Spokane dermatologist accused in federal indictment of using COVID relief funds on Arizona townhouse, two Porsches

A Spokane doctor is accused of defrauding taxpayers of $1.5 million in COVID relief money to buy sports cars, an Arizona townhouse and other items.

Dermatologist Dr. William “Phil” Werschler, who owns the Spokane Dermatology Clinic, faces a 23-count federal indictment.

Werschler denied any wrongdoing, in a statement through his lawyer.

“Dr. Werschler is a longstanding, highly respected dermatology expert, locally and internationally, who has advanced the well-being of thousands. The Indictment is not based in fact,” attorney Ronald Van Wert said in a statement . “Dr. Werschler, without exception, denies any wrongdoing as alleged. We are confident that the truth will be revealed and Dr. Werschler will be exonerated of these unfounded charges.”

Between 2020 and 2022, Werschler’s businesses received more than $2.9 million in federal CARES Act loans meant for struggling small businesses. This includes $500,000 for Spokane Dermatology Clinic, $410,200 for real estate company 3rd and Sherman LLC and $2 million for medical research company Premier Clinical Research.

“These funds were a critical lifeline for many businesses and their employees in Eastern Washington. They helped keep doors open, they helped employees be paid, and they helped keep the local economy afloat,” U.S. Attorney Vanessa Waldref said in a Monday news conference. “My office has made it a priority to hold fraudsters accountable who used these critical funds to enrich themselves.”

Of those funds, the indictment alleges Werschler used approximately $1.5 million dollars inappropriately. This includes $575,000 for the purchase of a townhouse in Scottsdale, Arizona, more than $166,000 for a 2011 Porsche and about $89,000 for a 1997 Porsche. The indictment also alleges the funds were used to pay off loans for the purchase of properties across the street from the Spokane Dermatology Clinic and for a storage unit used to store automobiles, jet skis and a boat.

Though the Arizona townhouse was purchased by Werschler’s real estate company, the indictment states the residence was “used for personal use.”

This case is not the first time Werschler’s dermatology practice has been under scrutiny. In 2009, the Department of Health opened an investigation into Spokane Dermatology Clinic over allegations of Medicare fraud. The DOH finding against the dermatologist was later overturned – ending with the state apologizing to Werschler and giving him a $600,000 check.

Van Wert points the finger at former bookkeeper Carol Castilla, who pleaded guilty last year to embezzling more than $715,000 from Spokane Dermatology Clinic and is now cooperating with prosecutors on this case. The indictment against Werschler is based on “misinformation” from Castilla, according to Van Wert.

“That bookkeeper pled guilty to felony wire fraud in federal court and faces years in prison under federal sentencing guidelines. She has made false allegations against Dr. Werschler in an attempt to reduce her prison exposure,” he said.

The federal indictment is peppered with text conversations between Werschler and his former employee, which the government uses to suggest his guilt.

While preparing to request the federal government for more COVID relief, Castilla asked Werschler what she should put as the reason for the request.

“Buy more cars?” Werschler replied.

In response, Castilla said she would list payroll, rent and business expenses as reasons for the loan increase request – to which Werschler replied “perfect.”

If convicted, Werschler faces up to a 20-year sentence and forfeiture of the allegedly ill-gotten funds. The allegations in the indictment do not detail any concerns over patient care at Spokane Dermatology Clinic.