Eighteen people have been arrested and 150 parents are under investigation by New South Wales police in relation to a syndicate which allegedly used a daycare centre as a front to steal up to NZ$5.3 million from the federal government.
It comes after a "graduation ceremony", staged by Red Roses Family Day Care, was live streamed on December 16, ABC News reports.
The ceremony was held for Year 6 students, who allegedly received their diplomas in front of their families, a title, written in Arabic, said.
The group claimed to operate centres throughout Sydney and Wollongong, but NSW police claim the centres were empty.
At least one of the Red Roses daycare centres, which was said to have looked after 50 children, was found to be operating from a garage, police said.
The company's director, Alee Farman, was among three men and 15 women arrested in police raids Wednesday.
Police are now investigating up to 150 parents who are believed to have sold their children's identities for perks from the Commonwealth's Child Care Subsidy Scheme.
The alleged scam had a "level of sophistication we don't see in outlaw motorcycles gangs," NSW Police Acting Assistant Commissioner Stuart Smith said.
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