More than 250 federal, state, and local law enforcement officers swept through San Diego before dawn on September 10, serving 12 search warrants and arresting a dozen home daycare operators accused of siphoning more than $10 million in government childcare subsidies. Federal prosecutors say the defendants ran licensed home childcare facilities that, in some cases, had few or no children actually showing up.
The scale of the operation underscores how seriously federal authorities are treating the case, according to the U.S. Department of Justice. The 12 defendants are described by federal prosecutors as naturalized U.S. citizens and Lawful Permanent Residents originally from Syria, Somalia, Sudan, Afghanistan, and Iraq who had obtained California licenses to operate home childcare centers, then registered those licensed daycares with local non-profits to receive government subsidy reimbursements. As reported by WPXI, the charges were announced jointly by the Justice Department and the IRS Criminal Investigations division, which had investigated the childcare facilities for several months.
Court filings paint a stark picture of how prosecutors say the alleged scheme worked. Federal agents recorded 57 days of video surveillance at the facility of defendant Abdulrahman Ayman Alawad in March and April 2026, and according to the Justice Department, they observed children entering or leaving on only a single day — the exact date a state inspector conducted an unannounced inspection. Alawad had submitted logs claiming to care for 23 children in March and 25 children in April, every day of both months, and prosecutors say he received more than $300,000 in childcare program payments in 2025. Alawad is 25 years old, per WPXI.
Payments Continued Even From Overseas
Prosecutors also allege that some defendants kept collecting subsidy payments even while they were outside the country. According to WPXI, 63-year-old defendant Turkiya Alawad submitted childcare payment claims while she was outside the United States from January 1, 2024, through January 30, 2024. Federal prosecutors say defendants across the case collected childcare payments from government programs for months or years despite having few or no children actually attending their facilities.
In San Diego County, federal and state childcare subsidy funds flow through two designated non-profit contractors, Child Development Associates and the YMCA Childcare Resource Service, which pay providers directly based on monthly attendance sheets submitted by the daycares, per the Justice Department. California regulations require licensed home childcare providers to be physically present at the facility and supervise children while they are in care, although limited temporary absences are permitted when a qualified substitute is present, and the same monthly attendance sheets must be signed under penalty of perjury by both the provider and the parent — meaning billing for non-existent care or falsifying those signatures constitutes wire fraud and theft of public funds.
How the Case Compares to Other Recent Prosecutions
Federal prosecutors say the California case is larger than the widely watched Feeding Our Future prosecution out of Minnesota, in which the group submitted roughly $4.6 million in child care assistance program claims, according to WPXI. In that Minnesota case, defendant Fahima Mahamud, 50, pleaded guilty in July 2026 to conspiracy and wire fraud charges, while Aimee Bock was convicted of fraud and conspiracy charges in May 2026 and sentenced to 41 years in prison; Bock has appealed her conviction. WPXI notes that the Feeding Our Future case focused more on meal subsidy fraud than childcare fraud specifically.
San Diego has seen this kind of fraud before. In August 2024, a federal judge sentenced Mohamed Muriidi Mohamed to 27 months in prison and ordered $3.7 million in restitution for a similar scheme that defrauded Child Development Associates and the YMCA using false employer verifications from UMI Learning Center, as Hoodline reported at the time. Other defendants in the current case are accused of collecting more than $1 million in childcare subsidy payments, according to prosecutors cited by WPXI.
A New Federal Fraud Unit's First Case
U.S. Attorney Adam Gordon announced that the San Diego home daycare indictments mark the first federal criminal charges alleging this type of fraud since the creation of the Justice Department's National Fraud Enforcement Division, a unit led by Assistant Attorney General Colin M. McDonald. The case arrives as the Trump administration has emphasized investigating and charging alleged fraud and abuse of government benefit programs, with Vice President JD Vance chairing the administration's task force on government benefit program fraud and abuse, according to WPXI.
That federal push has already collided with California once this year. The U.S. Department of Health and Human Services attempted to freeze approximately $10 billion in federal childcare and social services grants across five states, including California, citing fraud concerns, according to Courthouse News Service. A federal judge blocked that freeze with an injunction in March 2026, ruling that HHS had failed to follow required legal procedures and had presented insufficient evidence of widespread state-level fraud.
Riverside County's fraud unit conducts welfare-fraud investigations and prosecutions.
