Police are investigating whether childcare subsidies allegedly obtained by fraud have been funnelled to terrorists overseas as a series of raids across Sydney led to charges against two men for defrauding the federal government.
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Two men were arrested this week - Ali Assaad, 26, from Moorebank, on Wednesday and Hussein Dandachi, 26, from Old Guildford, on Thursday.
Both men have been charged with several fraud offences, primarily dishonestly obtaining a financial advantage by claiming childcare benefits and childcare rebates from the Commonwealth Department of Education and Training worth tens of thousands of dollars in total.
Court documents allege that the men had been doing so for at least a year.
Mr Assaad is listed as the secretary of an Australian-founded charity Dar al Quran wa Sunnah that is reportedly under investigation in Lebanon for raising money and recruiting for the Islamic State terror group.
The ABC's 7.30 program reported on Friday that police had raided Lakemba family daycare businesses that have claimed more than $27 million in childcare benefits and rebates since 2012 and have nearly 600 home providers of family daycare on their books, including Mr Assaad and Mr Dandachi. It reported the businesses are owned by brothers Mohammad and Ibrahim Omar, aged 27 and 25.
Counter-terrorism police are now combing through that company's records to see whether money has been fraudulently obtained as rebates and subsides and has been sent offshore, the ABC reported.
Fairfax Media has independently confirmed the substance of the 7.30 report. In a statement, the AFP said the investigations involved a range of agencies, including the Australian Border Force, Australian Criminal Intelligence Commission and the Australian Transaction Reports and Analysis Centre or AUSTRAC.
AUSTRAC is the federal government's financial intelligence agency and is responsible for investigating counter-terrorism financing and money-laundering.
Company records confirm one of the Lakemba businesses is owned by Ibrahim Omar. Court documents show police have alleged Mr Assaad conspired to defraud the Commonwealth Department of Education and Training. Neither of the Omars has been charged.
Mr Assaad is accused of submitting false statements and of dishonestly obtaining at least $9462.57 in childcare benefits from the DET.
Mr Dandachi is accused of lodging fraudulent documents to obtain $82,394.76 from the DET. The documents included falsified time sheets that were allegedly used to show he had performed childcare work.
The ABC reported that Mr Assaad had claimed to be looking after children at his Moorebank home when he was in fact in Kuala Lumpur, Malaysia.
It reported the investigation was launched after Mr Dandachi was prevented from boarding a flight overseas last October and had his passport cancelled.
The ABC reported last year that charity Dar al Quran wa Sunnah's founder is accused of fundraising for jihadists, recruiting for IS and fighting against the Lebanese army.
According to documents lodged with the Australian Charities and Not-for-profits Commission, the charity collected $632,556 in donations from Australian Muslims in the last financial year and used most of it to send food packs, winter clothing, gifts, education and medical supplies to people in Syria, Lebanon, Bangladesh and Burma.
The charity's constitution says they are a "non-government, non-political, non-sectarian and not-for-profit organisation, which exists to provide support and assistance to persons in Lebanon to provide relief and development opportunities to those residing in those countries".
The charity says they work to "promote cultural understanding, multiculturalism and is aiming towards helping the troubled youth in Australia".
