The California Department of Social Services (CDSS) is committed to safeguarding the compliance of child care subsidy payments and takes potential misuse of funds seriously.
If you suspect or would like to report potential child care subsidy fraud, please email ChildCareSubsidyFraud@dss.ca.gov.
When submitting a report, please include the following information, if available:
- Your name and contact information
- Date of incident
- Facility or provider name
- Facility or provider address
- Facility or provider license number
- Suspected fraudulent activity
What is Child Care Subsidy Fraud
Child care subsidy fraud can occur in a variety of ways. Generally, child care subsidy fraud involves intentionally providing false information or withholding certain information to obtain child care benefits that would otherwise not be received.
While not exhaustive, the following list are incidents…
THE HASHFLARE “CLOUD MINING” PONZI SCHEME (GLOBAL/ESTONIA)
Date: February 13, 2025 (Guilty Pleas) Perpetrators: Sergei Potapenko and Ivan Turogin
Case Description: This $577 million cryptocurrency fraud remains one of the largest digital asset scams in history, with major legal developments concluding in 2025. Potapenko and Turogin operated “Hashflare,” which they marketed as a massive cryptocurrency mining operation. Hundreds of thousands of victims worldwide purchased “mining contracts,” believing they were renting hash power to mine Bitcoin. In reality, the duo was running a sophisticated Ponzi scheme.
They created fake customer dashboards that showed “real-time” mining profits, but the money being paid out was simply the capital of newer investors. They laundered the proceeds through shell companies to purchase luxury real estate and a fleet of high-end vehicles. After a massive international investigation involving the FBI and Estonian authorities, the pair agreed to forfeit over $400 million in assets. This case underscores the “Cyber-enabled Fraud” warning issued by the FATF in early 2026: as technology evolves, the scale of fraud moves from local millions to global billions in the blink of an eye.
Link to Original: ACFE – High Profile Fraud of 2025