For years, Karen Kallen-Zury has lived in a $2 million-plus home in the coastal community of Lighthouse Point, taken care of her family and run a lucrative healthcare business.
Now, the 60-year-old chief executive officer of Hollywood Pavilion, a psychiatric hospital once managed by her late father, confronts the bleak likelihood of spending the rest of her life in prison.
Convicted with three others of swindling Medicare by paying bribes for patient referrals, Kallen-Zury faces up to 170 years in prison at her Sept. 10 sentencing for a $67 million billing scam. The taxpayer-funded program paid about $40 million to her business, described as a “brothel of fraud” by prosecutors.
The Justice Department, raising fears that Kallen-Zury has secreted away money and could flee to Israel, has urged a federal judge to revoke her $3 million bond and put her behind bars as soon as possible.
Prosecutor Robert Zink said in court papers that trial evidence showed she made — “conservatively” — more than $10 million from the “fraud scheme.”
The prosecutor noted that her husband, Tamir Zury, is an Israeli citizen and has a bank account in his native country, and that the couple own a 37-foot luxury powerboat that could be used to flee the United States. The prosecutor also said Kallen-Zury transferred $1 million to her lawyer when she was charged with Medicare fraud last fall. And, he said her mother receives more than $1 million a year from annuities.
“Her lifestyle will change drastically in prison,” Zink wrote in a motion filed Wednesday to revoke bail for Kallen-Zury and two other defendants. “This creates an incentive to flee.”
Kallen-Zury’s defense attorney, Michael Pasano, said the prosecution is telling “half the story,” pointing out that the Justice Department has already frozen his client’s assets, that her husband has little money in his Israeli bank account, and that she is close to her teen-age son and elderly mother. The mother lives in an assisted-living facility and provides financial support for her daughter.
And Pasano said the $1 million transferred to him is sitting in an escrow account and will be turned over to the prosecution.
Lastly, he pointed out that the couple’s Intrepid powerboat is for sport fishing.
“The bottom line is, she showed up every day for trial,” Pasano said. “There is no way this woman is going anywhere.”
At the end of trial in late June, prosecutors asked U.S. District Judge Jose Martinez to revoke the bonds of Kallen-Zury; Daisy Miller, 44, chief hospital clinical officer; and Christian Coloma, a therapist/administrator, 49, who worked for the CEO at Hollywood Pavilion. All three testified at trial.
The judge denied the prosecutors’ immediate request, but proposed they file a motion seeking to revoke the defendants’ bonds. The prosecutors’ raised the issue because It has become common practice for South Florida federal judges to remand convicted Medicare fraud defendants to prison before sentencing to prevent them from fleeing the country.
The vast majority of some 150 Medicare fraud suspects have fled either before they were arrested or after they were charged and obtained a bond while awaiting trial, according to court records and the FBI. Most often, they left for Cuba, Mexico or another Latin American country.