Lead: A state review released on Friday, January 2, 2026, found that Minnesota child care centers targeted in a viral video alleging widespread fraud were operating as expected when inspectors visited. The Department of Children, Youth, and Families (DCYF) said children were present at all but one site, which had not yet opened for the day. Investigators collected evidence and opened further review into four centers while federal agencies have paused payments pending broader inquiries. The episode has triggered tightened federal documentation requirements and heightened attention to Child Care Assistance Program (CCAP) payments for fiscal 2025.
Key Takeaways
- State review date: January 2, 2026 — DCYF reported inspectors found children present at all sites except one that had not opened for the day.
- Scope of investigation: DCYF identified and began further review of four centers featured in the viral video; the probe is ongoing.
- CCAP funding: Centers in the video received between $470,000 and $3.6 million in fiscal 2025, totaling more than $17 million.
- Federal response: The Department of Health and Human Services froze child care payments to Minnesota for review; the FBI and Department of Homeland Security are also involved in inquiries.
- Viral catalyst: A 42‑minute YouTube video posted Dec. 26, 2025, by creator Nick Shirley has more than 3 million views as of Jan. 2, 2026, and was reshared by high-profile figures, accelerating scrutiny.
- Administrative change: HHS Secretary Jim O’Neill announced payments to states will now require justification and receipts or photographic evidence for ACF disbursements.
- Historical context: The accusations come amid prior fraud scandals involving pandemic-era social service programs, including cases linked to the Somali community going back to 2016–2022.
Background
The recent controversy began after a 42‑minute YouTube video posted on Dec. 26, 2025, alleged broad fraud at Somali‑run child care centers in Minnesota. The creator behind the video, Nick Shirley, has produced anti‑immigrant and anti‑Muslim content previously. The video provided limited verifiable evidence for the wide claims it advanced but attracted major attention after being reshared by public figures.
Minnesota’s Department of Children, Youth, and Families moved quickly to review the centers named in the clip and issued a public news release on Jan. 2, 2026, describing on‑site findings and next steps. Federal agencies responded in turn: Health and Human Services paused state payments while the FBI and Department of Homeland Security are reported to be investigating related allegations. The Child Care Assistance Program (CCAP), which pays child care providers on behalf of eligible families, is central to questions about payments in fiscal 2025.
Main Event
DCYF inspectors visited the centers named in the video and reported that children were present at every site except one, which had not opened for families when the visit occurred. Investigators collected documents and other material; the agency said evidence was gathered and that a more detailed review had begun. DCYF emphasized its focus on fact‑based assessments to detect fraud while minimizing disruption to families and providers.
Following the video’s circulation, HHS froze child care payments sent to Minnesota pending a federal review. Secretary Jim O’Neill stated that the department would require more documentation — including receipts or photo evidence — before releasing federal disbursements through the Administration for Children and Families. Federal law enforcement involvement elevated the matter beyond state administrative review.
The centers referenced in public reporting received substantial CCAP funds in fiscal 2025, with individual center amounts cited between $470,000 and $3.6 million and a collective sum exceeding $17 million. DCYF’s release noted that one center named in the video has been closed since 2022, complicating some allegations that implied ongoing operations at every site mentioned.
Analysis & Implications
The immediate administrative effect is a tighter verification regime for federal child care payments. Requiring receipts or photos raises operational burdens for states and providers and could slow assistance to families if documentation rules are applied broadly. For Minnesota families who rely on CCAP, any prolonged payment pause or stricter evidence rules could create access problems and financial strain for working caregivers.
Politically, the episode underscores how social media content can rapidly shape enforcement priorities and public narratives. A single viral video with selective evidence prompted federal scrutiny, frozen funds, and amplified rhetoric targeting a specific immigrant community. That dynamic risks conflating unverified allegations with verified misconduct, with consequences for public trust and community relations.
Legally and administratively, the involvement of the FBI and DHS signals potential criminal or cross‑jurisdictional welfare fraud concerns beyond state audit procedures. If investigators find systematic misuse, prosecutions or civil recoveries could follow; if not, the episode may prompt policy reforms focused on documentation and anti‑fraud safeguards across federal block grants and state programs.
Comparison & Data
| Metric | Value |
|---|---|
| Number of centers under state further review | 4 |
| Lowest FY2025 CCAP payment to a featured center | $470,000 |
| Highest FY2025 CCAP payment to a featured center | $3,600,000 |
| Combined FY2025 CCAP payments (reported) | More than $17,000,000 |
The table summarizes figures DCYF reported for the centers featured in the viral video. Those amounts represent CCAP payments routed through the state to providers on behalf of eligible families in fiscal 2025. While large sums can draw scrutiny, CCAP is designed to subsidize child care for working families and payments vary based on enrollment, eligibility and service volume.
Reactions & Quotes
The state agency that conducted site visits stressed a fact‑based approach and warned about the harms of spreading unvetted claims. Before and after inspectors visited, DCYF urged caution about circulating unverified material that might endanger families and providers.
Children were present at all sites except for one — that site was not yet open for families for the day when inspectors arrived.
Minnesota Department of Children, Youth, and Families (state release)
Federal officials announced administrative changes to payment rules amid the controversy. The HHS secretary framed the documentation requirement as a step to ensure funds are spent appropriately while the department completes its review.
We will now require justification and receipts or photo evidence for all payments to states from the Administration for Children and Families.
Jim O’Neill, U.S. Department of Health and Human Services (statement)
Community leaders and advocates warned that publicizing unvetted allegations can inflict reputational harm and heighten risks for immigrant communities. Local advocates called for careful, evidence‑based investigation and for safeguards so families are not left without care while inquiries proceed.
Unconfirmed
- The viral video’s broader claim of widespread, systematic fraud across Minnesota child care providers remains unverified by independent evidence.
- Allegations tying specific individuals or entire communities to criminal schemes beyond the centers under review have not been substantiated by public records.
- The ultimate findings of FBI or DHS investigations, including whether criminal charges will be recommended, are not yet known.
Bottom Line
The state review released Jan. 2, 2026, found that inspectors observed children present and that the centers were operating as expected at the time of visits, while DCYF continues a more detailed review of four centers. Federal agencies have escalated scrutiny: HHS paused payments and tightened documentation rules, and law enforcement agencies are reported to be investigating.
Short term, families and providers face uncertainty: frozen payments or new documentation requirements could disrupt care access if applied broadly or if reviews are prolonged. Longer term, the episode may accelerate policy changes around documentation and oversight for federally funded social services, while highlighting the risks that viral content can pose to administrative processes and community cohesion.
Sources
- CNN — Media report summarizing state DCYF release and federal actions (Jan. 2, 2026)