Two men charged with ripping off Medicaid for $120 million threatened elderly people involved in their scheme to keep them in line, The Post has learned.
On ‘payday’ scores of senior citizens would line up outside owner Daniel Lee’s office of Royal Adult Day Care in Flushing, Queens, waiting for kickbacks for attending in a massive fraud that spanned a decade, according to a federal complaint.
Seniors caught gossiping to other local day care members about their haul were kicked out of the program, authorities claim.
A Justice Department complaint filed Monday alleged program director Inwoo Kim, 42, and Lee, 56 — who also ran Happy Life Adult Day Care — conspired to defraud federal healthcare programs of $120 million by bribing patients to enroll in their social adult day cares (SADC).
Local seniors in Flushing were given a kickback of $500 a month for joining one of the day care centers, but their cut went down to $300 if they actually showed up to use the facility, the complaint alleges.
They also got “unneeded” prescriptions written by consenting local doctors filled at a pharmacy owned by one of the alleged fraudsters, federal officials told The Post.
“You’re giving it out Monday, right? I told the elders to come Monday,” a text message to Kim from a co-conspirator read. The text, written in Korean, referred to kickback payments to Medicaid members, according to the complaint.
Flushing is overwhelmingly a Chinese community but on payday Kim and Lee, both Korean, made sure to take care of their own upfront, the documents claim to show.
“Please give $10,000 to the Korean members first,” another purported exchange between Kim and the unnamed co-conspirator read.
Lee, who has a South Korean passport but is believed to be a naturalized US citizen, was arrested Friday at JFK airport while attempting to board an international flight with $40,000 in cash, prosecutors said.
Despite being labeled a significant flight risk, he was released on a $500,000 bond. Kim was released on $250,000 bail. Both men are facing up to 10 years for conspiracy to commit health care fraud. Neither has yet entered a plea with court, their lawyers did not immediately return requests for comment.
The complaint revealed a spreadsheet prosecutors say the fraudsters allegedly used to keep track of the prescription drug hustle.
Their scheme involved getting friendly local doctors, home health workers, and acupuncturists to prescribe the expensive and profitable Diclofenac Epolamine pain relief patches to Medicaid recipients who didn’t need them, authorities alleged.
The Department of Health and Human Services Office of Inspector General told The Post SADC fraud is “one of the common, pervasive health care fraud schemes” they encounter.
Day care members were required to fill the prescription at a pharmacy owned by Kim, from which he profited $525 per 60-pack prescription and gave a $100 kickback to the day care members, the complaint alleged.
Lee “forbade” members from using rival pharmacies and “threatened to stop paying them” if they did, according to the complaint.
“Medically unnecessary prescriptions involved in the schemes often include innocuous medications that are not generally harmful, including pain patches and anti-fungal creams. The prescriptions are expensive, and there is a high rate of profit,” the HHS official said.
Unlike many recently exposed Medicaid fraudsters in New York City and across the country, federal officials told The Post Lee and Kim did not appear to lead lavish lives by blowing money on mansions, jewelry and sports cars and were potentially sending money overseas.
Property records show Kim lived at a tidy home on Long Island’s tawny Great Neck suburb that last sold for $1.2 million, while Lee lived in a small, 2nd floor Flushing apartment.
Lee, however, apparently liked to gamble. Between February 2024 and January 2025, he withdrew $124,000 at a casino in Yonkers, the complaint alleges.
But the pair’s alleged fraud became brazen.
SADCs bill Medicaid like a doctor’s visit—based on per person usage rather than a flat fee. Royal regularly claimed over 700 members visiting daily, despite the facility having a maximum occupancy of 81, according to the Dept. of Buildings.
In August 2022, Royal billed Medicaid for 1,041 member visits in a single day.
Another part of the alleged operation involved paying off day care members with gift cards to local mom-and-pop grocery stores in Flushing. An HHS official told The Post supermarket gift cards are often used in the cases because they seem “less egregious and easier to disguise” than cash kickbacks.
“Additionally, in some community based social adult day care and pharmacy fraud schemes, there are often transnational ties through which fraudulent proceeds are transferred overseas,” the official added.
New York taxpayers spend at least $400 million a year on SADCs, according to the Health Department, which have been prone of wildly egregious frauds.
Last June, law enforcement exposed how $68 million had been stolen from taxpayers in a scheme involving two SADCs in Brooklyn. Owner Zakia Khan’s racket paid kickbacks and bribes to marketers for referring Medicaid recipients to her SADCs from 2017 onward.