Cash Kickbacks, Fake Patients, Sky-High Bills

When Dr. Mehmet Oz says some New York City senior day care centers have turned into “clubhouses for criminals,” he is putting a blunt label on a fraud pattern that federal prosecutors, state auditors, and independent investigators have already documented in striking detail in Queens and Brooklyn.

At a Glance

Federal cases in New York have exposed more than $180 million in proven fraud tied to adult day care centers and affiliated pharmacies.
The mechanics are consistent: cash kickbacks to seniors, billing for services never provided, and claims that wildly exceed a facility’s physical capacity.
Flushing, Queens has emerged as a dense hub of social adult day care centers and billing volume, prompting federal scrutiny and Dr. Oz’s “clubhouse for criminals” characterization.
State audits have flagged hundreds of millions in questionable payments to adult day care providers, underscoring oversight gaps rather than isolated bad actors.

From Social Care to Fraud Platform: How These Schemes Work

Adult day care programs exist for a legitimate reason: to give frail or cognitively impaired seniors structured daytime supervision, social interaction, and relief for family caregivers. Under New York’s Social Adult Day Care framework, centers are reimbursed primarily through Medicaid for enrolled participants, with payments keyed to attendance and services such as meals, activities, and basic personal care.

In the Queens and Brooklyn schemes now on the record, operators turned this reimbursement structure into a revenue engine by manipulating the inputs that trigger payment. The Justice Department’s complaint against Inwoo “Tony” Kim and Daniel Lee, both of Flushing, is a textbook example. According to prosecutors, Kim owned a pharmacy and two social adult day care centers; over roughly a decade, he and Lee paid elderly Medicaid and Medicare beneficiaries in cash and supermarket gift cards to enroll in the centers and fill prescriptions, then billed federal programs for drugs and services that were medically unnecessary, never provided, or outright fabricated. The same complaint alleges that they submitted claims for day care services that exceeded the facilities’ permitted capacity—billing for more people than the buildings could physically hold. This is not an abstract concern; Medicare and Medicaid together paid approximately $120 million linked to this scheme.

The mechanics in the earlier Brooklyn case run along the same tracks. Federal indictments and subsequent guilty pleas describe operators paying illegal kickbacks to steer Medicaid recipients into two social adult day care centers and a home health care intermediary, then billing Medicaid for care that, in many instances, never occurred. Recruiters were paid to bring in beneficiaries; shell companies were allegedly used to launder proceeds and generate cash for ongoing bribe payments. In that case, the government put the intended loss to Medicaid at about $68 million.

Once a center is set up with a Medicaid provider number, every additional enrolled senior becomes a billable unit. Fraudsters exploit this by inflating attendance logs, using beneficiaries’ insurance numbers without their full understanding, and turning what should be modest per-capita reimbursements into large aggregate flows of public money. The “clubhouse” feel—ping-pong, mahjong, tai chi—provides a social cover for what is ultimately a billing machine.

Queens as an Epicenter: Flushing’s Dense Cluster of Day Care Billing

The reason Flushing, Queens, features so prominently in Oz’s rhetoric is simple: the numbers coming out of this one neighborhood do not look like normal social care utilization. Dr. Oz has stated publicly that social adult day care centers in New York generated about $2.5 billion in billings over three years, with roughly $2.1 billion concentrated in Flushing and nearby Queens communities. That figure comes from his team’s analysis of federal billing databases, though the underlying government table is not attached in public reporting, which limits outside verification.

Independent journalist Nick Shirley’s on-the-ground work helps explain why those aggregate numbers raised red flags. Using public CMS and HHS data, Shirley identified individual centers in Flushing reporting thousands of “patients” and multimillion-dollar annual billings out of storefront spaces that, by simple square footage, could not handle the claimed volume. Sunrise Senior Service, operating from a single-story location, reportedly billed Medicaid $12.9 million in a year while listing nearly 8,000 patients; Palace Daycare claimed similar counts and reimbursement. When Shirley confronted Sunrise’s owner about the numbers, the owner refused to engage and called the police—a pattern repeated at several facilities when pressed on enrollment and finances.

Staff at some centers described a competitive environment built around kickbacks rather than care. At one Flushing facility, an employee told reporters that day cares routinely lure seniors with grocery vouchers or cash payments; his center, he said, lost members because it did not participate in these practices. Shirley’s broader investigation, summarized by multiple outlets, alleges that seniors receive monthly cash for attending—sometimes as much as $500—with lower amounts when they actually show up, while operators bill Medicaid for each enrolled beneficiary regardless of true attendance, turning social adult day care into a lucrative referral network.

Oz’s “clubhouse for criminals” phrase, cited in both broadcast interviews and digital coverage, is meant to capture this dynamic: facilities masquerading as benign community spaces while functioning as hubs for organized fraud—using seniors’ identities and eligibility to extract public money at scale.

Documented Cases Versus Alleged Systemic Abuse

It is important to distinguish between what has been proven in court and what is still alleged or under investigation. The Kim–Lee case in Queens is anchored in a formal criminal complaint, DOJ press releases, and supporting audits. In Brooklyn, at least two individuals have pleaded guilty in connection with the $68 million adult day care fraud scheme; justice department notices and follow-up reporting confirm their admissions and the structure of the scam. Taken together, these cases alone account for nearly $190 million in fraudulent claims tied directly to adult day care centers and affiliated pharmacies in New York City.

Beyond those prosecutions, the New York State Comptroller’s February 2026 audit of Social Adult Day Care programs found roughly $285 million in “questionable payments” across the sector, including tens of millions paid to facilities that had already been terminated from provider networks based on fraud, waste, or abuse concerns. The audit also flagged safety risks and compliance problems that do not necessarily rise to criminal fraud but do underscore weak oversight and loose controls on billing. These findings lend weight to Oz’s assertion that the problem is systemic rather than isolated.

Still, not every center in Queens or Brooklyn has been implicated, and not every high-billing facility is automatically a criminal operation. Earlier New York Post coverage on the growth of senior day care noted that specific centers discussed in that story had not been accused of wrongdoing, despite operating within the same policy framework. Investigative pieces and opinion columns that describe widespread kickbacks and “jobs program” dynamics often rely on anonymous interviews and aggregated billing data; they rarely include internal contracts, sworn testimony, or detailed forensic audits of individual facilities beyond those targeted by federal prosecutors.

This gap between documented cases and broader allegations matters for policy and public perception. The existence of large, proven fraud schemes shows the vulnerability of the Medicaid-financed adult day care model; it does not, on its own, prove that every center in a given neighborhood is part of a “mafia” or that all billings from Flushing are fraudulent. Oz’s language is deliberately sharp, but the strength of the case varies by facility.

Why Immigrant Neighborhoods Became Targets

One uncomfortable truth that emerges from these investigations is how fraudsters exploit tight-knit immigrant communities. Flushing’s Korean and Chinese enclaves, and Brooklyn’s Pakistani and South Asian networks, provide fertile ground for schemes built on trust, language, and social obligation. In the Queens case, Kim explicitly directed kickback payments to “Korean members” in text messages cited in the complaint. Brooklyn indictments describe recruiters steering Medicaid recipients from their own communities into day cares that paid cash in exchange for enrollment.

In these contexts, a senior may see a modest cash stipend or grocery card not as a bribe but as a legitimate program benefit, particularly when explained by someone who speaks their language and appears to be a community leader. Operators use that cultural familiarity to maintain enrollment, discourage questions, and tamp down complaints—even resorting to threats when participants consider leaving, according to DOJ allegations and New York Post reporting.

The visible clustering of day care centers, pharmacies, and durable medical equipment suppliers on specific streets in Flushing is a physical manifestation of this exploitation. Once word spreads that a particular strip offers cash for participation and effortless access to medications or devices, informal referral networks form, reinforcing the fraud loop; each new enrollee is both a revenue source and a recruiter.

Oversight, Politics, and the Jobs Program Argument

Dr. Oz goes beyond describing the mechanics of fraud; he argues that Medicaid-funded adult day care has, in effect, become a political jobs program. In interviews and opinion pieces, he claims that centers employ staff at $17–$20 per hour, often in unionized positions, and that a share of this payroll ultimately flows back to Democratic campaigns via union political activity. This is a provocative assertion, but public reporting to date has not produced specific payroll records, union ledgers, or campaign finance filings tying particular day care operators to political contribution streams.

What is documented is the sheer scale of New York’s Medicaid program—over $100 billion annually—and the rapid growth of personal assistance and community-based services spending, which creates substantial vested interests in keeping the funding flowing. Oversight agencies, from the state comptroller to the Medicaid Fraud Control Unit, have called for stronger controls and more aggressive enforcement, acknowledging that current safeguards have not prevented large losses. Federal authorities have likewise launched coordinated national sweeps targeting hospice, home health, and day care fraud, seizing assets and pursuing criminal charges.

The political reaction has been mixed. Some state officials have publicly criticized Oz’s framing and questioned his data, especially when his letters or videos contain errors in basic math or incorrectly aggregate categories of spending. Others highlight the genuine value of adult day care for low-income seniors and warn against painting all providers with a fraud brush. Meanwhile, legislative moves like California’s AB 2624—aimed at restricting certain exposure of NGO funding and migration-related services—raise broader concerns about transparency and the ability of journalists to investigate publicly funded programs.

What the “Clubhouse for Criminals” Label Means Going Forward

From a policy standpoint, the phrase “clubhouse for criminals” is less about demonizing a single industry than about crystallizing the structural weakness of a particular funding model. When reimbursement is driven by enrollment and attendance in lightly regulated social programs, fraudsters can turn any benign gathering place into an instrument for siphoning public money. Seniors become the raw material; their eligibility and identities are leveraged for billing, and the nominal “services” provided—games, meals, socialization—serve primarily to keep the operation running and shielded from scrutiny.

The evidence in New York shows that this is not hypothetical. Federal prosecutors have already tied adult day care centers directly to large fraud schemes in Queens and Brooklyn, with detailed complaints, asset seizures, and guilty pleas. State audits have found hundreds of millions in suspect payments across the sector. Independent investigators have now mapped how implausible patient counts, dense provider clusters, and persistent kickbacks fit together on the ground.

The challenge is to respond without collapsing legitimate care along with the fraudulent operations. For many families, social adult day care is the only affordable way to keep an aging parent safe during the day. Closing centers wholesale would simply shift costs and burdens elsewhere. The real work lies in tightening enrollment verification, auditing capacity against claims, tracking patterns of kickbacks and referral payments, and ensuring that data anomalies trigger prompt, physical inspections rather than languishing in spreadsheets.

Dr. Oz’s rhetoric is intentionally sharp; his track record on medical claims has been questioned in other contexts. But in this specific domain, his “clubhouse for criminals” line reflects a pattern already corroborated by prosecutors and auditors. The adult day care model, as currently funded and overseen in New York, has created openings that criminal operators have exploited on a massive scale. Whether policymakers treat that as a reason to reform the system or simply to condemn a few bad actors will determine whether the next decade brings fewer such cases—or more.

🚨 Dr. Mehmet Oz says some senior day care centers in New York City have been turned into what he calls “clubhouses for criminals.”

While touring Queens with independent journalist Nick Shirley, Dr. Oz spoke with local business owners and pharmacists who claimed some centers use…

— JENNIFER (@jenn_2436_) July 18, 2026