Brooklyn Daycare Owner Sentenced in $64 Million Medicaid Fraud Scheme

A Brooklyn social adult daycare owner has been sentenced to 76 months in federal prison for her role in a Medicaid fraud and illegal kickback scheme involving approximately $64 million in fraudulent claims.

Zakia Khan, 55, was sentenced in federal court in Brooklyn after previously pleading guilty in August 2025 to conspiracy to commit health care fraud and conspiracy to defraud the United States and pay health care kickbacks. She was also ordered to pay more than $56 million in restitution and forfeit $5 million in fraud proceeds. The forfeiture includes two properties, cash and gold jewellery seized during a search of her home.

According to court documents, Khan owned two social adult daycare centres in Brooklyn: Happy Family Social Adult Day Care Center and Family Social Adult Day Care Center. She also owned Responsible Care Staffing Inc., a home health care fiscal intermediary, and Tanwee Services Inc., an entity used to receive and disguise proceeds generated through the scheme.

The fraudulent activity took place from approximately October 2017 through July 2024. During this period, marketers allegedly referred Medicaid recipients to Khan's adult daycare centres in exchange for kickbacks and bribes. The recipients were induced to enrol in the programmes and complete attendance documentation, while the services billed to Medicaid were not provided as represented.

The two daycare businesses submitted approximately $64 million in fraudulent claims to Medicaid during the period covered by the scheme. Medicaid paid approximately $56 million on those claims. The difference between the amount billed and the amount paid is reflected in the federal government's restitution calculation.

The scheme involved payments to Medicaid recipients who were induced to participate in the fraudulent billing arrangements. Investigators obtained evidence showing cash payments being made in connection with the scheme, including an undercover recording of Khan paying an illegal kickback inside the Happy Family facility. Photographs released in connection with the case also showed cash and other assets seized during the investigation.

The proceeds were also moved through multiple business entities. According to the court documents, Khan and her co-conspirators used these entities to launder the fraud proceeds and to generate the cash used to pay kickbacks and bribes to marketers and Medicaid recipients. Tanwee Services Inc. was identified as an entity used to receive and disguise proceeds from the fraudulent activity.

The financial component of the case therefore extended beyond the submission of fraudulent Medicaid claims. The proceeds generated from the false claims were transferred through business entities and converted into cash used for payments connected with the recruitment of Medicaid recipients. The authorities also pursued forfeiture of assets identified as proceeds of the scheme.

The investigation was conducted by the US Department of Health and Human Services Office of Inspector General, Homeland Security Investigations and the New York City Police Department. Federal prosecutors handled the criminal proceedings and forfeiture matters in the Eastern District of New York.

The sentencing followed Khan's guilty plea in 2025. In addition to the 76-month prison term, the court ordered restitution exceeding $56 million and forfeiture of $5 million. The forfeited property includes real estate, cash and gold jewellery that investigators identified as fraud proceeds or property subject to forfeiture.

The case forms part of federal enforcement activity involving healthcare fraud and Medicaid-funded services. The Department of Justice has stated that its Health Care Fraud Strike Force programme has charged more than 6,200 defendants since 2007 in cases involving alleged fraudulent billing of federal healthcare programmes and private insurers exceeding $45 billion.

The Khan case specifically concerned social adult daycare and related home health care services. The federal proceedings established that the Medicaid claims submitted by the two daycare centres were fraudulent and that Medicaid paid approximately $56 million on those claims. The guilty plea and subsequent sentence resolved Khan's criminal liability in the federal case.

The sentence also concludes the federal prosecution against Khan arising from the identified scheme, while the financial recovery measures address the proceeds obtained through the fraudulent Medicaid claims. The case involved healthcare fraud, illegal kickbacks and the movement and concealment of proceeds through multiple business entities.

By fLEXI tEAM