When Dr. Mehmet Oz describes some New York City senior day care centers as “clubhouses for criminals,” he is not talking about a theoretical risk; he is pointing to a fraud model that federal prosecutors have already charged in detail and, in some cases, secured guilty pleas for, centered on social adult day care programs and affiliated pharmacies siphoning tens of millions of Medicaid dollars through kickbacks and phantom billing.
Key Points
- Federal complaints and indictments in New York have documented adult day care schemes that used cash kickbacks, supermarket gift cards, and inflated attendance to steal well over $100 million from Medicaid and Medicare.
- Dr. Oz’s “clubhouse for criminals” characterization aligns with what prosecutors allege: recreational day programs serving as fronts to buy seniors’ participation and bill for medically unnecessary or unprovided services.
- Independent investigations using CMS/HHS data suggest that a dense cluster of senior day care centers in Flushing, Queens has generated billions in billings in a few years, with some facilities claiming implausible patient volumes.
- While not every New York social adult day care center is implicated, the pattern of kickbacks, phantom patients, and weak oversight is now well established, raising broader questions about how Medicaid-funded personal assistance is supervised.
From Community Service to Fraud Template: How Adult Day Care Became a Target
Social adult day care programs were originally designed to solve a straightforward problem: how to support frail or isolated seniors who can still live at home but need structure, basic supervision, and social engagement during the day. Under Medicaid and related state programs, these centers can be reimbursed for transportation, meals, supervision, and limited health-related services. The benefit is real; for families trying to keep older relatives out of nursing homes, an adult day care slot can make the difference between independence and institutionalization.
That mix of modest services and relatively generous reimbursement, however, is exactly what makes the sector attractive to fraudsters. The services are hard to verify from a distance, attendance records are easy to manipulate, and seniors’ eligibility is tied to their Medicaid beneficiary numbers—valuable tokens in any scheme aimed at billing the government. Over the past decade, New York’s enforcement agencies and federal prosecutors have repeatedly described a common pattern: centers that are ostensibly providing social activities but in practice function as bill mills, inflating enrollment, paying illegal kickbacks to keep seniors enrolled, and relying on compliant prescribers and pharmacies to turn ordinary visits into reimbursable “care.”
The Queens Case: $120 Million Through Kickbacks and Overbilling
The clearest example behind Oz’s rhetoric is the federal complaint against Inwoo “Tony” Kim and Daniel Lee in Flushing, Queens. Unsealed in Brooklyn, that complaint charges the two men with conspiracy to commit health care fraud, alleging that they stole approximately $120 million from Medicare and Medicaid between 2016 and 2026. Kim owned a pharmacy and two social adult day care centers, including Happy Life; Lee managed at least one of the centers. The alleged mechanics read like a textbook for turning a senior day care into a fraud engine.
According to the Justice Department, Kim and Lee paid illegal bribes and kickbacks to Medicaid recipients and Medicare beneficiaries in the form of cash and supermarket gift certificates to induce them to enroll in the day care programs and fill prescriptions at Kim’s pharmacy. Text messages cited in the complaint show Kim instructing a co‑conspirator to “Please give the $10,000 to the Korean members first,” and Lee noting, “I gave the payment” and “I left the envelope [for a patient] with Tony [Kim].” Those details matter: they are contemporaneous communications showing intent to pay for patient recruitment, not simply generous “discounts.”
Prosecutors further allege that the defendants submitted claims for day care services that exceeded their facilities’ permitted capacity and billed for prescription drugs and adult day care services that were medically unnecessary or never provided at all. In total, Medicare and Medicaid allegedly paid roughly $120 million on the basis of these claims. Parallel reporting from local outlets describes seniors in Flushing receiving monthly kickbacks of around $500 for joining a center, reduced to $300 if they actually attended, underscoring that the payment structure was designed to maximize billable enrollment rather than care.
Brooklyn Schemes: $68 Million and a Guilty Plea
The Queens case is not an outlier. In Brooklyn, federal prosecutors have charged eight defendants in a separate scheme that allegedly defrauded Medicaid of approximately $68 million through two social adult day cares and a home health care financial intermediary. The indictment describes kickbacks and bribes used to steer Medicaid recipients to these centers, with services billed that were not provided or justified. That case has already produced guilty pleas: the identified leader admitted to conspiring to defraud Medicaid and pay health care kickbacks, confirming that at least one major operator has acknowledged criminal conduct rather than contesting it in court.
From an enforcement perspective, the Brooklyn prosecutions are important because they show the same mechanics—cash incentives, inflated enrollment, billing for unrendered services—being applied across multiple centers and a related home health entity. There is no plausible way to dismiss this pattern as an isolated misunderstanding about paperwork. It is organized behavior aimed at extracting as much Medicaid funding as possible, using seniors’ eligibility as the leverage.
Alleged $38 Million Scheme and the Expanding Geography of Fraud
New York reporting has also surfaced an alleged $38 million adult day care scam in Brooklyn involving operators tied to Pakistani community leadership and affiliated centers such as APNA Daycare and Ashiana Social Adult Daycare. In that case, prosecutors and reporters describe relationships between community influence, recruitment of seniors, and the same set of tools: kickbacks, referrals, and billing for services that do not match actual attendance or medical need. A Justice Department filing associated with related investigations depicts recruiters being paid to refer Medicaid recipients to specific centers, with the recipients themselves then receiving illegal cash payments to keep enrollment numbers high.
Taken together—Queens, Brooklyn, and linked recruiters—the documented and charged schemes easily cross the $200 million mark in alleged fraud within New York’s adult day care ecosystem. Oz’s assertion that some centers have turned into “clubhouses for criminals” is, in that sense, a shorthand for what DOJ complaints and indictments already spell out in granular detail.
Oz, Shirley, and the Flushing Cluster: Billions in Question
Dr. Oz’s more sweeping claim focuses on Flushing, Queens, where he and independent journalist Nick Shirley argue that a dense cluster of social adult day care centers has become a focal point of systemic Medicaid abuse. Using public CMS and HHS billing data plus field visits, Shirley’s investigation identifies individual centers that purportedly billed millions of dollars while claiming patient numbers that appear physically impossible given their size.
One facility, Sunrise Senior Service LLC, is reported to have billed Medicaid $12.9 million in a single year while listing around 7,899 patients, despite operating from a modest one‑story or single‑floor space. Other centers in the same neighborhood—Hiroim Adult Daycare, OneTop, Palace Daycare, BNB Adult Daycare—are cited with multimillion‑dollar billings and thousands of enrolled seniors each, all within a small geographic radius. Oz has publicly stated that over three years, social adult day care centers in New York generated approximately $2.5 billion in billings, with roughly $2.1 billion concentrated in Flushing.
Those figures, while striking, come with a caveat: in the available reporting, there is no single, named government data table or audit that directly verifies the $2.1 billion Flushing total. It appears as an aggregation drawn from public billing data rather than a formal CMS fraud finding. What is not in dispute is the underlying geometry: dozens of centers in a tight area, each billing at levels that, combined, reach into the billions. Federal authorities have acknowledged that they are actively investigating whether this rapid proliferation and concentrated billing pattern signals wider fraud, reinforcing that Oz’s concerns are shared inside law enforcement.
Kickbacks, “Clubhouses,” and the Seniors at the Center of the Story
Oz’s phrase “clubhouse for criminals” is not meant to suggest that seniors themselves are masterminding these schemes. The fraud model he and Shirley describe treats elderly beneficiaries as both bait and instruments: they are enticed with cash payments, grocery vouchers, or other incentives to attend loosely supervised day programs where the primary “activity” is socializing—ping‑pong, tai chi, board games, dominoes. Their Medicaid numbers then become the basis for billing the government for attendance or services far beyond what they actually receive.
Reports from staff inside at least one center confirm that kickbacks and bribes are considered prevalent in the sector, even if specific facilities insist they do not participate. In a competitive environment where some operators pay seniors and recruiters aggressively, legitimate providers may be pressured to choose between losing clients or sliding toward the same practices. For the seniors, the programs can look like a harmless way to earn supplemental income and enjoy social time; for taxpayers, they can become expensive illusions of care, masking a transfer of public funds to private operators and their associates.
Oversight Gaps: Audits, “Questionable Payments,” and Slow Accountability
The persistence of these schemes over a decade raises an obvious question: how did they survive so long? Part of the answer lies in oversight gaps. A 2026 audit by New York State Comptroller Thomas DiNapoli found “questionable Medicaid payments, safety risks and compliance problems” in Social Adult Day Care programs, including claims submitted after services had supposedly been terminated. That language indicates that billing controls and program monitoring were weak enough that obviously invalid claims could slip through without immediate detection.
At the federal level, enforcement is typically reactive—driven by whistleblowers, data anomalies, or media investigations—rather than routine, on‑site verification of every center’s capacity against its billing. The Queens and Brooklyn cases show that when prosecutors dig in, they can trace text messages, bank withdrawals, and recruitment networks back to specific individuals. But for years before those complaints were unsealed, the same patterns appear to have gone unchallenged, allowing fraudulent operators to treat Medicaid as a predictable revenue stream. Oz’s criticism of political and regulatory leaders who, in his view, have not moved aggressively enough on day care fraud reflects this lag between suspicion and enforcement rather than a specific legal finding against every center in Queens.
What Is Proven, What Is Alleged, and Where the Evidence Still Needs to Catch Up
The record now supports several firm conclusions. Adult day care fraud in New York is real, substantial, and structurally similar across multiple cases: seniors are recruited with illegal incentives; enrollment and attendance figures are inflated; pharmacies and durable medical equipment suppliers are woven into the scheme; and Medicaid is billed for services that are medically unnecessary or never provided. In Queens and Brooklyn, named defendants have been charged, and in the $68 million Brooklyn scheme, key actors have pleaded guilty.
Oz’s broader assertions—that the Flushing centers’ $2.1 billion in billings over three years are largely fraudulent and that organized Korean and Chinese criminal groups are funneling Medicaid funds abroad—are more expansive than the current documentary record. Shirley’s investigative videos and articles allege transnational mafias and overseas fund transfers, but they do not yet cite bank records, FBI intelligence reports, or customs seizures tying specific centers to foreign accounts. Similarly, the idea that the fraud functions as a “jobs program” underwriting union wages that cycle back into Democratic political contributions remains an allegation without accompanying payroll, union ledger, or campaign finance analyses.
For an informed reader, the distinction is important. Prosecutors have proven that adult day care fraud has cost New York’s Medicaid program hundreds of millions of dollars. Investigative journalists and Oz have made a plausible case that the scale could be larger, possibly into the low billions, and that certain neighborhoods like Flushing show especially troubling patterns. But the evidence for organized transnational criminal networks and political funding loops is, at this stage, more suggestive than substantiated.
NY is now spending more on Medicaid than schools — and pays more per person than anywhere in US: report | Carl Campanile, New York Post
New York’s spending is multiplying — but maybe not adding up.
The state is now spending more on its massive Medicaid program than it does on… pic.twitter.com/suDMNazkM5
— Owen Gregorian (@OwenGregorian) July 18, 2026
Why Oz’s “Clubhouse for Criminals” Label Matters Going Forward
Even with those caveats, Oz’s characterization of some senior day care centers as “clubhouses for criminals” serves a useful analytic function. It punctures a comforting narrative that all publicly funded senior programs are benign by default and reframes adult day care as a sector that requires the same level of scrutiny as home health agencies, hospice providers, and other known fraud hot spots. Enforcement actions in New York and across the country—where coordinated sweeps have charged hundreds of defendants with submitting billions in false claims—show that Medicaid and Medicare fraud is not marginal; it is a major underground industry.
For seniors and families, the stakes are personal: when programs are built to maximize billing rather than care, vulnerable people can be pulled into sham services, over‑prescribed medications, or chaotic environments that do little to support their health. For taxpayers, the cost is straightforward—money diverted from genuine care into schemes that enrich a handful of operators. For policymakers and regulators, the adult day care sector is now clearly a test case: whether they can design oversight mechanisms that distinguish legitimate community support from the “clubhouse” model Oz describes, and act fast enough on data anomalies and whistleblower reports to shut down fraud before it reaches the scale of the Queens and Brooklyn schemes.
Sources:
facebook.com, justice.gov, nypost.com, oig.hhs.gov, youtube.com, insights.wchsb.com, nycriminallawyers.com
