A Fairy Meadow home, which allegedly masqueraded as a childcare centre, has been raided amid a major joint-agency family daycare fraud investigation.
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The Cabbage Tree Lane address was searched during simultaneous early-morning raids across the Illawarra and south-west Sydney on Wednesday, as police moved in to dismantle an alleged criminal syndicate.
The allegedly illegitimate home daycare business created false time sheets and rostering, mock-up children's play areas and advertised with photographs of children who were never in care as part of an elaborate syndicate designed to defraud the federal government childcare subsidy scheme in an amount of at least $4 million over eight months.
The investigation, involving more than 300 specialist investigators under the banner of Strike Force Mercury, smashed the syndicate when they descended on more than 20 properties - most in south-west Sydney, with one in the Illawarra.
Eighteen people were arrested, including three men - aged 24, 40, and 49 - and 15 women, aged between 21 and 44.
A 24-year-old woman, who police allege was among the facilitators of the syndicate, was arrested at Fairy Meadow.
She was charged with participating in a criminal group and is expected to face Wollongong Local Court next month.
Investigators have said those arrested on Wednesday were just the "tip of the iceberg", and that more than 150 parents, who each had three to seven children, could be next in line for allegedly offering their children's identities to keep the syndicate in operation.
It is believed there are a number of similar syndicates operating around Sydney that are yet to be targeted, some running operations with log books of children who have never existed.
The alleged fraud was perpetrated through a pyramid scheme-like structure run by the Fairfield-based Red Roses Family Day Care.
Red Roses director Alee Farmann was among three people charged with directing a criminal group; 14 others were charged with participating in a criminal group. One man was released pending further inquiries.
Among the properties raided on Wednesday was one that allegedly masqueraded as a daycare centre despite having been without electricity for 22 of the 28 days in February and never having housed any children.
It is understood the Fairy Meadow home also allegedly operated as a daycare centre.
Acting State Crime Commander Stuart Smith said the alleged criminal activities of the enterprise surpassed that of the highest level organised crime perpetrated by outlaw motorcycle gangs.