Minnesota child care funds frozen after viral video raises fraud allegations

The U.S. Department of Health and Human Services has frozen all federal child care payments to Minnesota amid allegations that millions of taxpayer dollars were funneled to fraudulent daycare providers, according to federal officials.

The freeze was announced Tuesday by Deputy Health and Human Services (HHS) Secretary Jim O’Neill, who said it applies to all payments administered through the Administration for Children and Families, citing what he described as widespread fraud in Minnesota.

HHS has requested that Minnesota Governor Tim Walz provide a comprehensive audit of childcare centers that received federal funds, including attendance records, licenses, complaints, investigations, and inspections.

A fraud-reporting hotline and email address have also been launched through Childcare.gov to collect tips from the public.

While fraud allegations and investigations involving childcare providers in Minnesota date back several years and have resulted in convictions, the issue returned to public attention over the weekend after a video posted by YouTuber Nick Shirley went viral.

The video shows Shirley, accompanied by a local man identified only as David, visiting daycare and healthcare-related locations in the Minneapolis area that had received millions of dollars in grants. In the video, they claim many of the facilities were operated by Somali immigrants.

The footage shows several locations that appear closed or without children present. Shirley claims that more than $100 million in suspected fraud was uncovered in a single day.

“Right now, on the ground in Minneapolis, Homeland Security Investigators are going door-to-door to these suspected fraud sites… and businesses around them as well — to get more information and to make sure we’re following the money,” said Tricia McLaughlin, assistant secretary at the Department of Homeland Security, in an interview on Tuesday.

Governor Walz criticized the federal government’s decision to freeze funding, calling it politically motivated.

“This is Trump’s long game,” Walz wrote in a social media post. “We’ve spent years cracking down on fraudsters. It’s a serious issue – but this has been his plan all along. He’s politicizing the issue to defund programs that help Minnesotans.”