Federal authorities allege more than $10M in childcare payment fraud in California
NEW YORK (AP) — Federal authorities charged a dozen people Tuesday for fraudulently collecting more than $10 million in government childcare payments in Southern California, when the operators had few or even no actual children attending their facilities.
The charges, jointly announced in San Diego by the Justice Department and the criminal investigations division of the IRS, are the latest effort by the Trump administration to investigate and charge alleged cases of fraud and waste in government programs.
The 12 defendants said they were operating licensed, at-home childcare facilities in the San Diego area, submitting attendance records and documenting when each child attended and for what times, in order to collect payments from government childcare subsidy programs. However, federal prosecutors say these at-home facilities rarely, if ever, had children. Defendants fraudulently collected from government programs for months or, in some cases, years, prosecutors said.
This scheme is also known as operating a “ghost” daycare, prosecutors said.
“There were no children," Colin McDonald, head of the Justice Department's fraud enforcement division, told a news conference. “There were no daycares. But the taxpayers were paying for all of it.”
The department's fraud division was created in April and this was the first indictment of its type since.
All 12 defendants were arrested Thursday and the charges against them were unsealed Tuesday. Prosecutors said the investigation continues.
Federal prosecutors say some of the defendants were not even in the country when they were submitting claims for childcare payments. One defendant, Turkiya Alawad, 63, was found to be outside the U.S. between Jan. 1, 2024, and Jan. 30, 2024, but at the same time, submitted and collected for childcare payments for the dates they were not away, prosecutors say.
Another defendant, Abdulrahman Alawad, 25, claimed to provide childcare to children in March and April but surveillance footage allegedly shows children entered Alawad’s facility only once, on the day a state inspector showed up. Alawad is alleged to have received more than $300,000 in payments from childcare programs in 2025.
Other defendants collected more than $1 million in childcare subsidy payments, prosecutors said. Jared Koopman, head of the IRS criminal investigations division, told reporters the defendants then used the proceeds to purchase luxury homes, send money overseas through wire transfers, and make large cash withdrawals.
“These are taxpayer-funded programs designed to help working families, children and vulnerable communities," Koopman said. “When those funds are diverted for personal profit, families lose, honest providers lose, taxpayers lose and the public trust in these programs is damaged."
While several of the defendants have similar last names, prosecutors said each investigation and indictment was reached independently.
The indictments in California have similarities to what happened with Minnesota-based Feeding Our Future. Federal prosecutors charged Feeding Our Future with scamming Minnesota and federal taxpayers out of millions of dollars of childcare and meal subsidies.
The alleged daycare fraud case in California is larger than the one with Feeding Our Future, which submitted roughly $4.6 million in claims to the childcare assistance program. However, the Feeding Our Future case was much more focused on fraud in meal subsidy programs than childcare.
The operator of the Feeding Our Future’s childcare facility, Fahima Mahamud, 50, pleaded guilty to conspiracy and wire fraud charges in July. The facility's leader, Aimee Bock, was convicted and sentenced to 41 years in prison in May for fraud and conspiracy charges. She has appealed her conviction.
The Internal Revenue Service’s Criminal Investigations Division had been investigating these childcare facilities going back to at least February. While the IRS is mostly known for the enforcement of tax law, the investigations division is one of the arms of the federal government that often focuses on white-collar crimes.
The Trump administration has put a heavy emphasis on investigating and charging alleged fraud and abuse of government benefit programs. Vice President JD Vance chairs the administration’s task force on the effort. McDonald said the public should expect more investigations and indictments in the coming months.