Walz Fraud
Trump Admin Ends Funding for Minnesota Childcare: "Turned Off the Spigot"
Deputy Health and Human Services Secretary Jim O’Neill announced the move Tuesday, saying the federal government had “turned off the money spigot” after years of alleged abuse in Minnesota’s childcare subsidy system. The freeze will remain in place until the state can demonstrate that funds are being spent legitimately.
The Trump administration has frozen all federal childcare payments to the state of Minnesota, citing what it describes as a sprawling and systemic fraud scheme involving daycare centers that may total billions of dollars.
Deputy Health and Human Services Secretary Jim O’Neill announced the move Tuesday, saying the federal government had “turned off the money spigot” after years of alleged abuse in Minnesota’s childcare subsidy system. The freeze applies to all payments routed through the Administration for Children and Families and will remain in place until the state can demonstrate that funds are being spent legitimately.
Minnesota has received approximately $185 million in federal childcare payments so far this year. According to O’Neill, those funds have been “funneled to fraudulent daycares across the state over the past decade,” with oversight failures allowing the problem to grow unchecked.
Federal officials say the decision was accelerated following public attention generated by a recent online investigation showing multiple daycare facilities listed as operational and receiving millions in public funds despite appearing closed, vacant, or inactive. Some facilities allegedly lacked children, staff, or basic signs of operation.
As part of the response, HHS is imposing new requirements that states provide receipts or photographic evidence to justify childcare payments. O’Neill also said he has demanded that Minnesota Governor Tim Walz conduct a comprehensive audit of the daycare centers flagged in the investigation. The audit is expected to include attendance records, licensing documentation, complaints, inspection histories, and prior investigations.
In addition, HHS has launched a national fraud reporting hotline and dedicated email address to collect tips related to misuse of childcare funds. Officials said the goal is to encourage parents, providers, and members of the public to report suspected abuse.
Federal prosecutors say at least $1 billion in fraud has already been confirmed, with warnings that the total amount could ultimately reach as high as $9 billion. To date, 92 people have been charged in connection with the scheme. According to the U.S. Attorney’s Office, 82 of those charged are Somali immigrants, a detail that has added political sensitivity to the case amid broader debates over immigration and public benefits.
Minnesota state officials have acknowledged problems in the system but have not publicly accepted the scale of fraud alleged by federal authorities. The freeze places immediate financial pressure on legitimate childcare providers across the state, many of whom rely heavily on federal reimbursements to operate.
The Trump administration has signaled that the funding will not be restored until Minnesota demonstrates substantial reforms and credible safeguards against further abuse.