HHS freezing child care payments to all states after Minnesota fraud allegations: Official
The Trump administration is pausing child care funding to all states after allegations of fraud in daycare centers in Minnesota emerged, an official with the Department of Health and Human Services said.
The official said the funds will be released “only when states prove they are being spent legitimately.” The official did not provide details or more information about the proof the agency is requiring from states.
HHS spokesperson Andrew Nixon told ABC News that recipients of funding who are “not suspected of fraudulent activity” are required to send HHS their “administrative data” for review.
Nixon said that recipients of federal funding in Minnesota and those “suspected of fraudulent activity” have to provide the HHS with additional records that include “attendance records, licensing, inspection and monitoring reports, complaints and investigations.”
"It's the onus of the state to make sure that these funds, these federal dollars, taxpayer dollars, are being used for legitimate purposes," Nixon told ABC News.
In addition, HHS is tightening requirements for payments from the Administration for Children and Families to all states, requiring a justification and a receipt or photo evidence, Deputy HHS Secretary Jim O'Neill said in a post on social media Tuesday.
The federal actions came after an unverified online video from conservative influencer Nick Shirley alleging fraud in child care in Somali communities in Minneapolis. Minnesota officials had disputed the allegations.
In the post, O'Neill wrote the agency was taking steps to address "blatant fraud that appears to be rampant in Minnesota and across the country" and said HHS was demanding Democratic Minnesota Gov. Tim Walz conduct a "comprehensive audit" of day care centers identified in the viral video.
In a post on social media, Walz responded to the move by HHS, writing: "This is Trump’s long game. We’ve spent years cracking down on fraudsters. It’s a serious issue - but this has been his plan all along. He’s politicizing the issue to defund programs that help Minnesotans."
Earlier this week, Minnesota officials had also pushed back on the claims made in the video that went viral last week.
Conservative influencer Nick Shirley posted a 40-minute-long video alleging fraud in childcare in Somali communities in Minneapolis. In the video, Shirley allegedly visited daycares that he said have taken public funds, but there were no children when he visited.
ABC News has not independently verified any of his claims. Unrelated allegations of fraud have been under investigation by state officials dating back to the time of the Biden administration.
According to Minneapolis-St. Paul ABC News affiliate KSTP, Tikki Brown, the commissioner of the state Department of Children, Youth and Families, raised concerns about the video, including whether videos were taken during times when the businesses were scheduled to be open.
"While we have questions about some of the methods that were used in the video, we do take the concerns that the video raises about fraud very seriously," Brown said on Monday.
"Each of the facilities mentioned in the video has been visited at least once in the last six months as part of our typical licensing process, and in fact, our staff are out in the community today to visit each of these sites again so that we can look into the concerns that were raised in the video," she added.
Brown noted that children were present during the unannounced visits by the state at all the visits.
The Minnesota Department of Children, Youth and Families did not immediately respond to ABC News' request for comment on the video or the allegations of fraud.
After the video Shirley posted to social media went viral, Homeland Security Secretary Kristi Noem said in an X post that her department was conducting a "massive investigation on childcare and other rampant fraud." Similarly, FBI Director Kash Patel said the agency had already surged resources into Minnesota and that he believed alleged fraud already uncovered on federal food aid during COVID was "just the tip of a very large iceberg."
"To date, the FBI dismantled a $250 million fraud scheme that stole federal food aid meant for vulnerable children during COVID," FBI Director Kash Patel said in a Sunday evening X post. "The investigation exposed sham vendors, shell companies, and large-scale money laundering tied to the Feeding Our Future network."
The COVID fraud scheme was uncovered during the Biden administration, but charges have been brought as late as this year.
At a cabinet meeting earlier this month, President Donald Trump criticized the U.S. Somali community, citing allegations of fraud in Minnesota.
One of the most senior career prosecutors at the U.S. Attorney's Office in Minnesota commented on massive amounts of alleged fraud in the state at a press conference earlier this month.
"The magnitude of fraud in Minnesota cannot be overstated. It’s staggering amounts of money that’s been lost," prosecutor Joe Thompson said on Dec. 18.
