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Updated: Police and FBI Raid Huntington Pharmacy, Arrest Owners

The FBI, Department of Justice, police and various state agencies raided Huntington Pharmacy in San Marino Thursday morning, arresting the two owners for a multi-million dollar prescription drug scheme that lasted at least two years.

Updated 3:30 p.m.

Sixteen people, including a doctor and the two owners of in San Marino, were arrested Thursday morning for criminal charges related to an $18 million scheme to defraud Medicare and Medi-Cal, the United States Attorney’s Office said in a statement Thursday.

See photos and video of officials searching inside Huntington Pharmacy for evidence of the prescription drug scheme here.

See reaction from a nurse who worked at the pharmacy, customers and others here.

This is the first case in the nation alleging an organized scheme to defraud government health care programs through fraudulent claims for anti-psychotic medications, a type of scheme that investigators say is on the increase around the nation,” said the U.S. Attorney’s Office.

The scheme involved several pharmacies, though Huntington Pharmacy is alleged as being the primary offender, and caused $7.3 million in actual losses to the Medicare and Medi-Cal programs.

Huntington Pharmacy owners Theana Khou, 39, and Phic K. Lim, 42, are residents of Pasadena and have owned the pharmacy since at least prior to 2009 when the investigation began, San Marino Detective Candice Torres told Patch Thursday morning.

From the United States Attorney's Office, Central District of California:

Manor Medical Imaging Clinic in Glendale operated a bogus clinic authorized to make claims to Medicare, hired a doctor to write prescriptions and recruited Medicare and Medi-Cal beneficiaries, while some also had their identities stolen and used for the scam without their knowledge, according to the U.S. Attorney’s Office.

Beneficiary information was used to bill Medicare and Medi-Cal for millions of dollars in illegitimate medical services and expensive anti-psychotic drug prescriptions. As a result, some beneficiaries were denied coverage for drugs they legitimately needed.

Drugs dispensed by the involved pharmacies did not go to beneficiaries but to black market wholesalers and back to the pharmacies where they were re-labeled, re-packaged and re-dispensed so new bills could be submitted to Medicare and Medi-Cal as if the drugs had not been dispensed previously.

Huntington Pharmacy saw a huge spike in claims to Medi-Cal—from just under $45,000 in 2009 to nearly $1.5 million in 2010—and the vast majority of claims were the result of prescriptions written by Manor’s in-house doctor, according to a federal criminal complaint unsealed Thursday morning that alleges the owners of Huntington Pharmacy were receiving kickbacks and “structuring” cash deposits totaling hundreds of thousands of dollars into their personal and business accounts.

In addition to the arrests, authorities searched five pharmacies, offices belonging to a drug wholesale company, the Manor clinic and homes of several conspirators.

One federal defendant was arrested earlier this month in connection with another Medicare fraud charge, while another defendant remains a fugitive.

All 17 defendants named in the federal criminal complaint are charged with conspiracy to commit health care fraud, which carries a statutory maximum penalty of 30 years in federal prison. The 15 federal defendants arrested Thursday are expected to make their initial appearances this afternoon in United States District Court in Los Angeles.

Updated 12:45 p.m.

San Marino Police, the Federal Bureau of Investigation, United States Attorney General and others raided San Marino's Thursday morning and arrested the two owners, following a two-year investigation into suspicious activity at the pharmacy, San Marino Police Chief John Schaefer told Patch Thursday morning.

"This investigation resulted in surveillances that seemed to point to a very sophisticated operation that involved a wide ring of suspects who had doctors writing multiple prescriptions for various antipsychotic medications to patients who were recruited and paid to get these prescriptions," according to a Thursday SMPD press release.

Patients then went to various pharmacies, including Huntington Pharmacy, in groups and filled their prescriptions and turned the drugs over to others who distributed the drugs through their criminal network and sold them on the black market, said SMPD.

"People came in by carloads," said Schaefer. "This business was a front for a scheme."

San Marino detectives contacted the California Department of Justice, who took over leading the investigation due to its complexity, magnitude and elements involving Medicare and Medi-Cal fraud.

More than $18 million in fraudulent claims were submitted to Medicare and Medi-Cal from Sept. 2009 to July 2011, said the SMPD, and it is alleged that Huntington Pharmacy is the largest distributor of Abilify, Seroquel, and Zyprexa.

Police and other officials are currently searching the pharmacy for evidence. 

Check back as Patch continues to investigate and update this story.

Did you ever witness suspicious activity at Huntington Pharmacy? Tell us in the comments.

Bernard Azer October 27, 2011 at 10:42 PM
Never did business here, but it is a shame that alleged Medicare Fraud was being committed here, at our expense, the taxpayers. However, I do find it odd that there is a black market for antidepressants and antipsychotics, which are not scheduled controlled substances.
Birgit Gabig October 28, 2011 at 12:59 AM
Had prescription filled there occasionally, never saw anything unusual...never lot's of people...I hope it is not true...if it is, I am glad that they got caught, we have to pay for Medicare/Medical fraud... On another note, hope that another nice pharmacist will open there again... Huntington Pharmacy had home delivery ..a godsend for some folks who cannot easily get around.
Penelope Bianchi October 28, 2011 at 03:53 AM
I am a big fan of "Julienne"; a wonderful restaurant and take out gourmet divine place. It is in the next block. I remember several times walking in to the Pharmacy; and wondering how they stayed in business. All their products were overpriced (way overpriced) they had limited inventory...and I remember thinking to myself "are they dealing drugs in here?" I was thinking "illegal drugs"; my intuition told me something was wrong in there; and I fled. Legal drugs; illegal sales. Trust your intuition! Penelope
John October 28, 2011 at 04:52 AM
Penelope, your intuition was wrong because you're speaking about the wrong pharmacy.
Penelope Bianchi October 28, 2011 at 05:07 AM
I am so sorry! This looked like the pharmacy on Mission! Where is this pharmacy! On Huntington Drive? I am so glad you caught my enormous mistake! Is there still a pharmacy on the corner of Los Robles and Mission? There was. So so sorry!
Kris October 28, 2011 at 06:12 AM
They have a lot of interesting merchandise including Shiseido, greeting cards, toys, even nail polish from Europe. Employees are very friendly there. Our family go there for flu shot every year. It is sad to know how greed can ruin a person's mind. The owners are very helpful. They seems to work very hard all the time. Sad to know they got arrested.I like the couple. Hope their kids are fine.
Penelope Bianchi October 28, 2011 at 07:07 AM
That is really sad. "I hope their kids are fine" How horribly sad that these people with children....would risk their lives.....and their futures. I really wonder. So now what happens???
Gilda Moshir October 29, 2011 at 01:16 AM
Whatever happened to "innocent until proven guilty" I was not in town on Thursday and when i returned, everywhere I went I heard the story about the Pharmacy, how disgusting that people don't have anything else to talk about, than someone's else's demise..I was sick to my stomach, thinking how can two very nice people go to jail just like that?...I am a regular customer of the pharmacy, and I find the owners to be very thoughtful and honest, it was shocking to hear the story break out the way it did. Yes, I too am wondering how they were associated with this scam, I hope there has been a mistake...but I am sure not going to judge them without learning more. I was happy to see them in business again today. I was so worried we'd lost a great Pharmacy in town. I am glad they are open again. I also appreciate all the employees that work there.
Paul Bois October 29, 2011 at 06:26 AM
Wow, that's really awful! When the FBI gets involved to the point where they raid the business you know they have a smoking gun on them. I hope there's some way to get the money back to those who were ripped off.
Declan McManus October 29, 2011 at 05:49 PM
Gilda, we should all be so lucky to have loyal friends like you. Have you gotten a load of the Lim's $3 Million+ mansion on El Molino? It's quite a place!
M. McIntyre October 30, 2011 at 07:06 PM
At 5,655 square feet, their house is quite large, but not quite 3m+. They bought it in 2009 for just under 2.5. A handsome house for successful business owners - whether or not it was earned or swindled from medicare/medical is for a jury to decide.
Mitsuki October 30, 2011 at 09:07 PM
Don't talk about my friends like that. I have been a frond of the Lims for a vey long time. I am shocked to hearof this. I am a best friend of the owners daughter. I am on the verge of tears for my best friend ,
Gilda Moshir October 31, 2011 at 12:27 AM
I don't make people's personal lives my spectacle. I have no doubt they've earned where they live and what they live in.
M. McIntyre October 31, 2011 at 03:31 AM
It was not my intention to talk negatively about anyone. I was simply trying to invalidate the facts being shared as erroneous. It is not our place to judge the Lims or what they have. In fact, they purchased their property in a period where the article said Huntington Pharmacy only had 45k in medi-cal billings. I have been a Huntington Pharmacy customer for my entire life and it has always been a great place to do business. As responsible Americans and educated people we should all know that an arrest does not equal guilt.
Dan October 31, 2011 at 02:28 PM
Rumors are dainty morsels that sink deep into one's heart. Spouting off before listening to the facts is both shameful and foolish. (Proverbs 18:8, 13 NLT) There are "friends" who destroy each other, but a real friend sticks closer than a brother. (Proverbs 18:24 NLT) A true friend stick together even after the fact. We are all here for you Theana and PK and pray for you and your daughters.
G Green October 31, 2011 at 06:04 PM
I saw the news last week and curious to know what they found during the raid. There should be a follow up article unless there was really nothing to report. The news on ABC seemed over-rated. I agree with the people above because I go to this Pharmacy. Great people and great service very professional. When people take the time to vouch for these people the way they do above, it means there's something more to the stories. I'm sure the police were doing their job but I think the publicity stunt is focused on the wrong place and the wrong people. The articles are one-sided obviously so let these people have their say before making judgments. What ever happened to the crooked doctors and the 15 other people involved.
G Green October 31, 2011 at 06:10 PM
Declan, I surely wouldn't want a friend like you that's for sure.

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