May 30—Charges of fraud related to federal COVID relief were dropped Friday against Spokane dermatologist Dr. William “Phil” Werschler.
Between 2020 and 2022, Werschler’s businesses received more than $2.9 million in federal CARES Act loans meant for struggling small businesses. The 23-count indictment filed last year alleged Werschler used $1.5 million of those dollars to purchase luxury vehicles and other items.
On Friday, the charges were dropped with prejudice — meaning they cannot be filed again. Werschler also agreed to pay a $1.4 million settlement with the federal government as part of the deal to avoid a civil penalty.
The Spokane dermatologist admitted to no wrongdoing as part of the settlement agreement. Lawyer Ronald Van Wert said the dismissal of such federal charges is “extraordinarily rare” and evidence of his innocence.
Van Wert said the problems were the fault of an employee in Werschler’s office who pleaded guilty to embezzlement in 2023.
“The nature of this dismissal is highly unusual and uncommon. And between our defense team, I don’t think any one of us has seen a dismissal with prejudice of criminal charges brought by a federal indictment,” he said.
In a statement, U.S. Attorney’s Office spokesperson Rob Curry said the case’s resolution was “just and in the best interest of the public.”
“Today’s settlement restores public funds that were misused during the course of the Covid-19 pandemic, while also recognizing mistakes made by Dr. Werschler and his companies. This global resolution balances a just outcome and need to protect public funds with the unique facts of this matter,” he said.
According to Van Wert, federal prosecutors were misled Carol Castilla, Werschler’s former bookkeeper who pleaded guilty to embezzling more than $715,000 from Werschler’s Spokane Dermatology Clinic. As part of that case, Castilla provided testimony and evidence Werschler embezzled COVID relief funds.
Weschler’s lawyers argue they proved Castilla’s testimony was fraudulent, which ultimately led to criminal charges being dropped.
“This bookkeeper had a number of texts and communications between her and the Werschlers. She took that information and manipulated and misrepresented those texts, and also the financial records and the timing of various types of transactions. From our perspective, we were able to demonstrate, through our own financial analysis and our own experts, where that was inconsistent,” Van Wert said.
While Werschler was not aware or participated in the improper use of COVID funds, he could have been found civilly liable as the employer of Casilla, Van Wert added.
Spokane Dermatology Clinic has remained open since Werschler’s indictment, and the dermatologist plans to continue his practice now.
“This ordeal has been emotionally and professionally devastating for me, my wife, and our employees. We are extremely pleased to put it behind us, and grateful for the support of our friends and colleagues,” Werschler said in a statement. “Our greatest concern remains for our valued patients as we have tried to reassure them this case has nothing to do with the healthcare they receive at Spokane Dermatology Clinic, and that justice would prevail. We are moving forward, continuing to provide excellent care to those who trust us with their healthcare needs.”