Justice Department arrests 12 in $10M childcare fraud scheme

(by Jennie Taer and Mary Margaret Olohan, Daily Wire) – The U.S. Justice Department charged a dozen foreign-born individuals in California with operating fake daycares in a scheme to steal more than $10 million from taxpayers.

…Officers arrested the accused early Thursday morning (Sept. 10) and executed search warrants at their San Diego homes, which they claimed to be using as childcare centers, the Justice Department said on Tuesday. Eleven of those arrested are naturalized United States citizens, while one has a green card and a pending application for citizenship.

The fraudsters hail from Syria, Somalia, Afghanistan, Iraq, and Sudan.

Image:  U.S. Department of Justice

The 12 individuals obtained California licenses to open home childcare centers. They then registered with Child Development Associates (CDA) and the YMCA to receive subsidies to help low-income families pay for childcare.

California receives funding for the aid program from the Department of Health and Human Services.

To receive the funds, the defendants had to submit monthly attendance records showing the exact dates and times they cared for each child. The accused allegedly falsified attendance records to claim they cared for the children when they actually did not.

The individuals received the payments based on the fraudulent records, according to the Justice Department.

“Today is a bad day for home daycare fraud,” U.S. Attorney Adam Gordon said in a statement on Tuesday. “These are the first charges alleging this type of fraud since the formation of the National Fraud Enforcement Division.”

“These fraudsters may have criminally gamed the system before. But today, the game is over,” he said.

Abdulrahman Ayman Alawad, a 25-year-old who was born in Syria, claimed his daycare looked after 23 children in March 2026 and 25 children in April 2026, the Justice Department said.

Surveillance recordings taken during 57 days of those two months showed just one day of children coming and going from the facility, according to federal authorities. It happened to be the same day a state inspector showed up for an unannounced visit.

Abdulrahman and the children showed up only after the inspector arrived, the Justice Department said. Border crossing records also showed that Abdulrahman and several other defendants were not present in the United States when they submitted attendance records purporting to care for children at their California centers.

One of the individuals, Turkiya Mamdouh Alawad, also of Syria, departed the United States on or about January 1, 2024, before returning to the country around January 30, 2024, the Justice Department said. While she was out of the country, the 63-year-old submitted attendance records to CDA and the YMCA for January 2024 and received eight direct deposits from the organizations totaling $14,970 in February 2024.

Several of the accused received more than $1 million in payments while running their schemes.

All 12 of the accused are charged with wire fraud, which carries a maximum punishment of 20 years behind bars and a fine of $500,000. Some of the alleged fraudsters have also been hit with money laundering charges, which carry the same punishment.

IRS Criminal Investigation Chief Jarod Koopman said the “takedown exposes a sprawling” and lucrative “fraud scheme.”

“By following the money, IRS Criminal Investigation uncovered patterns of deceit that revealed twelve ghost daycare operations billing for children who were never present,” Koopman said.

“This was not a victimless crime,” Koopman added. “It deprived working parents of critical support and eroded trust in programs meant to protect the most vulnerable in our communities. We remain steadfast in our commitment to safeguarding federal funds and ensuring that those who exploit public programs for personal gain are held fully accountable.”

The latest charges are part of efforts by the White House Fraud Task Force, led by Vice President JD Vance, to investigate and root out fraud throughout the United States. In May, Vance announced that the White House was suspending enrollment of home health companies in Ohio’s Medicaid program for six months following a Daily Wire investigative series into home healthcare waste, fraud, and abuse. In that series, The Daily Wire’s Luke Rosiak exposed widespread alleged Medicaid fraud across the state in Ohio’s home health sector.

On Monday, the Justice Department and Small Business Administration announced that their summer crackdown on COVID-era fraud resulted in DOJ enforcement against 160 defendants who were tied to about $245 million in intended losses.

During a Kansas City press conference on Monday afternoon, Vance told The Daily Wire that officials in former President Joe Biden’s administration were aware of the fraud, calling the matter an “open secret.”

“Everybody knew people were skimming off the top,” he shared. “Absolutely, we need to be looking into the officials who are turning a blind eye to this stuff.”

As of August 2026, the Task Force says it has uncovered almost $230 billion in fraud, stopped $56 billion in fraudulent payments, and enforced more than $55 billion in indictments, civil penalties, and settlements.

Published at Daily Wire on Sept. 15. Reprinted here for educational purposes only. May not be reproduced on other websites without permission.