and follow the money trail."

DEFENDANT

Rick A. Shacket
Del Mar, California

SUMMARY OF CHARGE

Title 18, United States Code, Section 371, Conspiracy to Defraud the United States (one count).
Maximum sentence of five years in prison and fine not to exceed $250,000.

AGENCIES

Internal Revenue Service, Criminal Investigation
Department of Defense, Defense Criminal Investigative Service