The Brisbane-based charity, The Grey Man, which claims it is comprised of ex-police officers and special services veterans, placed photographs of the children on their website and Facebook pages and began an appeal for funds.
But says Bangkok-based investigative journalist Andrew Drummond, the Thai non-government organisation Trafcord and the Department of Special Investigations found that the children had never left their homes, had continued to attend school and had suffered as a result of the publicity.
At the request of the Australian Federal Police, a letter through Thailand's Ministry of Foreign Affairs will seek a parallel investigation in Australia to focus on the alleged use of false advertising to solicit funds.
Claims against the Grey Man charity are appearing for the first time in the Australian media and are likely to become just as newsworthy in Thailand as a result of an article at andrew-drummond.com that reports fully on the hill tribe deception.
AFP officers were summoned to a meeting on Saturday at the DSI headquarters in Bangkok to hear the complaints.
The Grey Man's president, John Curtis, said he had no difficulties with any investigation by either the Thai government or the AFP and blamed the resentment of the Thai-based NGO, Trafcord.
Andrew Drummond reports that in its press release The Grey Man said: ''Most of the girls and some of the boys would have ended up in the sex industry in Bangkok and Pattaya.
''Without our help the rest would have been most likely been trafficked for labor in sweatshops. Now they have a chance.''
However, Drummond reports that an investigation shows that not only were these very same children never taken to safe housing, they were going to school as they normally do. His site includes a more recent photograph of all but one of the same children.
Their uniforms, books, and lunches were being paid for out of a Thai Government fund for disadvantaged children.
Nevertheless by October 15 after just four days The Grey Man announced that it had raised half the money they needed, claiming that the children were being looked after in a safe house.
A week later, the rescue story ''totally disappeared'' from The Grey Man site and Facebook, Drummond reports.
In response to a question from Phuketwan last year about activities on Phuket John Curtis replied: ''We rarely visit Phuket simply because flying into Bangkok allows us access to other places in Thailand that are good targets for us.
''We don't know much about the situation there but if you have any information we are happy to follow up on it.''
The Grey Man has had unquestioningly complimentary coverage in the Australian media until now, even though the concept of ''foreign operatives'' rescuing children without local assistance seems odd.