A Pakistani-American businessman and several associates have been charged in connection with an alleged $38 million Medicaid fraud scheme involving two adult day care centres in Brooklyn, according to US prosecutors. The case centres on claims that the group submitted millions of dollars in fraudulent Medicaid reimbursement requests for services that were either exaggerated or never provided, while using various methods to conceal the movement of funds.Who Is the Pakistani-American Businessman Charged in the Case?The main defendant named in the indictment is 78-year-old Pervez Siddiqui, a Brooklyn-based businessman, pharmacy owner and community leader. Authorities arrested Siddiqui along with seven other individuals accused of participating in the alleged scheme. Prosecutors claim the operation ran from 2019 until December 2025 and generated approximately $38 million in fraudulent Medicaid claims.The indictment also names Shazia Bibi, also known as Shazia Wattoo, Abdul Aziz, Shair Ali, Zebun Ahmed, Josna Begum, Saira Khatoon and Atia Shahnaz.How Did the Alleged Medicaid Fraud Scheme Work?According to prosecutors, the defendants used two Brooklyn-based social adult day care centres, APNA Adult Daycare and Ashiana Social Adult Daycare, to enrol elderly Medicaid recipients.Investigators allege that many of the enrolled individuals rarely attended the centres, despite claims being submitted for services. Prosecutors say recruiters were paid kickbacks to sign up Medicaid beneficiaries, allowing the centres to bill the state's Medicaid programme.The alleged scheme resulted in millions of dollars being claimed for services that were not provided.Why Are 'Laddu' Payments Mentioned in the Indictment?Federal prosecutors allege that the defendants used shell companies and misleading payment descriptions to disguise financial transactions connected to the operation. According to court documents, payments were labelled using terms such as "gifts", "dividends", "medicine" and "laddu", a popular South Asian sweet, in an effort to conceal the movement of money.Authorities claim some of the billing operations were handled by staff based in Pakistan.Allegations of Fake Attendance Records and False ClaimsInvestigators allege that the adult day care centres created false attendance records and sign-in sheets to support Medicaid claims. Some records reportedly showed attendance figures exceeding the facilities' legal occupancy limits.Prosecutors further claim that certain Medicaid beneficiaries continued generating claims even while living outside the United States.According to the allegations, some individuals linked to the claims were residing in countries including Pakistan and Morocco while services were allegedly being billed in New York.Did Defendants Try to Obstruct the Investigation?Federal authorities claim that after search warrants were executed in December 2025, some defendants attempted to interfere with the investigation. According to prosecutors, employees were instructed to replace mobile phones and delete data that could be relevant to the case.These allegations form part of the broader investigation into the suspected fraud operation.Political Connections Draw Attention in High-Profile CaseThe case has attracted additional attention because of Siddiqui's involvement in community and political activities. According to reports, the businessman owns multiple pharmacies in New Jersey and has contributed to Democratic political campaigns over the years.Through community organisations, he has attended events involving prominent political figures, including New York City Mayor Zohran Mamdani, New York Attorney General Letitia James and former New York City Mayor Eric Adams.However, prosecutors have not accused any elected officials of wrongdoing, and no politicians have been named as defendants in the case.Are Siddiqui's Pharmacies Accused of Fraud?The indictment focuses on the alleged activities involving the adult day care centres. Court documents do not accuse Siddiqui's pharmacies or other affiliated businesses of participating in the alleged Medicaid fraud scheme.The charges relate specifically to the operation of the adult day care programmes and associated billing practices.Why Is New York's Adult Day Care Industry Facing Increased Scrutiny?The latest case comes amid a series of investigations into alleged Medicaid fraud involving adult day care centres in New York. Federal prosecutors have recently brought charges in several other high-value cases involving similar allegations of fraudulent billing, kickbacks and false attendance records.Experts say New York's Medicaid programme, one of the largest in the United States, has become a frequent target for fraud investigations because of the substantial public funds involved.What Happens Next in the Brooklyn Medicaid Fraud Case?The charges against Siddiqui and his co-defendants remain allegations, and all defendants are presumed innocent unless proven guilty in court. Federal prosecutors are expected to continue presenting evidence as the case moves through the legal system.If convicted, the defendants could face significant financial penalties and prison sentences under US federal law.Inputs from TOI