DOJ Charges 12 California Home-Daycare Operators in $10 Million Subsidy Fraud Scheme

The Justice Department has charged 12 people in San Diego with running fake home daycares to steal more than $10 million in taxpayer-funded childcare subsidies, according to a Justice Department statement reported by The Daily Wire.

More than 250 law enforcement officers carried out arrests early Thursday morning and executed search warrants at the defendants' homes, which they had licensed and registered as childcare facilities, DOJ said. Eleven of the 12 are naturalized U.S. citizens. The twelfth holds a green card and has a pending citizenship application.

The defendants were born in Syria, Somalia, Afghanistan, Iraq, and Sudan, according to DOJ. None of the charges filed involve terrorism, extremism, or national security. The allegations are financial fraud, plain and simple, involving falsified paperwork submitted to a state-run childcare subsidy program.

How the Scheme Allegedly Worked

All 12 defendants obtained California state licenses to operate home-based childcare centers. They then registered with Child Development Associates and the YMCA to receive subsidies that help low-income families cover childcare costs, DOJ said. California administers that aid with funding from the U.S. Department of Health and Human Services.

To collect payments, operators had to submit monthly attendance logs documenting exact dates and hours each child was in their care. Prosecutors allege the defendants fabricated those records, billing for children who were never actually there.

"Today is a bad day for home daycare fraud," U.S. Attorney Adam Gordon said in a statement. "These are the first charges alleging this type of fraud since the formation of the National Fraud Enforcement Division." He added: "These fraudsters may have criminally gamed the system before. But today, the game is over."

The Evidence DOJ Says It Has

One case detailed in the charges involves Abdulrahman Ayman Alawad, a 25-year-old born in Syria. He claimed his daycare cared for 23 children in March 2026 and 25 children in April 2026, according to DOJ.

But surveillance footage covering 57 days across those two months allegedly showed children coming and going on just one occasion, according to federal authorities, and that day happened to coincide with an unannounced visit from a state inspector. DOJ says Alawad and the children arrived at the facility only after the inspector showed up.

Border crossing records, prosecutors say, also show that Alawad and several co-defendants were outside the United States on dates when they submitted attendance records claiming to have been caring for children in California.

Another defendant, 63-year-old Turkiya Mamdouh Alawad, also born in Syria, left the U.S. around January 1, 2024, and did not return until January 30, 2024, according to DOJ. While out of the country, she allegedly submitted attendance records to Child Development Associates and the YMCA for all of January 2024, then received eight direct deposits totaling $14,970 the following month.

The Daily Wire's headline frames this case around the defendants coming from "terror-plagued countries," a framing choice that leads with national origin rather than the underlying conduct. The actual charging documents, as described by DOJ, allege straightforward benefits fraud against a childcare subsidy program: falsified attendance logs and payments collected for care that wasn't provided. Nothing in the DOJ statement ties the scheme to terrorism, extremism, or any national-security concern. Readers should not conflate the defendants' countries of birth with the nature of the alleged crime, which prosecutors describe purely in financial terms.

That said, the birthplace detail is a documented fact DOJ itself disclosed, not something invented by the outlet. The reporting error, if there is one, is in the implied connection the headline draws rather than in the underlying facts reported.

DOJ has not released a full list of charges, potential prison exposure, or a court date for arraignments in this case. Gordon's statement that this is the "first" prosecution of its kind since the National Fraud Enforcement Division was formed suggests more cases targeting home daycare subsidy fraud could follow. Whether California's Department of Social Services tightens verification requirements for the CDA and YMCA subsidy pipeline, and whether HHS pursues clawbacks of the roughly $10 million allegedly stolen, remain open questions.