US Charges 12 in $10M California Childcare Subsidy Fraud

Federal prosecutors have charged 12 people in Southern California with fraudulently obtaining more than $10 million in government childcare subsidy payments, alleging that the at-home daycare facilities they operated had few or no children actually attending.

The charges were announced jointly in San Diego by the Justice Department and the criminal investigations division of the Internal Revenue Service. All 12 defendants were arrested on Thursday, and the charges against them were unsealed on Tuesday.

According to prosecutors, the defendants claimed to run licensed, at-home childcare facilities and submitted attendance records documenting which children attended and for how long, in order to draw payments from government childcare subsidy programs. Federal authorities allege that these facilities rarely, if ever, had children present, and that the defendants collected payments fraudulently for months, and in some cases years.

Prosecutors say some defendants were not even in the country when they submitted claims. Turkiya Alawad, 63, was found to be outside the United States between January 1 and January 30, 2024, while allegedly submitting and collecting payments for dates on which she was away.

Another defendant, Abdulrahman Alawad, 25, claimed to have provided childcare in March and April, but surveillance footage allegedly showed children entering his facility only once — on the day a state inspector visited. He is alleged to have received more than $300,000 in childcare program payments in 2025. Other defendants collected more than $1 million in subsidy payments, prosecutors said.

The case has drawn comparisons to the Minnesota-based Feeding Our Future fraud, in which federal prosecutors accused the organization of defrauding state and federal taxpayers out of millions of dollars in childcare and meal subsidies. The California case involves a larger alleged amount than the roughly $4.6 million in claims submitted to the Child Care Assistance Program in the Minnesota matter, though that investigation focused more heavily on meal subsidy fraud.

In the Minnesota case, Fahima Mahamud, 50, who operated Feeding Our Future's childcare facility, pleaded guilty to conspiracy and wire fraud charges in July. The organization's leader, Aimee Bock, was convicted and sentenced to 41 years in prison in May on fraud and conspiracy charges, and has appealed.

The IRS Criminal Investigations Division has been examining the California childcare facilities for several months. Although the agency is best known for enforcing tax law, the division frequently handles white-collar crime cases.

The prosecution is part of a broader push by the Trump administration to investigate and charge alleged fraud and waste in government benefit programs. Vice President JD Vance chairs the administration's task force overseeing that effort.