FLUSHING, NY — Two Queens men face federal charges for allegedly orchestrating a $120 million fraud scheme targeting Medicare and Medicaid through a pharmacy and two adult day care centers, according to a criminal complaint unsealed Friday in Brooklyn federal court.
Federal prosecutors charged Inwoo Kim, 42, also known as "Tony Kim," and Daniel Lee, 56, also known as "Daniel Yang," with conspiracy to commit health care fraud. The complaint alleges the defendants paid illegal cash bribes and supermarket gift certificates to elderly beneficiaries to induce them to fill prescriptions and enroll in adult day care programs between 2016 and 2026.
The Alleged Scheme
According to court documents, Kim owned Z & W Empire Enterprise Inc., operating as Royal Adult Daycare, Happy Life Inc., and a pharmacy in Queens. Lee served as program director at Happy Life. The Justice Department alleges the defendants used these facilities as vehicles for submitting fraudulent claims to federal health care programs.
"The defendants allegedly turned a pharmacy and social adult day care centers meant to help senior citizens into a $120 million dollar Medicare and Medicaid fraud scheme," stated Assistant Attorney General A. Tysen Duva of the Justice Department's Criminal Division in announcing the charges.
Prosecutors claim Kim and Lee paid illegal kickbacks to Medicaid and Medicare beneficiaries to entice them to enroll at the adult day care facilities. Text messages obtained by investigators allegedly show Kim instructing a co-conspirator: "Please give the $10,000 to the Korean members first." In other messages, Lee reportedly wrote "I gave the payment" and "I left the envelope [for a patient] with Tony [Kim]."
The scheme allegedly involved submitting claims for day care services exceeding the facilities' permitted capacity, according to the complaint. To generate cash for the illegal payments, Kim and Lee withdrew substantial amounts from bank accounts they controlled, prosecutors allege.
U.S. Attorney Joseph Nocella Jr. for the Eastern District of New York stated that the defendants "allegedly stole $120 million from federal health care programs by luring the elderly to their businesses with illegal cash payments."
Federal authorities allege the total fraudulent billing to Medicare and Medicaid reached approximately $120 million for prescription drugs and adult day care services that were medically unnecessary, never provided, or obtained through illegal inducements.
Multi-Agency Investigation
The case represents a joint effort by multiple federal agencies. The investigation involved the FBI's Criminal Division, the U.S. Department of Health and Human Services Office of Inspector General, IRS Criminal Investigation, and the New York State Medicaid Inspector General.
"Using the backdrop of an adult day care center, it's alleged the two charged today had devised an elaborate scheme filled with bribery, kickbacks and good old-fashioned deception," stated Special Agent in Charge Harry T. Chavis Jr. of IRS Criminal Investigation New York. Investigators reportedly followed financial trails to document the alleged decade-long fraud operation.
Acting Deputy Inspector General Scott J. Lampert of HHS-OIG emphasized the impact of such schemes on federal health care programs: "Schemes like this, which allegedly drained more than $120 million from Medicare and Medicaid, erode trust in our health care system."
Federal Health Care Fraud Laws
Federal law prohibits paying or receiving remuneration to induce referrals for services covered by Medicare and Medicaid. The Anti-Kickback Statute makes it illegal to knowingly and willfully offer, pay, solicit, or receive anything of value to generate business involving federal health care programs.
Health care fraud conspiracy charges carry potential penalties including imprisonment and substantial fines. The Justice Department has prioritized prosecution of individuals who exploit government programs intended to serve vulnerable populations.
Acting Medicaid Inspector Frank T. Walsh Jr. stated that the case "sends a clear message that the Empire State is committed to working closely with our law enforcement partners to protect the integrity of the Medicaid program."
Impact on Medicare and Medicaid Programs
Adult day care programs provide legitimate social and health services for seniors who need supervision during daytime hours while family caregivers work. These programs typically offer meals, activities, and basic health monitoring. Medicare and Medicaid coverage for such services aims to help seniors remain in their communities rather than entering institutional care.
When providers submit fraudulent claims, they drain resources from programs designed to serve America's most vulnerable populations. The alleged $120 million in false billing represents funds that could otherwise support legitimate care for seniors requiring assistance.
Federal prosecutors emphasized their commitment to protecting government health care programs from exploitation. "These charges are part of this Office's commitment to protecting federal programs and prosecuting those who steal from them," according to U.S. Attorney Nocella.
The case remains pending in federal court. Criminal complaints contain allegations, and defendants are presumed innocent unless proven guilty beyond a reasonable doubt.
Resources for Families
Families concerned about potential fraud or abuse in adult day care programs or pharmacies can report concerns to several agencies. The U.S. Department of Health and Human Services operates a fraud hotline at 1-800-HHS-TIPS (1-800-447-8477). The Centers for Medicare and Medicaid Services maintains a fraud reporting system accessible online.
The National Long-Term Care Ombudsman Resource Center provides assistance at 1-800-677-1116 for concerns about services provided to seniors in various care settings. Additional information is available at https://ltcombudsman.org.
New York residents can contact the New York State Medicaid Inspector General to report suspected Medicaid fraud. Medicare beneficiaries who suspect improper billing should contact 1-800-MEDICARE to file complaints about potentially fraudulent charges.
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