Trump admin halts Minnesota childcare payments amid fraud claims: 'We have turned off money spigot'

WASHINGTON, DC: The Trump administration has halted all childcare payments in Minnesota and is calling for a complete audit of the state’s daycare centers amid an alleged billion-dollar fraud involving the human services department.

The Department of Health and Human Services (HHS) clarified the funding freeze in a statement: “We have turned off the money spigot and we are finding the fraud.” The video was shared on Tuesday, December 30.

The scandal first came to light when YouTuber and independent journalist Nick Shirley raised questions about possible fraud in Minnesota’s daycare subsidy system. Since then, he has pushed his claims further, pointing to what he says is widespread abuse of the program.

Minnesota will need to prove funds are being spent legitimately 

Deputy HHS Secretary Jim O’Neill addressed the situation on X (formerly Twitter), saying the move responds to what he called "blatant fraud that appears to be rampant in Minnesota and across the country."

“We have frozen all child care payments to the state of Minnesota,” O’Neill wrote Tuesday afternoon, following a viral video that exposed alleged fraud at daycare centers in the state. “Funds will be released only when states prove they are being spent legitimately,” he added.

O’Neill claimed that Minnesota has “funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade,” and outlined three measures the department is taking to prevent further misuse of funds.

The first step requires “a receipt or photo evidence” for any payments sent to states through the US Administration for Children & Families (ACF). O’Neill also said he has “demanded” that Governor Tim Walz conduct a “comprehensive audit” for the investigation. “This includes attendance records, licenses, complaints, investigations, and inspections,” he explained.

He specifically referenced Shirley’s video, in which he visited Minneapolis daycare centers receiving millions in state funds despite appearing closed or inactive. Finally, HHS has set up a dedicated hotline and email at childcare.gov for reporting suspected fraud.

Nick Shirley’s video exposes alleged childcare fraud, prompts federal probe

YouTuber Nick Shirley’s investigation prompted the Trump administration to take action against Minnesota. Shirley went viral after posting a 42-minute video chronicling his search for fraudulent childcare programs across the state.

His video, shared on the social platform X, has racked up over 100 million views, showing him visiting daycare centers that were receiving public funding. The 23-year-old alleged that several local centers were not caring for any children and confronted staff on camera, asking about the whereabouts of the children outside each facility.

The video gained widespread attention after a federal probe revealed that Minnesota’s nonprofit 'Feeding Our Future' had allegedly misused millions of dollars intended for low-income children during the pandemic.