Federal authorities arrested 12 operators last week on charges of defrauding government childcare subsidy programs of an estimated $10 million in Southern California, the U.S. Department of Justice announced Sept. 15.
The defendants, all naturalized U.S. citizens, were charged with wire fraud and, in some cases, money laundering for allegedly operating fake daycare facilities that submitted fraudulent attendance records to receive payments. The scheme, dubbed Operation Cradle to Grift, targeted programs designed to assist low-income families with childcare costs.
Core Facts of the Case
Federal prosecutors allege the defendants operated licensed, at-home daycare facilities in San Diego County, submitting documentation to state and federal programs indicating children were present when, in reality, few or no children attended. The fraudulent billing occurred over months or years, with some defendants submitting claims while physically outside the U.S.
Among the defendants, Turkiya Alawad, 63, allegedly submitted childcare payment claims between Jan. 1 and Jan. 30, 2024, despite being outside the country during that period. Another defendant, Abdulrahman Alawad, 25, received more than $300,000 in payments in 2025, though surveillance footage reportedly shows children entered his facility only once—on the day a state inspector visited.
Nine of the defendants originally entered the U.S. as refugees or asylum seekers from Syria, Somalia, Sudan, Afghanistan, or Iraq. All 12 have since become naturalized citizens.
Charges and Potential Penalties
Each defendant faces one federal count of wire fraud, carrying a maximum penalty of 20 years in prison and a $500,000 fine. Some are also charged with money laundering, which carries the same penalties. The investigation, led by the DOJ’s National Fraud Enforcement Division and the IRS Criminal Investigations unit, uncovered more than $10 million in fraudulent billing through financial tracking.
Assistant Attorney General Colin McDonald stated during a press conference that the scheme exploited vulnerable families and taxpayer-funded programs. “There were no children. There were no daycares. These daycares were fake, and the taxpayers were paying for all of it,” McDonald said.
IRS Criminal Investigations Chief Jarod Koopman emphasized the broader impact: “This is not a victimless crime. It deprived working parents of critical support and eroded trust in programs meant to protect the most vulnerable in our communities.”
How the Scheme Operated
Prosecutors allege the defendants submitted false attendance records to state and federal childcare subsidy programs, which provide funding to licensed facilities serving low-income families. The programs, administered through the U.S. Department of Health and Human Services (HHS) and state agencies, reimburse providers based on documented attendance.
Investigators traced a “money train” of fraudulent payments, revealing that some defendants received more than $1 million in subsidies over multiple years. The scheme allegedly continued undetected for extended periods, with payments processed despite no verifiable childcare services being provided.
Arrests and Legal Proceedings
Federal agents executed search warrants at a dozen San Diego-area homes listed as daycare facilities on Sept. 12. All 12 defendants were arrested and charged, with the indictments unsealed Sept. 15. The case is ongoing, with no trial date yet set.
The investigation remains active, and authorities have not ruled out additional charges or defendants as the case develops.