NYC adult day care director pleads guilty in $127 MILLION Medicare, Medicaid fraud scheme

Daniel Lee, 57, of Flushing, New York, pleaded guilty Monday to conspiracy to commit health care fraud and conspiracy to commit money laundering, the Justice Department announced Tuesday.

According to court documents cited by the department, Lee served as program director at two social adult day care centers in Flushing: Happy Life Inc. and Z&W Empire Enterprise Inc., which operated as Royal Adult Day Care Center.

For approximately a decade, the centers paid illegal cash kickbacks and bribes to Medicaid recipients to persuade them to enroll. The businesses then billed Medicaid for services that were never delivered.

Some claims covered periods when recipients were hospitalized, making it impossible for them to have received the purported day care services.

During the same period, Lee and his co-conspirators also paid kickbacks and bribes to Medicare beneficiaries and Medicaid recipients at a related pharmacy. That pharmacy submitted claims for medically unnecessary prescription drugs, according to the Justice Department.

Investigators recovered more than $100,000 in cash while executing a search warrant at Happy Life. Authorities also seized approximately $900,000 in fraud proceeds from bank accounts.

“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.”

US Attorney Joseph Nocella Jr. for the Eastern District of New York said prosecutors are continuing to investigate fraud involving social adult day care providers.

“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,” Nocella said.

Scott J. Lampert, deputy inspector general for investigations at the Department of Health and Human Services Office of Inspector General, emphasized the impact on people who depend on the programs.

“Paying kickbacks and billing for services that were never provided is not patient care. It is theft from programs that vulnerable people depend on,” Lampert said.

A federal district court judge will determine Lee’s sentence after considering federal sentencing guidelines and other statutory factors. He faces a maximum penalty of 30 years in prison and is scheduled to be sentenced March 2, 2027.