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'Fake' Child-Care Sting Allegedly Defrauded $4 Million From Taxpayers

Nearly 20 people have been arrested after police uncovered an elaborate scheme in which a family day-care business allegedly defrauded taxpayers of about $4 million.

Detectives executed 22 warrants on Wednesday at properties from Fairfield in Sydney's west all the way down to Wollongong, arresting 18 people.

It is alleged the daycare company was set up with all the fittings of a legitimate business in order to make fraudulent claims against the federal government's childcare subsidy schemes.

"It created timesheets, it had photographs of children that weren't in care, it had mock-up areas, it had an administrative structure, rostering, like anything else in a legitimate business," State Crime Commander, Acting Assistant Commissioner Stuart Smith.

"However, the whole thing was a fraud."

Police allege the company claimed at least $3.8 million in payments annually, and that it's director alone had a take-home pay of around $30,000 per fortnight.

The government Child Care Subsidy was set up to help reduce the financial burden on low and middle-income families paying for childcare. The rebate is generally paid to childcare providers, who then pass them on to parents as a fee reduction.

Detectives executed 22 warrants on Wednesday at properties from Fairfield in Sydney's west all the way down to Wollongong, arresting 18 people. Image: NSW Police

Fifteen women -- aged between 21 and 44 -- and three men aged 24, 40 and 49 were arrested following the raids on 23 properties.

So far, fourteen of those arrested have since been charged with participating in a criminal group, while another three have been charged with directing a criminal group.

During the searches, police seized large volumes of documentation, including business records, a Range Rover, $35,000 cash, and two electronic control devices.

"The whole thing was a very elaborate, syndicated criminal organised crime venture," Smith said.

"We saw a level of sophistication or coordination in this that we don't see in outlaw motorcycle gangs".

Smith said the operation was just the start of Strike Force Mercury and further arrests have not been ruled out.

In recent years, 29 people have been charged with criminal offences in relation to child care payment fraud, according to Detective Superintendent Linda Howlett, commander of the Financial Crimes Squad.

A total of 21 people have been found guilty to date.