Owner of mental health clinics indicted in $1M fraud scheme (updated)

Matthew Fazelpoor//September 20, 2022//

Owner of mental health clinics indicted in $1M fraud scheme (updated)

Matthew Fazelpoor//September 20, 2022//

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In a sweeping indictment announced Sept. 19, the owner of a now-shuttered chain of New Jersey mental health clinics was charged with orchestrating a scheme to defraud Medicare and for using the clinics, with his wife, to conceal the couple’s income in a $1 million tax evasion scheme.

Daniel Cassell, the 56-year-old founder of Kwenyan Professional Health Services and Kwenyan and Associates, 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 last month.

The charges stem from an Office of the Insurance Fraud Prosecutor (OIFP) investigation revealing that the alleged scheme occurred between January 2015 through October 2021, when the Kwenyan entities ceased operations.

Cassell is accused of conspiring with and directing two Kwenyan employees, Carmen Ward and Knyckholle Hooke, in a Medicare fraud scheme in which thousands of false claims were submitted for reimbursement of mental health services that were never rendered. The three are charged 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.

“Individuals who bend and skirt the law to defraud publicly-funded insurance programs and avoid paying their fair share in taxes undermine the systems that are vital for the well-being of the public,” said acting Attorney General Matthew 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.”

Additionally, Cassell is accused of conspiring with another employee, John Johnson, in a scheme to illegally obtain lower premiums for insurance coverage on the more than 20 vans used by Kwenyan entities.

Finally, Cassell and his wife, an officer of the company, are accused of using the clinics to hide unreported income and for failing to report more than $11 million in additional New Jersey-earned income on non-resident income tax returns they jointly filed in 2016, 2017 and 2018, resulting in unpaid tax liabilities of over $1 million. For those allegations, 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.

“Insurance fraud and tax evasion are serious crimes with serious consequences,” said Insurance Fraud Prosecutor Tracy 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.”

“The state’s charges against Dr. Cassell are misguided,” Lee Vartan, attorney for Daniel Cassell, told NJBIZ. “The state can offer absolutely no proof – because there is none – that Dr. Cassell was himself responsible for any of the misbilling alleged in the state’s indictment or that the misbilling was the result of fraud as opposed to inadvertent mistake. Dr. Cassell looks forward to being vindicated in court.”

Editor’s note: This story was updated at 5:40 p.m. ET Sept. 20 to include a comment from Cassell’s attorney.