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HHS freezes Minnesota child care payments over alleged daycare fraud scheme
By Louis Casiano
Published December 30, 2025
HHS Deputy Secretary Jim O'Neill in a YouTube announcement. (HHSTV1 via YouTube)
The U.S. Department of Health and Human Services will freeze all child care payments to Minnesota, the agency said Tuesday, amid the scrutiny surrounding alleged fraud involving child daycare centers across the state.
"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," HHS Deputy Secretary Jim O'Neill wrote on X.
In a video message, O'Neill cited the viral video released last week by independent journalist Nick Shirley that highlighted alleged fraud involving Minnesota childcare and learning centers.
'NO WAY' WALZ ADMINISTRATION WAS UNAWARE OF MINNESOTA FRAUD SCANDAL, EMMER SAYS
Quality Learning Center in Minnesota was found at the center of an alleged childcare fraud scandal in the state. (Fox News)
In the video, many of the facilities appeared non-operational despite allegedly receiving millions of dollars in government aid.
"We believe the state of Minnesota has allowed scammers and fake daycares to siphon millions of taxpayer dollars over the past decade," he said.
In an effort to combat fraud, O'Neill said he ordered that all Administration for Children and Families payments made across the country require justification and receipt or photo evidence before money is sent to a particular state.
Secondly, the agency is demanding that Minnesota Gov. Tim Walz hand over a comprehensive audit of the centers featured in Shirley's video, including attendance records, licenses, complaints, investigations and inspections.
FEDS LAUNCH 'MASSIVE' INVESTIGATION AFTER VIRAL VIDEO ALLEGES MINNESOTA DAYCARE FRAUD
HHS Deputy Secretary Jim O'Neill in a YouTube announcement. (HHSTV1 via YouTube)
In addition, HHS has launched a hotline to report fraud.
A spokesperson for Walz's office told Fox News Digital that the HHS move was politically motivated.
"The governor has been combatting fraud for years while the President has been letting fraudsters out of jail," the spokesperson said in a statement. "Fraud is a serious issue. But this is a transparent attempt to politicize the issue to hurt Minnesotans and defund government programs that help people."
In a post on X, Walz said the move was part of President Donald 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 wrote. "He’s politicizing the issue to defund programs that help Minnesotans."
Alex Adams, the assistant secretary for HHS' Administration for Children and Families, said his office has provided Minnesota with $185 million in child funds annually.
"That money should be helping 19,000 American children, including toddlers and infants. Any dollars stolen by fraudsters is stolen from those children," Adams said.
Adams said he spoke with the head of Minnesota Child Care Services office on Monday.
Independent journalist Nick Shirley's video about the daycares went viral. (Fox News)
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"She could not tell me with confidence whether those allegations of fraud are isolated or whether there's fraud stretching statewide," he said.
https://www.foxnews.com/politics/hhs-freezes-minnesota-child-care-payments-over-alleged-daycare-fraud-scheme