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      centrelink fraud

      Multi-million dollar childcare fraud more elaborate than bikie gangs – The Law, Defences and Penalties for Centrelink Fraud

      An alleged childcare fraud that took advantage of COVID Centrelink payments has been brought to its knees with multiple arrests across Sydney’s south-west.

      The arrests occurred in dramatic fashion as officers dressed in balaclavas and bullet proof vests stormed numerous buildings with media on hand.

      It is another scalp for police attached to Strikeforce Mercury who busted a similar Centrelink fraud involving childcare scams last year.

      Centrelink fraud arrests

      In total, 18 homes throughout Sydney were raided by Police.  

      Heavily armed officers executed arrests on individuals who are accused of fraudulently claiming government subsidies for family daycare centres.

      One suspect refused to open the door and Police were forced to break down the front door before leading the accused away in handcuffs.

      Criminal defence lawyers for the Accused persons will be provided with Fact Sheets of the allegations and take instructions from their clients.

      Community outrage

      The investigation was led by Detective Superintendent Linda Howlett, who said that Police had been on the trail of the suspects for six months.

      Speaking to media, Howlett said, “People aren’t actually taking government money, they’re actually taking our money, they’re stealing from their fellow Australians so that’s why we investigate these crimes and we obviously take it very seriously”.

      “It’s significant because most Australians are paying a lot of money for childcare and offenders are actually ripping off the system and making it harder for everyday Australians to get their children into placements.”

      Police allege childcare scam

      Most of the persons charged are in fact parents themselves, while the leaders of the group are  educators.

      Police claim that the alleged scam is one of the most sophisticated criminal syndicates they have seen.

      Detective Howlett explained that Police would be, “alleging that this (the childcare operation) is a mock set up.”

      Suspects named and photographed by media

      The alleged fraudsters included 46-year-old single mother Suzy Zrieka from Sydney’s south and Ali Al Sharifi.

      The pair were said to be holding themselves out as directors of ‘ABC Kids N Care’, which claimed to be a family daycare service.

      Between March 2020 and October 2020, the company allegedly received over $500,000 in fraudulent Centrelink subsidy payments.

      The fraud is said to be complex and sophisticated. In March 2020, ‘ABC Kids N Care’ made three applications for payments through the COVID-19 stimulus package totalling $138,000.

      However, the police facts allege that the recipients did not provide care to children. Rather, it was a well-run scheme to steal taxpayer money.

      Assistant Commissioner Stuart Smith from the New South Wales State Crime Command spoke about the level of planning and sophistication involved in the childcare scam.

      “It’s a slick operation and it is there to steal money from taxpayers…It’s all fake, it is all a giant fraud.”

      How did the Centrelink fraud work?

      Police allege that Zreika and Al Sharifi masterminded the scheme by setting up the childcare company and making themselves directors of it.

      They would then have several staff working for them who were called people management controllers and co-ordinators.

      In what appears to be a clear conflict of interest, these individuals are tasked with auditing and monitoring the family daycare business they work for. This includes checking the accuracy of financial records and the veracity of expenses and income.

      The auditors can be in charge of up to 60 educators. Those educators then recruit parents to the scam in return for a portion of the Centrelink benefits the company receives.  

      Assistant Commissioner Smith said that those involved in the scams, “…come from a diverse background, we have seen single parents, we have seen a lot of people arriving from overseas being duped by spruikers belonging to these syndicates”.

      Each educator can look after seven children a day from 7am to 8pm.

      The parents allegedly sell their child’s identity by allowing educators to claim up to 50 hours a week in childcare that they’re not using.

      The directors of the company take a percentage of each Centrelink subsidy payment. Smith explains that the scam is built on the volume of persons involved.

      “Each of those kids is worth $212 a week plus a payment of $7500… the fraudulent scheme or the network syndicate can have a value of up to $7 million in fraud per year”.

      The loopholes in the system are due to its model of trust and self-regulation, which makes it more affordable for parents. However, this also means that there are less checks and balances, allowing perpetrators to cheat the system.

      “The more complex or more regulated the systems are, the more sophisticated the criminal networks get to respond to how to defeat government systems.”

      Police Minister David Elliott said the Federal Government needed to look at how auditing was done as a result of crime syndicates ripping off the system.

      “Clearly the auditing has let the situation continue,” he said.

      It follows a spate of fraud offences committed by member of the community including police officers and union leaders.

      Systemic changes required?

      These arrests are almost a year to the date after similar arrests were made following the downfall of the ‘Red Roses Family Day Care’ centre.

      That was a multimillion-dollar childcare fraud syndicate which was said to be more organised than ‘bikies’. It also operated in Sydney’s south west with operations as far south as Wollongong.

      NSW Police initially charged 17 people in May 2019 and alleged the company obtained at least $3.9 million in rebates over a 10-month period by exploiting the Federal Government’s child care subsidy scheme.

      The director of that company was able to obtain $30,000 a fortnight according to the Police facts sheet.

      This scheme was based on 150 parents claiming they had between three and seven children in their care. This case is still in the Court system where the Defendants’ fraud lawyers have yet to confirm whether their clients will plead guilty to the charges.

      The police facts alleged that parents and carers provided their children’s details to the operators of the fake day care in exchange for cash — but the children never attended the centre.

      Mr Smith claimed that, “they had accountants, they had facilitators, and then they had a number of carers underneath which were allegedly caring for kids that were never cared for…The syndicate was disciplined — it was more disciplined than outlaw motorcycles gangs in terms of their structure.”

      At the time of those arrests, Smith suggested that up to 100 childcare fraud syndicates were operating across Sydney, potentially costing taxpayers up to $750 million a year.

      Detectives from the Financial Crimes Squad and Organised Crime Squad established the strike force in July 2018 after suspecting the childcare system was being exploited by a spate of Centrelink fraud offences.

      Charged with Centrelink fraud offences

      There are a number of centrelink fraud offences that police can lay. They carry different maximum penalties based on the moral culpability of each offence.

      For an offence of centrelink fraud with deception and dishonesty pursuant to s. 134.2 Criminal Code Act, the prosecution would have to prove that the Accused obtained a financial advantage from Centrelink or another commonwealth body.

      This offence is most commonly associated with a failure to update changes in personal income to centrelink. Usually it is discovered when tax returns are matched with the benefits received by an individual.

      The maximum penalty for centrelink fraud with deception and dishonesty 12 months imprisonment and/or a fine of $6,600.

      The more serious offence of centrelink fraud with deception is contained in s. 135.2 Criminal Code Act. For this charge, the Crown would have to establish that the Accused committed a deceptive act that led to the financial advantage.

      The maximum penalty for centrelink fraud with deception is 10 years imprisonment and/or a fine of $33,000.

      If you are accused of childcare fraud, you can also be charged with making a False Claim for Benefit. This is also known as an offence of general dishonesty.

      The prosecution would need to prove, beyond reasonable doubt that you obtained a gain from or caused a loss to Centrelink. You intended to obtain the gain or cause the loss. Your actions caused the gain or loss and those actions were dishonest.

      The maximum penalty for Making a False Claim for Benefit is 10 years imprisonment.

      Although most offenders are sentenced to jail for Centrelink fraud charges, there have been some recent examples of offenders receiving no jail for centrelink fraud charges.

      That is why it is important to obtain advice from one of Australia’s best Centrelink fraud lawyers who has successfully defended hundreds of these charges. Call Astor Legal on (02) 7804 2823. Or, you can email info@astorlegal.com.au.

      For more information you can contact our Sydney, Parramatta or Liverpool Criminal Lawyers. We can arrange a conference for you with a Law Society Accredited Specialist in complex fraud offences.

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