NSW Police, as it arrested a group of Sydney mothers on Thursday for an alleged childcare fraud ring, warned the problem is widespread.
In morning raids police arrested 16 women, charging 14 of them with being involved with an alleged fake childcare centre that pocketed government subsidies without providing care for any children.
Most of the women were mothers accused of handing over their children's information to be used on false enrolment records.
While this particular syndicate is alleged to have claimed $3.9 million fraudulently, acting assistant commissioner Stuart Smith said the same scam is also operated by many others.
"Our objective is to completely dismantle the business model which we know is being used by at least 100 other syndicates with an estimated potential value of the fraud across Sydney at least $750 million per year," he said.
"This should act as a further warning for anyone else involved in similar syndicates – you are being monitored and we will arrest anyone who intends to make fraudulent family day care claims."
The federal government assists parents by paying subsidies on behalf of them directly to childcare centres.
Strike Force Mercury was formed in July last year to investigate the Red Roses Family Day Care centre in Fairfield, which has now closed.
The centre – all in an effort to claim government grants – allegedly hosted no children in reality but created fake enrolment paperwork, HR records and even playgrounds.
One property that supposedly looked after 50 kids, Fairfax Media reported, was alleged to be a tiny garage that had no electricity for 22 days in February.
NSW police minister David Elliott said citizens are "fed up" with having to pay higher childcare fees because of criminal activity.
"Strike Force Mercury has now exposed an extensive network of fraudsters – including mums and dads – caught up in a sophisticated syndicate," he said.
"This crackdown will deliver justice to every taxpayer in the country."
Thirty-nine people have now been charged in relation to the Red Roses scam, with all the women charged on Thursday granted bail to appear at Liverpool Local Court on September 30.
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