Seven people will face court over what police say is a fake sex abuse claims scheme that’s paid out more than $1 billion.

A strike force was established in February last year to investigate alleged fraudulent compensation claims for historic sexual abuse brought against the NSW Department of Communities and Justice and the NSW Department of Education.

Investigators believe they identified “claims farmers” who are alleged to have approached adults who were former young offenders, inmates, and school students, to encourage them to file fake claims for historic child sex abuse.

The same alleged “claims farmers” are then alleged to have coached the claimants on how to pursue those claims through various Sydney law firms, allegedly receiving a benefit for each referral.

Police say the proceeds were referred to as “bum money” within the group, and investigators allege a “significant portion” of $1.3 billion worth of claims are fake.

At about 6.05am yesterday, police carried out a search warrant in Girraween, Sydney, where they arrested a 55-year-old man.

He was charged with 21 fraud-related offences and refused bail to appear in court today.

Police will allege he was one of the supposed “claims farmers”.

Throughout yesterday, police arrested a further six people, including a 53-year-old woman, a 32-year-old man, a 42-year-old man, a 52-year-old woman, a 35-year-old woman, and a 23-year-old man.

The 23-year-old was arrested on the Gold Coast, while the other five were all in Sydney.

They were all charged with publishing false material to obtain advantage.

Investigators also carried out a search warrant at a Sydney law firm.

Police will allege in court the seven charged stood to make $3.75 million in fake sex abuse compensation claims, but that the claims had not yet been paid out.

The investigation continues, with police saying more arrests are expected.