A Flushing pharmacy owner and his Long Island associate were arrested by federal agents Tuesday morning for allegedly engaging in a $26 million healthcare fraud scam.
Dacheng “Bruce” Lu, 44, from Flushing, and Taesung “Terry” Kim, 58, of Great Neck, were arraigned on an indictment unsealed in Brooklyn federal court charging them with submitting false and fraudulent claims to Medicare and Medicaid for medically unnecessary prescription 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 filings, the two men owned and operated four pharmacies in Flushing and Brooklyn. Between January 2015 and December 2022, they conspired with others to file false and fraudulent claims. Lu and Kim 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 illegal kickbacks and bribes to the doctors who prescribed medically unnecessary medications filled at their pharmacies in the form of rent and office staff.
Kim and Lu allegedly laundered the proceeds of their fraud through shell entities to generate cash that they could disperse as profits to themselves and the pharmacies’ other owners and to pay pharmacy customers as kickbacks.
As part of the scheme, Kim and Lu’s pharmacies submitted approximately $26 million in fraudulent claims to Medicare and Medicaid, according to federal prosecutors.
Lu and Kim were arraigned before U.S. Magistrate Judge Cheryl L. Pollak where they were charged with conspiracy to commit health care fraud, conspiracy to pay illegal health care kickbacks and bribes, and conspiracy to commit money laundering. They each face up to 35 years in federal prison if convicted on all counts.
