Two Pharmacy Owners Charged with $29M Health Care Fraud Scheme
An indictment was unsealed today in Brooklyn charging two New York men for their alleged participation in a scheme to submit false and fraudulent claims to Medicare and Medicaid for medically unnecessary prescriptions and over-the-counter products that were not actually dispensed, to pay illegal kickbacks and bribes, and to launder the proceeds of their scheme.
According to court documents, Taesung “Terry” Kim, 58, of Purchase, and Dacheng “Bruce” Lu, 44, of Great Neck, partly owned and operated four pharmacies: 888 Pharmacy Inc. and Huikang Pharmacy Inc., located in Brooklyn, and Elmcare Pharmacy Inc. and NY Elm Pharmacy Inc., located in Flushing. Between January 2015 and December 2022, Kim and Lu allegedly conspired with others to submit false and fraudulent claims to Medicare and Medicaid for dispensing pharmaceutical and over-the-counter products that were medically unnecessary, procured by the payment of kickbacks and bribes, or not provided. Further, Kim and Lu allegedly conspired with others who paid illegal kickbacks and bribes, in the form of cash and supermarket gift certificates, to Medicare beneficiaries and Medicaid recipients who filled their prescriptions at their pharmacies. Kim and Lu also conspired with others to pay and paid illegal kickbacks and bribes, in the form of rent and office staff, to the doctors who prescribed the medically unnecessary medications filled at their pharmacies.
Kim and Lu also are alleged to have laundered the proceeds of their fraud through shell entities to generate cash that they could disperse as unrecorded profits to themselves and the pharmacies’ other owners and to pay kickbacks to pharmacy customers. As part of the scheme, Kim and Lu’s pharmacies submitted approximately $29 million in fraudulent claims to Medicare and Medicaid.
Kim and Lu are charged with conspiracy to commit health care fraud, conspiracy to commit money laundering, and conspiracy to pay illegal health care kickbacks and bribes. If convicted, they each face a maximum penalty of 10 years in prison for conspiracy to commit health care fraud, 20 years in prison for conspiracy to commit money laundering, and five years in prison for conspiracy to pay illegal health care kickbacks and bribes.
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Breon Peace for the Eastern District of New York, Assistant Director in Charge Michael J. Driscoll of the FBI New York Field Office, and Special Agent in Charge Naomi Gruchacz of the Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.
The FBI and HHS-OIG are investigating the case.
Trial Attorney Patrick J. Campbell and Acting Assistant Chief Miriam Glaser Dauermann of the Criminal Division’s Fraud Section are prosecuting the case.
The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, comprised of 15 strike forces operating in 25 federal districts, has charged more than 5,000 defendants who collectively have billed federal health care programs and private insurers more than $24 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at https://www.justice.gov/criminal-fraud/health-care-fraud-unit.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.