Two New York men have been charged with healthcare fraud after they attempted and were successful in submitting multiple false and fraudulent claims to Medicare and Medicaid over medically unnecessary prescriptions and other over-the-counter products that were never actually dispensed. Additionally, the men are facing charges of paying illegal kickback bribes to facilitate their scheme.

Taesung “Terry” Kim, 58, of Purchase, and Dacheng “Bruce” Lu, 44, of Great Neck were part owners and the operators of four pharmacies throughout New York. According to officials, between 2015 and 2022 both men conspired with others to submit false claims to Medicare and Medicaid in order to collect government payment for prescriptions that were never dispersed.

Additionally, both men offered illegal kickbacks and bribes to participating conspirators in the form of cash and supermarket gift certificates. These bribes and kickbacks were also made out to Medicare beneficiaries and Medicaid recipients who agreed to have the prescription filled at the participating pharmacies. Other individuals were also paid in bribes and kickbacks in the form of rent and office staff for doctors who agreed to prescribe the medically unnecessary prescriptions.

Both men are also facing accusations that they laundered money from their unlawful transactions using shell entities. Using these shell entities, the men were able to generate cash that could be distributed to other accounts as unrecorded profits. Officials detail that the duo's fraudulent tactics resulted in over $29 million of fraudulent claims that were submitted to Medicare and Medicaid.

Both men were arraigned before U.S. Magistrate Judge Cheryl L. Pollak. The men are facing several charges, including conspiracy to commit healthcare fraud, conspiracy to commit money laundering, and conspiracy to pay illegal healthcare kickbacks and bribes to participating individuals. If convicted, they each face up to 35 years in federal prison.

The case against Kim and Lu represents a substantial but declining issue plaguing the nation's healthcare system. In fiscal year 2021, there were 57,287 fraud cases reported to the U.S. sentencing commission. Eight percent of these cases involved healthcare-related fraud such as the scheme conducted by Kim and Lu. Despite this staggering figure, cases of healthcare fraud have been declining over the years, with a 28.7% decline since fiscal year 2017.

Both men align with national statistics as 65.8% of healthcare fraud is conducted by males, with the average perpetrator being age 50 or older. Additionally, a significant majority of healthcare fraud offenders (92%) have little or no prior criminal history.

The top five districts for healthcare fraud across the nation include the Northern District of Alabama, ranking at the top, followed by the Southern District of Florida; the Northern District of Texas; the Southern District of Texas; and the Central District of California.

On average, offenders receive a sentence of 30 months behind bars, with a majority (73.5%) of offenders actually being sentenced to prison time.

The FBI and HHS-OIG are investigating the case against Kim and Lu, with Trial Attorney Patrick J. Campbell and Acting Assistant Chief Miriam Glaser Dauermann of the Criminal Division’s Fraud Section prosecuting the case.