The Health and Human Services Department on Tuesday announced it is freezing all childcare payments to Minnesota amid allegations of widespread fraud.
Somali healthcare and daycare scammers may have stolen more than $9 billion in taxpayer money in Minnesota.
“We have turned off the money spigot,” HHS Deputy Secretary Jim O’Neill said.
The HHS took three actions against the rampant fraud in Minnesota: All payments across the country will require justification and photo evidence before money is sent to a state.
All individuals in Nick Shirley’s video have been identified and audits have been demanded.
The HHS has also launched a fraud reporting hotline.
Full statement from Jim O’Neill:
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 against the blatant fraud that appears to be rampant in Minnesota and across the country:
1. I have activated our defend the spend system for all ACF payments. Starting today, all ACF payments across America will require a justification and a receipt or photo evidence before we send money to a state.
2. Alex Adams and I have identified the individuals in @nickshirleyy’s excellent work. I have demanded from @GovTimWalz a comprehensive audit of these centers. This includes attendance records, licenses, complaints, investigations, and inspections.
3. We have launched a dedicated fraud-reporting hotline and email address at https://childcare.gov Whether you are a parent, provider, or member of the general public, we want to hear from you.
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…
— Deputy Secretary Jim O’Neill (@HHS_Jim) December 30, 2025
The HHS’s announcement comes after federal agents with the Department of Homeland Security were on the ground going door-to-door at suspected Somali fraud sites in Minneapolis following journalist Nick Shirley’s viral video revealing rampant fraud in the Somali community.
Federal agents descended on Somali businesses in Minneapolis on Monday.
“Homeland Security Investigations @ICEGov are on the ground in Minneapolis right now conducting a massive investigation on childcare and other rampant fraud,” DHS Chief Kristi Noem said.
“More coming,” Noem added.
