FDC providers caught in AFP raid seek millions in compensation after charges are dropped

Two family day care (FDC) operators who were charged with fraud by the Australian Federal Police (AFP) during a 2020 raid are seeking millions of dollars in compensation after the case was later dropped.

 

A defamation action has been filed by two providers, who claim the AFP investigation resulted in the collapse of their $10 million business once the charges were made public. 

 

The two providers were arrested in November 2020 when 150 AFP officers raided properties across Melbourne and Sydney as part of a probe involving several different government departments and thousands of documents.

 

Following the raid, the AFP held a press conference announcing that it had dismantled an alleged criminal network that had defrauded millions worth of childcare subsidies which was being spent on luxury goods and investments.

 

Central to the AFP claims were the registration of “phantom children” who did not attend any FDC services allowing the provider to fraudulently claim Child Care Subsidy payments, along with the COVID-19 stimulus package payments, including JobKeeper, that they weren’t entitled to.

 

While the pair of providers were not named in the press conference, they were subsequently named as “alleged syndicate masterminds” in mainstream media reports of the arrests.

 

During the press conference, an AFP representative gave the ages of the pair, and said that their service was “one of the biggest claimants of subsidies in Australia”.

 

The pair were charged with conspiring with the intention to dishonestly cause a loss to the federal government, however, the case was later dropped when it reached court.

 

A defamation suit was lodged by the pair against the AFP representative and the Commonwealth of Australia in the Victorian Supreme Court, with the pair saying that their reputation had been harmed by the AFP.

 

They are subsequently seeking compensation for the destruction of their business, which was worth more than $10 million and generating annual profits of $2.5 million, as well as aggravated damages for the AFP’s conduct.

 

Central to their claim is that the business interests they had overseas, including in Kuwait where they were born, were harmed by the AFP press conference, and that a restaurant they own now operates on “a greatly reduced scale” as a result of the claims made against them.

 

“The press conference was undertaken for the sole or dominant purpose of seeking to promote the AFP and to improve the standing and reputation of certain…members of the AFP” their statement of claim reads. 

 

“There was otherwise no legitimate forensic need or purpose to hold the press conference.”

 

Additionally, the pair alleged that there was no reasonable basis for the allegations and that the AFP should have known that subsidies could be claimed without children attending care for absent days.

 

Much of the evidence collected by the AFP, they continued, was gathered while ECEC services were receiving business continuity payments from the government during the COVID-19 pandemic, which involved services being paid 50 per cent of their weekly income from before the pandemic, regardless of the number of children who attended.

 

“Whether or not children did…attend services on the days in which surveillance was undertaken by the AFP made no difference to the funding provided,” court documents state.

 

“The defendants ought to have known there was no truth to the imputations.”

 

In response, the AFP has outlined that it was “free to publish the words of the press conference under qualified privilege, which protects communication between certain parties,” relying on a “defence of honest opinion” and that the representative who spoke at the press conference believed the material provided to him during the investigation was substantially true.

 

For further coverage of this story, please see here.