Two Korean Americans charged in $120 million adult day care fraud scheme

Two Korean Americans in Flushing have been charged with conspiring to commit adult day care fraud, allegedly defrauding Medicare and Medicaid of about $120 million, federal prosecutors said.

On February 9, the Department of Justice announced charges against Inwoo Kim, 42, also known as Tony Kim, and Donghee Yang, 56, also known as Daniel Lee or Daniel Yang. Prosecutors allege the two operated a wide-ranging scheme involving adult day care centers, a pharmacy, and illegal kickbacks.

According to authorities, Kim owned Royal Adult Day Care, Happy Life, and a pharmacy. Yang worked as a program director at Happy Life. Prosecutors allege the two coordinated fraudulent billing and kickback payments over nearly a decade.

Federal officials said the adult day care fraud scheme ran from 2016 through 2026. During that period, the defendants allegedly paid Medicare and Medicaid beneficiaries illegal bribes in cash and supermarket gift cards. In return, beneficiaries were steered to fill prescriptions at Kim’s pharmacy or enroll in Kim’s adult day care centers.

In addition, prosecutors allege the defendants billed federal health programs for services that were never provided or were medically unnecessary. As a result, they claim, Medicare and Medicaid paid out approximately $120 million in improper claims.

Court documents cite text messages exchanged between the defendants. In one message, Kim allegedly instructed an accomplice to “first give $10,000 to Korean members,” referring to illegal cash payments. Prosecutors said Yang also sent messages stating that he had distributed money and handed envelopes intended for patients to Kim.

The case is the result of a joint investigation by the Department of Health and Human Services Office of Inspector General, the Federal Bureau of Investigation, the IRS Criminal Investigation division, and the New York State Comptroller’s Office.

As part of the probe, federal agents conducted early-morning raids on Korean-run adult day care facilities on February 6. Investigators seized computers and documents containing member and financial records. Seniors attending the centers that morning were questioned about their identification and whether they had received cash payments.

If convicted, Kim and Yang each face up to 10 years in federal prison.

Joseph Nocella Jr., U.S. Attorney for the Eastern District of New York, said the defendants are accused of luring seniors with illegal cash payments and siphoning $120 million from federal health care programs.

The Department of Health and Human Services added that institutions meant to support seniors instead diverted taxpayer funds through fraud.

The case highlights continued federal scrutiny of adult day care fraud and improper billing practices involving Medicare and Medicaid.

BY EUNBYUL KIM   [kim.eb@koreadailyny.com]