*The Trump administration has frozen federal child care payments to Minnesota as investigators examine ongoing allegations of large-scale fraud tied to day care operations in the state.
The decision was announced Tuesday by U.S. Department of Health and Human Services Deputy Secretary Jim O’Neill, who said the pause was immediate and nationwide safeguards were being expanded.
“We have frozen all child care payments to the state of Minnesota,” O’Neill said in a post on X. “Today we have taken three actions against the blatant fraud that appears to be rampant in Minnesota and across the country.” He later added, “We have turned off the money spigot and we are finding the fraud.”
We have frozen all child care payments to the state of Minnesota.
You have probably read the serious allegations that the state of Minnesota has funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade.
Today we have taken three actions… pic.twitter.com/VYbyf3WGop
— Deputy Secretary Jim O’Neill (@HHS_Jim) December 30, 2025
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O’Neill outlined a series of measures aimed at tightening oversight of Administration for Children and Families funding. These steps include requiring payment justifications and receipts or photo evidence before funds are released, demanding a comprehensive audit of the child care centers in question, and launching a dedicated fraud-reporting hotline and email through childcare.gov.
Minnesota Governor Tim Walz responded publicly, pushing back against claims the state ignored warning signs. “We’ve spent years cracking down on fraud – referring cases to law enforcement, shutting down and auditing high-risk programs,” Walz wrote on X. He added, “Trump keeps letting fraudsters out of prison. To the national news just now paying attention, here’s what we’ve done to stop it.”
According to federal authorities, the alleged fraudulent scheme is substantial in scale. Minnesota has seen more than 60 people convicted and over 90 facing charges in connection with the case, Newsweek reports. Government officials estimate taxpayer losses between $250 million and $1 billion. A federal prosecutor claimed that as much as $9 billion in federal money distributed through 14 state programs since 2018 could have been stolen, though state authorities challenge this estimate while conceding there are genuine problems. A significant number of those accused have roots in East Africa and are thought to belong to Minnesota’s Somali immigrant population.
The issue gained renewed attention after a 42-minute video by independent journalist Nick Shirley went viral in December. The footage showed Shirley visiting federally funded Minnesota day care sites that allegedly had no children present despite receiving payments.
Vice President JD Vance also weighed in, writing, “Turning off payments and forcing verification before taxpayer money flows out the door is one of the most important steps we can take to end the fraud in Minnesota. But there will be many more to come.”
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