HHS freezes Minnesota child care payments after viral fraud allegations

Lead

The U.S. Department of Health and Human Services (HHS) said it has frozen all child care payments to Minnesota after a viral video alleged widespread fraud in day care centers. Deputy HHS Secretary Jim O’Neill announced tighter documentation rules for Administration for Children and Families payments, requiring justification plus receipts or photos. The action follows a 40-minute online video from conservative influencer Nick Shirley that targeted Somali communities in Minneapolis; Minnesota officials have disputed the video’s claims. Federal and state authorities have signaled investigations, while elected leaders clashed over whether the move is an anti-fraud step or a politicized cut to services.

Key takeaways

• HHS announced a freeze on all child care payments to Minnesota and new ACF documentation rules requiring justification and a receipt or photo, per Deputy Secretary Jim O’Neill’s social post.
• The online video at the center of the dispute is about 40 minutes long and was posted by conservative influencer Nick Shirley; ABC News has not independently verified his assertions.
• Minnesota officials, including Commissioner Tikki Brown, said state licensing staff had visited each facility mentioned within the previous six months and conducted unannounced visits that found children present.
• FBI Director Kash Patel and Homeland Security Secretary Kristi Noem reported increased federal attention; Patel referenced a prior $250 million COVID-era food-aid fraud dismantling tied to the “Feeding Our Future” network.
• Governor Tim Walz described the federal move as politically motivated, while HHS demanded a comprehensive audit of centers identified in the video.
• State prosecutors and a senior U.S. attorney’s office official have described large-scale fraud investigations in Minnesota, with public comments noting substantial sums involved (Dec. 18 remarks).

Background

Federal funding for child care and related support flows through programs administered by HHS, including the Administration for Children and Families (ACF). Those funds are distributed to states and to licensed providers; routine federal and state oversight typically relies on state licensing, provider reporting, and occasional audits. Allegations of misuse of pandemic-era relief and child-related benefits have surfaced in multiple states since 2020, prompting a series of local and federal investigations and prosecutions.

In Minnesota, community concern and prior inquiries into unrelated fraud schemes have heightened attention to childcare payments and program eligibility. Somali-American communities in the Twin Cities have faced scrutiny in prior enforcement actions and political rhetoric, which complicates public responses and trust. The viral video at issue alleges empty centers collecting public money, a charge Minnesota officials have said requires careful verification given licensing visits and other oversight already in place.

Main event

Deputy HHS Secretary Jim O’Neill posted on social media that HHS has suspended child care payments to Minnesota and is tightening ACF payment requirements, asking states to provide a written justification plus a receipt or photo for payments. O’Neill described what he called “blatant fraud that appears to be rampant in Minnesota and across the country” and said HHS demanded Gov. Tim Walz order a comprehensive audit of day care centers named in the viral video.

The video, produced by conservative influencer Nick Shirley, runs roughly 40 minutes and shows visits to several day care operations in Minneapolis’s Somali neighborhoods, asserting providers received public funds while centers were unoccupied when filmed. ABC News and state officials have said the video’s claims remain unverified; Minnesota’s Department of Children, Youth and Families said staff visited the named facilities and found children present during unannounced inspections.

Governor Tim Walz responded on social media, calling the federal action politically motivated and saying the move risks defunding programs that serve Minnesotans. Homeland Security Secretary Kristi Noem and FBI Director Kash Patel publicly described increased federal scrutiny; Patel cited the earlier FBI dismantling of a $250 million COVID-era food-aid fraud scheme tied to vendors in the Feeding Our Future network.

State licensing officials, represented by Commissioner Tikki Brown, said they had questions about the methods used to produce the video but take the potential fraud concerns seriously, and that teams were conducting follow-up visits. A senior prosecutor in the U.S. Attorney’s Office in Minnesota stated at a Dec. 18 press event that alleged fraud in the state involved “staggering amounts” of money, indicating ongoing, large-scale investigations.

Analysis & implications

The HHS freeze and new documentation requirements will have immediate operational effects: providers that rely on federal reimbursement could face cash-flow interruptions while audits and supplemental paperwork proceed. For low-margin child care operators, delayed payments can force temporary closures or reductions in capacity, which disproportionately affects families seeking affordable care. The policy change demonstrates how a single viral allegation can trigger federal administrative action that cascades into service disruptions.

Politically, the episode sharpens partisan lines. Minnesota’s Democratic leadership framed the move as a weaponization of fraud claims to undercut social programs, while conservative federal officials framed the intervention as corrective enforcement. That dynamic complicates cooperation on audits and follow-ups: effective investigations require state-federal data-sharing and agreed protocols, which can erode under a highly politicized spotlight.

For Somali and other immigrant communities, the episode may deepen mistrust. Public allegations tied to particular communities can stigmatize providers and parents, deterring eligible families from seeking subsidized care. Conversely, credible evidence of fraud—if found—would justify tightened oversight and could lead to prosecutions and policy reforms to close vulnerabilities in payment systems.

Comparison & data

The table summarizes the principal figures cited in public statements. The $250 million figure refers specifically to a separate COVID-era food-aid fraud uncovered by the FBI and is offered by federal officials as context for concerns about systemic abuse. The scale of any alleged child care fraud tied to the recent video has not been quantified publicly; officials describe ongoing reviews and potential audits.

Reactions & quotes

“We have frozen all child care payments to Minnesota and are tightening ACF requirements to address what appears to be blatant fraud.”

Deputy HHS Secretary Jim O’Neill (social post)

O’Neill framed the pause and new documentation standards as immediate corrective measures intended to prevent further misuse of federal funds while audits proceed.

“This is Trump’s long game. … He’s politicizing the issue to defund programs that help Minnesotans.”

Governor Tim Walz (social post)

Gov. Walz characterized the federal action as politically motivated and warned of collateral harm to families who depend on subsidized child care if payments are withheld.

“Each of the facilities mentioned in the video has been visited at least once in the last six months… our staff are out in the community today to visit each of these sites again.”

Tikki Brown, Commissioner, Minnesota Department of Children, Youth and Families (statement to KSTP)

Commissioner Brown emphasized state licensing activity and the department’s immediate follow-up inspections to verify or refute the video’s allegations.

Unconfirmed

• The specific extent and dollar value of any alleged child care fraud tied to the Shirley video have not been publicly verified.
• Claims that fraud is “rampant” across Minnesota and nationwide reflect HHS language but lack fully public, independently verified quantification at this stage.
• Public statements about federal surges of investigative resources to Minnesota are reported by officials but the precise scope and timeline of investigative actions have not been fully disclosed.

Bottom line

The HHS decision to freeze Minnesota child care payments and to tighten ACF documentation rules followed a viral video alleging fraud in Minneapolis day cares. Federal officials cite prior large-scale fraud cases as rationale for swift action, while Minnesota authorities say they are already conducting licensing checks and dispute the video’s implications.

Key next steps to watch: results of any state-ordered comprehensive audit, whether federal investigators produce substantiated evidence connecting the named providers to fraud, and whether the payment freeze is lifted after verification. The episode underscores the tension between rapid federal intervention and the need for careful, evidence-based review to avoid unintended harm to service providers and families.

Sources

• ABC News (national news outlet reporting on HHS announcement and state responses)