The U.S. Department of Health and Human Services took swift action. It froze all child care payments to Minnesota. This decision followed serious fraud allegations. Officials cited blatant fraud in the state’s programs. They aimed to protect taxpayer money.
The Spark from a Viral Video
A conservative YouTuber named Nick Shirley posted a video. He alleged that nearly a dozen day care centers in Minnesota received funds but provided no services.
The video focused on centers in Somali communities. It quickly went viral and drew national attention. Moreover Shirley claimed these facilities operated as ghost operations. This prompted immediate federal scrutiny.
HHS Announces the Freeze
Deputy Secretary Jim O’Neill shared the news on X. He stated, “We have turned off the money spigot and we are finding the fraud.”
HHS demanded a comprehensive audit from Minnesota. The audit must cover attendance records, licenses, and inspections. In addition, the agency identified the centers in the video. It seeks clear evidence to verify operations.
Pushback and Verifications
Some day care centers disputed the claims. For example, ABC Learning Center provided surveillance footage. The footage showed parents dropping off children.
CBS News analyzed state records. Most centers hold active licenses. Regulators visited them recently. However records showed citations for safety and cleanliness issues. No fraud evidence appeared in the documents.
Minnesota Officials Respond
Governor Tim Walz’s office criticized the move. A spokesperson said it politicizes fraud to hurt Minnesotans. The state has fought fraud for years. Officials vowed to continue cracking down. Furthermore, Walz disputed past fraud estimates. He questioned claims of billions in Medicaid losses.
Historical Fraud in the State
Minnesota faced major scams before. Prosecutors convicted dozens in a $250 million child nutrition fraud during the pandemic.
Federal probes targeted autism services and housing programs. Estimates suggest up to $9 billion in Medicaid fraud. As a result, the Department of Homeland Security visited sites. Agents investigated on December 29, 2025.
Federal Move Ignites Controversy Over Program Oversight
The U.S. Department of Health and Human Services froze all child care payments to Minnesota. This action followed viral allegations of fraud in day care centers. Officials cited blatant fraud as the reason. They aimed to investigate claims thoroughly.
The Viral Video Sparks Action
Conservative YouTuber Nick Shirley released a video. He alleged that nearly a dozen day care centers in Minnesota received funds but provided no services. In addition, Shirley focused on centers in Somali communities. His claims quickly gained attention online.
However some centers disputed the accusations. For example, ABC Learning Center shared surveillance footage. It showed parents dropping off children on the day of Shirley’s visit.
HHS Demands Audit and Tightens Rules
Deputy Secretary Jim O’Neill announced the freeze on social media. He stated, “We have turned off the money spigot and we are finding the fraud.”
Moreover HHS demanded a comprehensive audit from Minnesota. This includes attendance records, licenses, and inspections. Nationwide, the agency now requires justification for all payments. States must provide receipts or photo evidence before receiving funds.
Minnesota Officials Respond
Governor Tim Walz’s office criticized the decision. A spokesperson said it politicizes fraud to defund programs that help people.
Furthermore, state records show most centers hold active licenses. Regulators visited them recently. Despite this, Minnesota has faced past fraud issues. Prosecutors convicted dozens in a $250 million scheme during the pandemic.
Broader Implications and Investigations
The freeze affects significant funding. HHS sends about $185 million annually to Minnesota for child care. As a result, low-income families may suffer. The program supports around 23,000 children.
In addition, the Department of Homeland Security joined the probe. Agents visited sites in Minneapolis. President Trump highlighted the issues. He noted many defendants come from Somali backgrounds.
Looking Ahead
HHS vows to restore funds after a satisfactory audit. Meanwhile debates continue over fraud and politics. This event underscores the need for better oversight. It prompts calls for reforms in federal programs.
