A Brooklyn businesswoman was sentenced to 76 months in federal prison for orchestrating a $64 million Medicaid fraud and kickback scheme that operated through two social adult daycare centers and a home health care staffing company she owned, federal prosecutors announced.
Zakia Khan, 55, was also ordered to pay more than $56 million in restitution and to forfeit $5 million in fraud proceeds, including two properties, cash, and gold jewelry that investigators seized during a search of her home. Khan pleaded guilty in August 2025 to conspiracy to commit health care fraud and conspiracy to defraud the United States and pay health care kickbacks.
According to court documents, Khan owned Happy Family Social Adult Day Care Center Inc. and Family Social Adult Day Care Center Inc., along with a home health care fiscal intermediary, Responsible Care Staffing Inc., and a separate entity, Tanwee Services Inc., that prosecutors say was used to launder and conceal fraud proceeds. From October 2017 through July 2024, a network of marketers allegedly referred Medicaid recipients to Khan’s daycare centers in exchange for bribes and kickbacks. Investigators say Khan and her co-conspirators then paid Medicaid recipients directly to sign up for services that were never actually delivered, despite being billed to the government program.
Over that roughly seven-year period, Happy Family and Family Social fraudulently billed Medicaid approximately $64 million, of which the program paid out about $56 million based on the false claims, according to the Justice Department. Prosecutors said Khan and her associates relied on multiple shell business entities to launder the proceeds and generate cash used to continue paying kickbacks to marketers and beneficiaries, sustaining the scheme for years before it was uncovered.
The case underscores a persistent vulnerability in Medicaid-funded home and community-based care, where oversight of attendance and service delivery can be difficult to verify in real time. Social adult daycare programs, designed to provide supervised support for elderly and disabled beneficiaries who might otherwise require institutional care, have increasingly drawn scrutiny from federal investigators in New York and other states after a string of similar fraud cases involving inflated attendance records and kickbacks paid directly to enrollees.
Health care fraud involving Medicaid and Medicare continues to be one of the Justice Department’s top enforcement priorities, with the National Fraud Enforcement Division and agencies such as the Department of Health and Human Services Office of Inspector General and Homeland Security Investigations coordinating on complex financial and undercover investigations. Officials have repeatedly pointed to schemes like Khan’s as evidence that fraud networks are growing more sophisticated, often using layered shell companies and cash transactions to obscure the flow of stolen taxpayer funds.
Officials from the Justice Department, the U.S. Attorney’s Office for the Eastern District of New York, HHS-OIG, Homeland Security Investigations, and the New York Police Department each highlighted the case as a warning to other operators who might attempt to exploit Medicaid programs intended to serve vulnerable populations. The investigation included undercover recordings that captured Khan paying illegal kickbacks inside her office, as well as evidence of recipients receiving cash payments in exchange for filling out false attendance sheets.
The case was investigated by HHS-OIG, Homeland Security Investigations’ New York office, and the NYPD. It was prosecuted by the Justice Department’s National Fraud Enforcement Division’s Health Care Fraud Section, with assistance from the U.S. Attorney’s Office for the Eastern District of New York on forfeiture matters, according to a Justice Department press release.
