The U.S. Department of Justice announced charges this week against 12 San Diego daycare operators in what federal prosecutors call “Operation Cradle to Grift,” alleging the defendants falsified timesheets and enrollment records to collect millions of dollars in taxpayer-funded childcare benefits while operating ghost daycares where no children were present.
Approximately $10 million intended to provide childcare to families in need instead allegedly went to fraudulent operators, with prosecutors pointing to luxury purchases including Rolls-Royces and Rolexes.
In a coordinated takedown, more than 250 federal, state, and local law enforcement personnel arrested 12 defendants. The DOJ announced at the press conference that 11 of the 12 entered the United States seeking immigration privileges, had refugee status, and within a few years of entering the country were stealing millions of dollars via fraud. Five of the defendants were from Syria, three from Afghanistan, two from Somalia, one from Sudan, and one from Iraq.
The charges were announced alongside the Justice Department’s new National Fraud Enforcement Division.
“These were made up fake daycares that, day after day, month after month, year after year, billed the taxpayer for allegedly taking care of children, but there were no children, there were no daycares,” Assistant Attorney General Colin McDonald of the Justice Department’s National Fraud Enforcement Division said Tuesday.
Months before the federal charges became public, California state daycare inspection records were already documenting unusual patterns at some of the daycare operations.
In January, I began examining and exposing California state daycare inspection records of a ghost daycare owner arrested in September after independent journalist Nick Shirley exposed alleged ghost daycares in Minnesota.
As I previously reported for IW Features, I searched the California Department of Social Services Community Care Licensing public records database, beginning alphabetically and never focusing my search on race, ethnicity, religion, or national origin. Within the first two hours, a pattern emerged that mirrored what Nick Shirley found in Minnesota: California state inspectors were arriving at licensed daycares in the middle of the day and in the middle of the week, yet some facilities publicly reporting anywhere from eight to 39 enrolled children had zero children present when inspectors arrived.
State records also documented missing enrollment records, missing rosters, missing emergency contact information, and missing infant sleep logs.
Months before federal authorities announced arrests, I had been examining several daycare licenses connected to members of the Alawad family in particular. State records for Mohamad Alawad’s family childcare operation showed that during an October 17, 2024, inspection, 14 children were enrolled but none were present. During another inspection on September 11, 2024, 14 children were again enrolled with zero present. The licensee told the state the daycare operated from 11:59 a.m. until 10 p.m. IW Features contacted the state in April and was told his actual hours were from 2 p.m. to 11 p.m., seven days a week.
When inspectors returned on February 26, 2026, 12 children were enrolled, and once again no daycare children were present.
The inspection report documented something else unusual. Inspectors reported observing no children’s toys, age-appropriate play equipment, books, play structures, or child-safe arts and crafts materials. According to the record, Alawad told the inspector he would purchase toys, play equipment, and coloring materials and provide verification later.
Twenty-one-year-old Mazin Alawad operated another licensed family childcare home. State records listed unusual operating hours: Monday through Friday from 1:30 p.m. until midnight and weekends from 7 a.m. until 10 p.m.
On February 3, 2026, state inspectors conducted an unannounced visit at approximately 2 p.m. No children were present. Records showed 28 children associated with the daycare, while inspectors documented missing files for 12 children and an incomplete roster containing only 20 of the 28 children.
The records showed a recurring pattern across multiple daycare licenses connected to the same extended family: large numbers of enrolled children, repeated inspections where few or no children were present, missing records, unusual operating hours, and relatives appearing across multiple daycare operations.
My investigation also uncovered another business connected to the Alawad family: Safe Journey Transportation Inc., a non-emergency medical transportation company. Records I reviewed identified Abdulrahman Alawad, also a co-defendant, as an authorized official associated with the NEMT provider.
On April 6, 2026, before the DOJ announced its arrests, I went to the company’s listed address at 770 First Avenue in downtown San Diego. There was no dedicated Safe Journey Transportation suite. The company instead used shared office space through Regus in Suite 250. According to my contemporaneous investigative notes, the receptionist said the company had terminated its lease effective at the end of April.
I also visited addresses associated with the daycare and transportation operations and documented vehicles that appeared not to have moved for extended periods.
Mohamad Alawad is charged with wire fraud and money laundering. Over several years, prosecutors allege Alawad received more than $1.2 million for purportedly providing daycare services.
Federal agents conducted 57 days of surveillance and compared their observations with Alawad’s billing records. Between March 21 and April 27, Alawad allegedly claimed to have cared for as many as 13 children every day of the week.
Prosecutors also allege Alawad continued billing taxpayers for daycare services supposedly provided in San Diego while he was outside the United States. Records cited by prosecutors show Alawad claimed to have provided daycare services for 120 days during five separate international trips.
While federal investigators were conducting surveillance, I continued my independent investigation into the same family. Another piece of my investigation came from an unlikely source: divorce court. I went to the San Diego Hall of Justice and reviewed Alawad’s 179-page divorce file. In the court record, Alawad stated that he was making $20,000 per month from his daycare.
The file also contained invoices submitted to nonprofit organizations administering childcare benefits. While reviewing those invoices, I noticed that the parents of the children listed on the invoices shared Alawad’s last name. That raised additional questions because other members of the Alawad family also operated licensed daycares.
Federal prosecutors now allege the San Diego schemes generated millions of dollars. Each defendant allegedly received between approximately $538,000 and $1.2 million during periods ranging from months to years.
According to the federal complaints, Alawad received more than $300,000 in payments from San Diego County, CDA, and YMCA in 2025 alone. Prosecutors allege several defendants received more than $1 million each over the course of their respective schemes.
Mohamad Alawad is not the only member of the family now facing federal charges. Abdulrahman Alawad, 25, of El Cajon; Mazin Alawad, 22, of San Diego; and Turkiya Alawad, 63, of San Diego, have also been charged.
All 12 defendants are charged with wire fraud, which carries a maximum statutory penalty of 20 years in federal prison and a $500,000 fine. Some defendants also face money laundering charges carrying the same maximum exposure. The charges are allegations, and the defendants are presumed innocent unless and until proven guilty.
But the federal cases raise a larger question about California’s taxpayer-funded childcare system: How were operators allegedly able to collect millions of dollars even as warning signs were repeatedly documented in state inspection records?
Long before “Operation Cradle to Grift” became public, those warning signs were already there. The state’s own records documented them. California officials, however, seem to have decided to ignore them.
