Trump administration says it's halting federal child care payments to Minnesota after viral fraud claims

( NBC )

The Department of Health and Human Services said Tuesday that it is freezing all federal child care payments to the state of Minnesota in the wake of a viral video that alleged widespread fraud at child care facilities across the state.

In a statement and accompanying video on X, Deputy Secretary Jim O’Neill and Assistant Secretary Alex Adams said that in addition to halting all payments to Minnesota they were implementing new requirements for child care payments nationwide.

The statement said that all payments handled by the Administration for Children and Families — a component of HHS — will “require a justification and a receipt or photo evidence before we send money to a state.”

"We have turned off the money spigot and we are finding the fraud," the statement said.

In a follow-up post more than an hour after that statement, O'Neill added that funds will be released "only when states prove they are being spent legitimately."

Gov. Tim Walz, who was the 2024 Democratic nominee for vice president, said in a post on X responding to O'Neill that his administration has "spent years cracking down on fraudsters."

"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," Walz wrote. "He’s politicizing the issue to defund programs that help Minnesotans."

Vice President JD Vance praised O'Neill and Health and Human Services Secretary Robert F. Kennedy Jr. in a post to X on Wednesday morning.

"Turning off payments and forcing verification before taxpayer money flows out the door is one of the most important steps we can take to end the fraud in Minnesota," Vance wrote. "But there will be many more to come."

Adams said in the video statement posted to O'Neill's account that the Administration for Children and Families provides Minnesota $185 million in child care funds each year. HHS did not respond to an inquiry about exactly how much of that is being frozen.

The announcement by HHS comes days after FBI Director Kash Patel said on Sunday that the bureau had "surged" resources to Minnesota to investigate claims of widespread fraud, insisting those steps were taken before right-wing influencer Nick Shirley's video went viral over the weekend for purporting to show child care facilities that weren't operational but were receiving state and federal funds.

The FBI’s fraud investigation has largely targeted Somali immigrants in Minnesota, a frequent target of President Donald Trump in recent months.

In an appearance on "Fox & Friends" Wednesday morning, White House press secretary Karoline Leavitt called the investigation into alleged fraud "a top priority for the administration."

"The Department of Justice, as we speak, is continuing to execute search warrants and subpoenas," Leavitt said. "People will be in handcuffs as a result of the fraud that Governor Walz has allowed to occur for the for many, many years. The Department of Homeland Security is conducting door-to-door investigations on the ground at potential fraud sites, and they are also, of course, conducting continued deportations of illegal aliens in Minnesota’s communities.”

Leavitt added that the Trump administration is “not afraid to use denaturalization” as part of its response and said the administration “absolutely” wants to see citizenship revoked from Somalis convicted of fraud.

Other blue states, including California and New York, will also be looked at for fraud, she said.

The Justice Department has been investigating fraud involving some members of Minnesota’s Somali community for years. Federal prosecutors in 2022 — under the Biden administration — announced initial indictments in what they said was a $250 million scheme to defraud a federally funded child nutrition program.

As of November, prosecutors had charged 77 people, and they described Aimee Bock, who is white, as the mastermind of the operation. A jury convicted Bock in March.

Shirley’s video garnered national attention after it was amplified by Vice President JD Vance, Elon Musk and right-wing outlets. In it, Shirley cited "the Somali population" in his accusations of daycare fraud.

Minnesota's Department of Children, Youth, and Families Commissioner Tikki Brown said this week that one of the daycare centers highlighted by Shirley had closed in 2022, with an agency spokesperson saying the other ones visited have active licenses.