US Freezes All Minnesota Childcare Funds After Fraud Probe Allegations
The action follows emerging allegations that Minnesota funneled millions in taxpayer funds to fraudulent childcare operations throughout the past decade.
O'Neill declared on X: "We have frozen all child care payments to the state of Minnesota," detailing three supplementary measures implemented to address the purported fraud.
According to O'Neill, he initiated the "Defend the Spend" protocol for all Administration for Children and Families (ACF) disbursements, mandating verification and receipt confirmation before releasing any funds.
He has also ordered Minnesota Governor Tim Walz to conduct a full audit encompassing attendance documentation, licensing records, complaints, investigations, and facility inspections. A dedicated fraud reporting hotline has been established as well.
ACF Assistant Secretary Alex Adams revealed his office allocates $185 million annually in childcare funding to Minnesota, serving roughly 19,000 American children.
Adams stated: "Any dollar stolen by fraudsters is stolen from those children."
The investigation originated from footage released by YouTuber Nick Shirley, who claimed a widespread fraud operation involving Somali-operated childcare facilities, with estimated fraudulent claims exceeding $110 million.
Department of Homeland Security Secretary Kristi Noem subsequently announced a "massive investigation on childcare and other rampant fraud," sharing footage of agents interrogating business proprietors.
FBI Director Kash Patel confirmed resources had been "surged" to Minnesota, cautioning these cases represented just "the tip of a very large iceberg" and warning perpetrators could face "denaturalization and deportation."
Walz has mounted a defense of his administration while praising the state's diversity and substantial Somali population. State authorities have challenged Shirley's conclusions, asserting the facilities shown in his video underwent inspections within six months showing "no findings of fraud."
O'Neill emphasized: "We're committed to holding bad actors accountable. Regardless of rank or office, anyone who's involved in perpetrating this fraud against the American people should expect to be prosecuted to the fullest extent of the law."
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