The U.S. Department of Health and Human Services has implemented a funding freeze for Minnesota’s child care programs. President Donald Trump’s administration made the announcement Tuesday, demanding an audit of some day care centers after a series of fraud schemes involving government programs in recent years.
Federal investigators are demanding an immediate audit of specific providers following social media allegations and a broader federal inquiry into state-administered programs, according to U.S. Deputy Secretary of Health and Human Services Jim O’Neill.
"Let me be crystal clear, ACF expects every state to uphold the highest standards of oversight, monitoring, and accountability for federal dollars," O'Neill explained. "Minnesota is no exception."
O'Neill referenced a right-wing influencer who posted a video Friday claiming he found that day care centers operated by Somali residents in Minneapolis had committed up to $100 million in fraud.
Governor Tim Walz has maintained that the state is still in the middle of conducting its own review, scheduled to be finished in late January. The funds in question serve roughly 19,000 children statewide.
O’Neill is also making a request for detailed receipts and records from providers.
"I've just signed and sent a demand letter to Governor Walz," O'Neill added. "I required a full 360 review of these centers. This includes attendance records, licenses, complaints, investigations, and inspections."
Walz responded to the announcement on X.
"This is Trump’s long game," said Walz. "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."
Wednesday morning, Minnesota Senate Majority Leader Erin Murphy (DFL- St. Paul) released a statement blasting Republicans for taking away services she says Minnesotans depend on.
“Republicans are playing sick games and winning devastating prizes," Murphy said. "Sending a YouTuber to drive around demanding that he gets to see children isn’t an investigation; it’s creepy. And now, tens of thousands of Minnesota families will pay the price as Donald's Trump's agents strip away crucial funding. Our daycare system is already stressed; this reckless decision could force a collapse that affects all of us."
"This is part of a pattern in which the GOP operates in favor of political gain rather than solutions," Murphy continued. "Weeks ago, we learned Republicans are withholding whistleblower tips from investigators. They care more about viral tweets and being featured on Fox News than they do about Minnesotans. DFLers will continue to work to actually stop and prevent fraud, and protect the necessary services that Minnesotans rely on.”
President Trump posted to Truth Social earlier Wednesday, saying, "Tim Waltz of Minnesota is a Crooked Governor!!!" and purposefully misspelling the governor's name.
The announcement comes one day after U.S. Homeland Security officials were in Minneapolis conducting a fraud investigation by going to unidentified businesses and questioning workers.
There have been years of investigations that included a $300 million pandemic food fraud scheme revolving around the nonprofit Feeding Our Future, for which 57 defendants in Minnesota have been convicted. Prosecutors said the organization was at the center of the country’s largest COVID-19-related fraud scam, when defendants exploited a state-run, federally funded program meant to provide food for children.
The pressure from Republicans on Walz has only increased over the last couple of weeks. Minnesota Republican House Speaker Lisa Demuth (Cold Spring), and one of Walz's opponents in the 2026 election, told WCCO's Chad Hartman that Walz should either resign or drop out of the governor's race over what she calls the record fraud that has happened under his watch.
"Feeding our future, autism services, housing stabilization, child care, adult daycare, non-emergency transportation. No one has been fired or publicly disciplined by Governor Walz under this failure," she explains.
A federal prosecutor alleged earlier this month that half or more of the roughly $18 billion in federal funds that supported 14 programs in Minnesota since 2018 may have been stolen. Most of the defendants in the child nutrition, housing services and autism program schemes are Somali Americans, according to the U.S. Attorney’s Office for Minnesota.
O’Neill, who is serving as acting director of the Centers for Disease Control and Prevention, also said in the social media post Tuesday that payments across the U.S. through the Administration for Children and Families, an agency within the U.S. Health and Human Services Department, will now require “justification and a receipt or photo evidence” before money is sent. They have also launched a fraud-reporting hotline and email address.
The Administration for Children and Families provides $185 million in child care funds annually to Minnesota, according to Assistant Secretary Alex Adams.
“That money should be helping 19,000 American children, including toddlers and infants," he said in a video posted on X. "Any dollar stolen by fraudsters is stolen from those children.”
Adams said he spoke Monday with the director of Minnesota's child care services office and she wasn't able to say "with confidence whether those allegations of fraud are isolated or whether there’s fraud stretching statewide.”
Trump has criticized Walz’s administration over the fraud cases, capitalizing on them to target the Somalia diaspora in the state, which has the largest Somali population in the U.S.
Walz, the 2024 Democratic vice presidential nominee, has said an audit due by late January should give a better picture of the extent of the fraud. He said his administration is taking aggressive action to prevent additional fraud. He has long defended how his administration responded.
Minnesota’s most prominent Somali American, Democratic U.S. Rep. Ilhan Omar, has urged people not to blame an entire community for the actions of a relative few.
The Associated Press contributed to this story.