Date: 07-31-2018

Case Style:

Case Number: 1:17-cr-00224-LO

Judge: Liam O'Grady

Court: United States District Court for the Eastern District of Virginia (Arlington County)

Plaintiff's Attorney: Kevin Lowell and Katherine L. Wong

Defendant's Attorney: Ian Hoffman and Preston Smith

Description: Alexandria, VA - Former Owner of Sleep Study Businesses Convicted of Fraud Conspiracy

A federal jury convicted a Sterling, Virginia woman on July 31, 2018 on health care fraud and tax charges for operating a fraudulent sleep study clinic in Northern Virginia.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney G. Zachary Terwilliger of the Eastern District of Virginia; Assistant Director in Charge Nancy McNamara of the FBI’s Washington Field Office; Acting Special Agent in Charge Kelly R. Jackson of IRS Criminal Investigation (CI) Washington D.C. Field Office; Special Agent in Charge Bret D. Mastronardi for the Office of Personnel Management Office (OPM); Special Agent in Charge Robert E. Craig for the Defense Criminal Investigative Service’s (DCIS) Mid-Atlantic Field Office; and Special Agent in Charge Maureen Dixon of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) made the announcement.

After a two-week trial, Young Yi, 44, a citizen of South Korea, was convicted of one count of conspiracy to commit health care and wire fraud, seven counts of health care fraud, one count of conspiracy to defraud the United States, and one count of filing a false tax return. She is scheduled to be sentenced on Nov. 2 by U.S. District Judge Liam O’Grady of the Eastern District of Virginia, who presided over the trial and remanded her into the custody of the U.S. Marshals Service.

“Young Yi fueled her lavish lifestyle by misleading patients, withholding information from physicians, and using doctors’ identifying information without their permission in order to steal millions of dollars from Medicare and private insurers,” said Assistant Attorney General Benczkowski. “Today’s verdict highlights the important work of the Department and our law enforcement partners as we seek to hold people accountable for defrauding our health care system.”

“Yi lied to, cheated, and stole from taxpayers and insurance companies,” said U.S. Attorney Terwilliger. “When someone commits healthcare and tax fraud it drives up the cost of care for everyone and creates an un-level playing field. Yi misled patients and their doctors, falsified records to cover it up, and deducted millions in taxes she used to buy expensive properties and luxury goods. I want to thank our trial team and investigative partners for their terrific work on this complex and important case.”

According to evidence presented at trial, Yi obtained more than $83 million from Medicare and private insurance during the health care fraud conspiracy and lowered her taxes by nearly $900,000 in one tax year alone. Yi formed the primary entities she used to commit the crimes, 1st Class Sleep Diagnostic Center and 1st Class Medical, in 2005. Using those and other entities, Yi directed her employees to solicit patients who had been referred to her clinic for legitimate sleep studies for supplemental but medically unnecessary studies. To conceal the scheme, Yi instructed employees not to send the results of the fraudulent studies to the patients’ doctors, lied to patients by telling them they did not have to pay copays or coinsurance, and cross-billed using her different entities both to conceal the repetition from the insurance companies and to get out-of-network payments for in-network services. The cross-billing between the two lead entities alone was approximately $4 million. Yi also used the original referring doctors’ names and identifying information on health insurance claims without their permission, the evidence showed.

According to the evidence presented at trial, Yi used her business bank accounts to purchase personal luxury goods and real estate that she nonetheless booked as business expenses. Those falsely booked purchases included a $25,000 Rolex watch, $10,500 in mink coats, several luxury vehicles and a $1.1 million home in Sterling, Virginia. Yi also used the proceeds of her crimes to purchase five condominiums worth more than $2.8 million in McLean, Virginia; Chicago, Illinois; and Honolulu, Hawaii. Yi used money that she falsely booked as payments for medical supplies and health insurance reimbursements to purchase land in Great Falls, Virginia. After a February 2014 search warrant was executed at her businesses, Yi and her husband formed a purported charity, and transferred assets into that foundation to protect them from law enforcement.

In addition to the medically unnecessary sleep studies performed on patients who had been referred by doctors to 1st Class Sleep Diagnostic Center, Yi also encouraged her own employees to have sleep studies that were then billed to insurance, the evidence showed. Those included claims charged in the indictment for three employees who did not have sleep apnea but nonetheless received at least 27 sleep studies between them in less than three years. The employees received payments for undergoing the sleep studies, and in some instances, the employees were organized into teams for “races” to see who could refer the greatest number of friends and family members for the fraudulent studies.

Yi’s co-defendant, Dannie Ahn, pleaded guilty in December 2017 and is scheduled to be sentenced on Sept. 14.

The case was investigated by the FBI Washington Field Office, IRS-CI, OPM-OIG, DCIS and HHS-OIG.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. The Medicare Fraud Strike Force operates in nine locations nationwide. Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

Outcome: Guilty

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