Owner of Fraud-Suspected Daycare Caught Donating to Democratic Governor

Two operators of adult daycare centers in Queens donated thousands of dollars to New York Governor Kathy Hochul, while businesses connected to them collected tens of millions of dollars through Medicaid, according to a new investigation. Two of the centers appeared empty of patients when reporters visited them last week. Campaign disclosures link Baoli Zhang and Jiemin Shang to a combined $25,000 in contributions to Hochul’s campaign.

The investigation focused on social adult daycare centers, commonly known as SADCs, in Flushing, Queens, where 77 such facilities operate in one district. Hochul received $55,000 in SADC-linked contributions during her 2022 gubernatorial campaign. The nine daycare businesses behind those contributions collectively billed Medicaid approximately $49 million that year, according to the report. Monthly revenue collected by daycare centers across Flushing has nearly doubled from its pre-pandemic level.

Zhang, 69, personally contributed $10,000 to Hochul and gave another $5,000 through Bao Kang Adult Day Care, campaign disclosures showed. Businesses connected to Zhang have submitted at least $32 million in Medicaid claims since 2018 on behalf of tens of thousands of patients. Bao Kang’s annual Medicaid billing grew from approximately $1.5 million in 2018 to $7.22 million in 2024. Zhang is also the founder of the Asian American Adult Daycare Association, a nonprofit formed in 2023 as an industry advocacy group.

Shang operates Livingwell Day Care, which donated $5,000 to Hochul in 2022 while billing Medicaid approximately $5.8 million that same year, the New York Post reported. Another business operated by Shang, Finest Adult Day Care, contributed an additional $5,000. Livingwell’s Medicaid claims increased from $114,000 in 2018 to approximately $8.05 million in 2024. Shang also serves as secretary-general of Zhang’s daycare association.

Reporters found Bao Kang and Livingwell apparently vacant when they visited the facilities, despite the Medicaid billing associated with the businesses. Zhang identified himself as Bao Kang’s owner and manager in campaign-finance records, but local and federal Medicaid data reportedly identify other people as its owners. Similar discrepancies surround Empire SADC, another daycare Zhang claimed to own in campaign disclosures and which local reports described as his operation. Government records list two different owners for that facility.

Zhang also owns Confucius Social Daycare Center in Manhattan’s Chinatown, which billed Medicaid approximately $15.7 million between 2018 and 2024. Another Zhang company, AA Plus Management Inc, operates as a point-of-service Medicaid provider and billed taxpayers approximately $2.65 million, according to federal data. Cathay Adult Daycare, which shares a Baxter Street building with a business address used by Zhang, donated $5,000 to Hochul in 2022 while billing Medicaid $8.4 million. Zhang is not listed as Cathay’s owner, and the report said it remains unclear whether he has any connection to that center.

The scrutiny comes amid continuing investigations into fraud involving New York’s social adult daycare industry. The NY Department of Health has referred 387 centers for investigation since 2021, with approximately one-third of those cases subsequently sent to the attorney general for possible legal action. Previous investigations and federal raids have found centers billing Medicaid for seniors who did not receive services and, in some cases, returning part of the government money as kickbacks.

An industry source claimed the centers became far more profitable after struggling during the pandemic. “In 2021, [social adult daycare centers] were dying due to COVID. Someone threw them a lifeline and must have said something like, ‘Take care of me, I’ll take care of you.’ They’re making more money than ever now,” a source told the New York Post. Another source said politicians value the centers because of their potential influence over local elections. “If you get 100 people in there and you make them vote, it’s very powerful for a primary. Every politician goes to these daycares for help,” the source said.

Zhang has also donated $7,800 to Democrat Representative Grace Meng and $4,950 to Democrat state Senator John Liu, according to campaign disclosures. Both lawmakers attended a 2022 event at Empire SADC during which Zhang warned elderly residents against greed and “excessive consumption” of New York’s public benefits. Liu called Zhang a respected community leader but said suspected wrongdoing should be pursued. “If fraud and impropriety are suspected at any facilities, full investigations and prosecutions should be undertaken,” he said.

Hochul’s office denied that the contributions affected the state’s handling of the daycare industry. A spokesperson said the governor’s administration had pursued reforms and enforcement efforts that produced billions of dollars in taxpayer savings and criminal prosecutions. “Any facility caught breaking the law will be held accountable,” the spokesperson said, adding: “Political contributions have no influence on government decisions.”