Minn.: HHS freezes all child care payments amid ongoing widespread fraud allegations

Jim O’Neill and Alex J. Adams

The U.S. Department of Health and Human Services (HHS) has officially frozen all federal child care payments to the state of Minnesota. The decision follows a series of widespread fraud investigations and allegations regarding millions in taxpayer funds being funneled to non-operational or fraudulent day care centers.

 On Tuesday, HHS Deputy Secretary Jim O’Neill revealed that all child care payments to the North Star State have been frozen, adding that the agency has so far “taken three actions” in relation to the matter.

“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,” O’Neill wrote on X.

“Today we have taken three actions against the blatant fraud that appears to be rampant in Minnesota and across the country,” he continued, before sharing a video.

 

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… pic.twitter.com/VYbyf3WGop

— Deputy Secretary Jim O'Neill (@HHS_Jim) December 30, 2025

O’Neill went on to highlight three actions the department has taken in order to prevent to flow of exploitable funds.

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.

Following an expose by independent journalist Nick Shirley, Department of Homeland Security (DHS) Secretary Kristi Noem also deployed federal agents to Minneapolis on Monday to investigate the large-scale childcare fraud.

 

Shirley’s reporting focused on numerous Somali-owned centers that had collected millions in public money, but appeared to be entirely vacant or shut down.

Noem’s announcement of a “massive investigation” marked the first escalation in response to ongoing claims that Minnesota taxpayer funds were being disbursed to immigrant-owned businesses that existed largely on paper.