A Queens man pleaded guilty on Monday to defrauding Medicare and New York State Medicaid of approximately $127 million by billing for medically unnecessary prescription drugs and social adult day care (SADC) services that were not provided.
“For over a decade, Daniel Lee helped run a brazen kickback scheme that stole from Medicare and Medicaid through fraudulent claims for medically unnecessary prescription drugs and social adult day care services that were never provided,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division. “Yesterday’s guilty plea underscores the Department’s commitment to holding accountable those who exploit federal health care programs for personal gain.”
“Yesterday’s guilty plea marks the end of the defendant’s long running and staggering fraud against the Medicare and Medicaid programs,” said U.S. Attorney Joseph Nocella Jr. for the Eastern District of New York. “Our Office is working diligently to uncover and prosecute social adult day care fraud schemes to protect the vital public benefit programs that so many Americans rely on.”
“Paying kickbacks and billing for services that were never provided is not patient care. It is theft from programs that vulnerable people depend on,” said Deputy Inspector General for Investigations Scott J. Lampert of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “This guilty plea sends a clear warning: HHS-OIG and our law enforcement partners are watching, and we will relentlessly pursue those who corrupt these programs for personal gain.”
“The FBI New York Health Care Fraud Task Force is working aggressively alongside our federal, state, and local partners to expose, disrupt, and dismantle multimillion-dollar healthcare fraud schemes like the one alleged yesterday,” said Assistant Director in Charge James C. Barnacle of the FBI’s New York Field Office. “New Yorkers deserve to know their hard-earned tax dollars are funding legitimate medical care – not lining the pockets of criminals. To those who believe they can defraud Medicare and Medicaid undetected, let this serve as a warning: You can hide your schemes, but justice will find you.”
“Healthcare fraud is a serious crime that harms patients, burdens taxpayers, and weakens the integrity of our healthcare system,” said Chief Jarod Koopman of the IRS Criminal Investigation. “These schemes drive up costs, threaten patient care, and siphon resources away from individuals and communities that depend on them. The defendant’s admissions Yesterday should serve as a warning to anyone seeking to profit through fraud: IRS Criminal Investigation and our law enforcement partners will relentlessly follow the money, dismantle criminal operations, and hold offenders accountable.”
According to court documents, Daniel Lee, 57, of Flushing, New York, was a program director at two Flushing SADC centers, Happy Life Inc. (Happy Life) and Z&W Empire Enterprise, Inc. doing business as Royal Adult Day Care Center (Royal). Over approximately ten years, Happy Life and Royal paid illegal cash kickbacks and bribes to Medicaid recipients to induce them to enroll with the businesses and billed Medicaid for services that were never provided.
Some claims were submitted for SADC services when the Medicaid recipients could not possibly have received the services because they were hospitalized at the time. During the same over ten-year period, Lee and his co-conspirators paid kickbacks and bribes to Medicare beneficiaries and Medicaid recipients at a related pharmacy that submitted claims for medically unnecessary prescription drugs. When law enforcement executed a search warrant at Happy Life, they recovered over $100,000 in cash. Law enforcement also seized approximately $900,000 in fraud proceeds held in bank accounts.
Lee pleaded guilty to conspiracy to commit health care fraud and conspiracy to commit money laundering. He is scheduled to be sentenced on March 2, 2027, and faces a maximum penalty of 30 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
HHS-OIG, FBI, IRS-CI, and OSC are investigating the case.
Deputy Chief Patrick J. Campbell of the Fraud Division’s Health Care Fraud Section is prosecuting the case, with Assistant U.S. Attorney Claire Kedeshian for the Eastern District of New York, who is assisting with forfeiture matters.
On April 7, the Department of Justice announced the creation of the Fraud Division. The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people. The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.