A "graduation ceremony" staged by a childcare facility at the centre of an alleged multi-million dollar fraud was filmed and live-streamed online last year.

Key points: The ceremony took place at the Bill Lovelee Youth Centre in Chester Hill on December 16

The ceremony took place at the Bill Lovelee Youth Centre in Chester Hill on December 16 It was live-streamed and posted to Facebook

It was live-streamed and posted to Facebook Police say Red Roses Family Day Care never actually looked after any children

NSW Police this week arrested 18 people over their alleged connection to the syndicate, which police claim used Red Roses Family Day Care to steal up to $5 million from the Federal Government.

The group claimed to operate centres at several locations in Sydney and Wollongong, and NSW Police Acting Assistant Commissioner Stuart Smith said the alleged scam had a "level of sophistication we don't see in outlaw motorcycles gangs".

Police allege the centres had no children in their care, and are now investigating up to 150 parents they say sold their children's identities to the group to get kickbacks as part of the Commonwealth's Child Care Subsidy Scheme.

In the video, which was streamed live on Facebook on December 16, children wearing mortar boards can be seen receiving diplomas in front of a large crowd.

The ceremony took place at the Bill Lovelee Youth Centre in Chester Hill near Bankstown around midday on December 16.

Scores of children and adults were in attendance and purple balloons, emblazoned with Red Roses branding can be seen decorating the hall.

Three men and 15 women were arrested on Wednesday over their alleged roles in the scam. ( Supplied: NSW Police )

The company's director, Alee Farman, 49, was among three men and 15 women arrested on Wednesday during raids stretching from Fairfield to Wollongong.

Police said Mr Farman was originally from Iraq and became an Australian citizen in 2007.

Much of Red Roses' online content appears to be aimed at Arabic-speaking communities in Sydney, however none of the photographs on the website show people from Middle Eastern backgrounds because they are all stock photographs.

A title on the video, written in Arabic, says the ceremony was for Year 6 students and their teachers.

The video runs for 27 minutes, and was also posted to YouTube.

Yesterday, police claimed one of the Red Roses centres — which supposedly looked after 50 children — was operating out of a garage.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 58 seconds 58 s NSW Police reveal how sophisticated alleged childcare fraud scheme was

Police said they were working closely with the Department of Education to "ensure those vulnerabilities are removed from the system".

Australia's statutory authority on the childcare industry, the Australian Children's Education and Care Quality Authority (ACECQA), has rated almost 15,000 services — including Red Roses Family Day Care Pty Ltd.

An ACECQA ratings chart for Red Roses gives the business its lowest rating — "Significant Improvement Required" — across almost all criteria including "Children's health and safety" and "Educational program and practice".

Signage outside the Red Roses head office in Fairfield tells a different story, boasting a range of impressive services including "attractive payments for educators", as well as 24-hour care.

The Red Roses website features the ACECQA logo, next to a logo for the Department of Education and Training and includes a 153-page policy guide published in January 2018.

The policy guide includes food-handling practices for children with allergies and an explicit policy banning unimmunised children from centres.

It also lays out safety protocols for sandpits, first aid kits and working with children checks, although large swathes of the document appear to be directly lifted from ACECQA online handbooks.