$38M Daycare Scam Explodes In Brooklyn

Hands placing cash into an envelope at a wooden table

A Brooklyn civic leader who donated to New York City Democrats — including newly elected Mayor Zohran Mamdani — has been charged in a $38 million Medicaid fraud scheme that stole taxpayer money for six years.

Story Snapshot

Pervez Siddiqui, 78, a Brooklyn community board member and Democratic donor, was arrested with seven co-conspirators in a $38 million Medicaid fraud scheme.
The group allegedly billed Medicaid for adult day care services that were never provided, paid seniors $500 a month to hand over their Medicaid cards, and used billing staff based in Pakistan.
To hide the money, the group ran cash through shell companies and labeled payments as “gifts,” “dividends,” and even “laddu” — a South Asian sweet.
No evidence in the indictment directly ties Mayor Mamdani to the fraud itself, though Siddiqui cultivated close ties with Democratic politicians.

Brooklyn Civic Leader Arrested in Medicaid Kickback Scheme

Federal prosecutors arrested Pervez Siddiqui, 78, on Monday alongside seven alleged co-conspirators. Siddiqui is a well-known member of Brooklyn Community Board 13 and spent years building ties with prominent Democratic politicians. The indictment charges the group with running a Medicaid fraud operation through two Brooklyn adult day care facilities — APNA Adult Daycare and Ashiana Social Adult Daycare — from 2019 through December 2025. ^[1]

Prosecutors say the scheme worked simply. Recruiters targeted low-income seniors in public housing, bus stops, and doctors’ offices. They asked one question: “Do you have a Medicaid card?” Seniors who signed up rarely attended the facilities. Yet the group billed New York’s Medicaid program as if they had — generating roughly $38 million in false claims for services that were never provided. ^[1]

Cash Kickbacks, Fake Records, and Overseas Billing Staff

The indictment lays out a detailed cover-up operation. The group created fake sign-in sheets that listed more people than the facilities could legally hold. They paid billing staff based in Pakistan to process the fraudulent claims. They also moved money through shell companies, disguising payments with labels like “gifts,” “dividends,” “medicine,” and “laddu.” ^[10] Seniors or their relatives reportedly received about $500 per month just for letting their Medicaid information be used — even when those seniors had moved out of the country. Prosecutors say payments continued flowing to some beneficiaries who were living overseas at the time.

Also named in the indictment are Shazia Bibi, Abdul Aziz, Shair Ali, and four recruiters: Zebun Ahmed, Josna Begum, Saira Khatoon, and Atia Shahnaz. After federal agents executed search warrants in December 2025, some defendants allegedly told employees to swap out their phones and delete data — a sign they knew investigators were closing in. ^[10]

Political Ties Raise Questions, But Indictment Stops Short

Siddiqui was known for cultivating relationships with Democratic politicians, including Mayor-elect Zohran Mamdani. Photos of the two together circulated on social media after the arrest. ^[1] Separately, a watchdog group called the Coolidge Reagan Foundation has filed criminal referrals against Mamdani with the Department of Justice and the Manhattan District Attorney over alleged illegal foreign donations to his mayoral campaign. ^[2] Those are separate matters from this fraud case.

Pakistani-American Democratic donor & Brooklyn community leader arrested in $38M Medicaid fraud

Pervez Siddiqui, 78, a prominent Pakistani-American businessman, pharmacy owner (15+ locations in NJ), and longtime Brooklyn Community Board 13 member, was arrested Monday along with…

— Bhairav Force (OSint) (@BhairavForce) June 19, 2026

The indictment does not allege that Mamdani or any other politician knew about or helped run the fraud scheme. The political connections and the criminal charges are legally distinct. Still, the pattern is worth noting: Medicaid fraud in New York’s adult day care sector has become a massive, recurring problem. In January 2026, two Brooklyn marketers pleaded guilty in a separate $68 million adult day care fraud. In February 2026, two Queens men were charged in a $120 million scheme using the same playbook — fake attendance, kickbacks, and billing for services never given. ^[17] ^[19] Taxpayers are footing the bill every time, and the oversight failures that allow it keep piling up.