The U.S. Department of Health and Human Services (HHS) today announced the immediate freeze of all child care payments to the state of Minnesota in response to widespread allegations of fraud within its child care programs.
This decisive action addresses blatant fraud that appears rampant in Minnesota and across the country, as highlighted by recent investigations and a viral video exposing potential misuse of federal funds.
HHS Deputy Secretary Jim O'Neill stated, "We have turned off the money spigot and we are finding the fraud." The freeze follows a video by conservative YouTuber Nick Shirley, which alleged that nearly a dozen day care centers in Minnesota receive state funds but fail to provide services. These centers, many reportedly migrant-run, have drawn scrutiny amid broader fraud schemes, including a $250 million scam targeting child nutrition programs during the COVID-19 pandemic.
HHS provides approximately $185 million annually to Minnesota for child care through the Administration for Children and Families (ACF). Assistant Secretary Alex Adams emphasized that the Minnesota state child care office director could not confirm whether the issues are isolated or statewide.
In a letter to Governor Tim Walz, Deputy Secretary O'Neill demanded a comprehensive audit of the implicated centers, including attendance records, licenses, complaints, investigations, and inspections.
To prevent further abuse, HHS has activated the "Defend the Spend" system nationwide. Effective immediately, all ACF payments require justification, receipts, or photo evidence before release. Additionally HHS has launched a fraud-reporting hotline to encourage tips from the public.
Minnesota officials have responded critically, with Governor Walz's office calling the move a politicized attempt to defund programs. Some day care centers, such as ABC Learning Center, have pushed back by providing surveillance footage showing active operations. HHS remains committed to verifying all claims and ensuring taxpayer dollars support legitimate child care services.
This action builds on ongoing federal probes, including those by the FBI and Department of Homeland Security, into Minnesota's social services fraud. HHS will continue to monitor the situation closely and restore funding only upon satisfactory audit results.