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NJ Mental Health Clinic Chain Owner Charged with Tax Evasion Scheme

By metrowriter on
Trenton

The owner of a chain of mental health clinics in New Jersey was charged with enlisting the aid of his employees to defraud Medicaid in a phony billing scheme and then, together with his wife, using the clinics to conceal the couple’s income in a $1 million tax evasion scheme, was announced today according to Acting Attorney General Matthew J. Platkin and the Office of the Insurance Fraud Prosecutor (OIFP). 

Daniel E. Cassell, 56, of Perkasie, PA, founder of Kwenyan Professional Health Services, LLC and Kwenyan and Associates (the “Kwenyan Entities”), was charged with first-degree money laundering, second-degree theft by deception, and multiple counts of conspiracy, insurance fraud and related offenses in an indictment handed up by a state grand jury on August 25.

According to preliminary reports the charges stem from a 2019 OIFP investigation allegedly revealing that from January 2015 through October 2021, when the Kwenyan entities ceased operations, Cassell, with assistance from his employees, engaged in schemes to defraud Medicaid and to defraud Progressive Insurance Company, which provided auto insurance coverage for a fleet of over 20 service vans used by the clinics.  

A subsequent joint investigation by OIFP and the New Jersey Department of the Treasury allegedly revealed that Cassell and his wife, Bindu R. Cassell, 37, of Perkasie, PA, used the Kwenyan entities to hide income and also failed to disclose additional earned income on their jointly filed 2016, 2017 and 2018 N.J. tax returns.

“Individuals who bend and skirt the law to defraud publicly-funded insurance programs and avoid paying their fair share in taxes to undermine systems that are vital for the well-being of the public,” said Acting Attorney General Matthew J. Platkin. “We will not allow criminals to line their pockets at the expense of the vast majority of law-abiding New Jerseyans who do not illegally enrich themselves.”

“Insurance fraud and tax evasion are serious crimes with serious consequences,” said Insurance Fraud Prosecutor Tracy M. Thompson. “The charges contained in this indictment send a clear message that OIFP will rigorously investigate anyone suspected of these crimes and hold violators accountable.”

Cassell is accused of conspiring with and directing Kwenyan employees Carmen C. Ward, 63, of Flemington, NJ, and Knyckholle Hooke, 47, of Roselle, NJ, in a Medicaid fraud scheme in which thousands of false claims were submitted to Medicaid for reimbursement of mental health services that were never rendered, or where group services were performed but individual or family psychotherapy services were billed.

The three were charged in the indictment with second-degree conspiracy to commit health care claims fraud, second-degree health care claims fraud, third-degree conspiracy to commit Medicaid Fraud, and third-degree Medicaid Fraud.

Cassell is also accused of conspiring with employee John Johnson, 31, of Levittown, PA, in a scheme to illegally obtain lower premiums for insurance coverage on the over 20 vans used by Kwenyan entities. According to the charges, in obtaining coverage from Progressive Insurance Company (Progressive), Cassell and Johnson falsely claimed that the vehicles, which were garaged and operated out of Kwenyan clinics throughout New Jersey, would be garaged in Pennsylvania. As a result, the defendants could insure the vehicles in Pennsylvania, thereby obtaining an aggregate monetary benefit of more than $1,000. 

Additionally, Cassell and his wife, an officer of the Kwenyan entities, are accused of using their mental health clinics to hide unreported income, including by disguising it as loan repayment checks from the Kwenyan entities to Daniel Cassell. The couple is also accused of failing to report more than $11 million in additional New Jersey-earned income on N.J. non-resident income tax returns they filed jointly in 2016, 2017, and 2018, resulting in unpaid tax liabilities of over $1 million. They are charged with second-degree misconduct of a corporate official, and three counts each of third-degree filing a fraudulent return and third-degree failure to pay tax. 

The charges are merely accusations, and the defendants are presumed innocent until proven guilty. Second-degree charges carry a sentence of five to 10 years in state prison and a fine of up to $150,000, and third-degree charges carry a sentence of three to five years in state prison and a fine of up to $15,000.  

Deputy Attorneys General Charisse M. Penalver and Vladimir D’Argenio are prosecuting the case for the Office of the Insurance Fraud Prosecutor, Medicaid Fraud Control Unit. Detectives conducted the investigation for OIFP in the Medicaid Fraud Control Unit. The investigation for the New Jersey Department of the Treasury was conducted by the Division of Taxation, Office of Criminal Investigation. 

Insurance Fraud Prosecutor Thompson thanked the Medicaid Fraud Division of the Office of the State Comptroller for referring the case to OIFP. 

In New Jersey, the New Jersey Medicaid Fraud Control Unit protects Medicaid beneficiaries and the Medicaid Program from fraud, waste, and abuse. The Medicaid Fraud Control Unit is within the New Jersey Office of the Insurance Fraud Prosecutor. 

New Jersey’s Medicaid Fraud Control Unit receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling approximately $4.1 million for the Federal fiscal year (“F.Y.”) 2022. The remaining 25 percent, totaling about $1.3 million for F.Y. 2022, is funded by New Jersey.

To report Medicaid Fraud or Patient Abuse & Neglect, please email NJMFCU@njdcj.org, complete the Medicaid Fraud & Patient Abuse & Neglect Reporting Form, or call 609-292-1272. The Medicaid Fraud Control Unit also conducts presentations educating the public and the health care industry regarding Medicaid fraud. For more information on presentations, call 609-292-1272.

To report suspected tax fraud, please call the N.J. Treasury, Division of Taxation 24-Hour Recorded Tip Line at 609-322-6057.