The Trump administration announced on Tuesday that it is suspending the disbursement of child care funds to the state of Minnesota and has requested a thorough audit addressing fraud allegations across government-supported programs. This decision was communicated by Jim O'Neill, Deputy Secretary of Health and Human Services (HHS), through the social media platform X. O'Neill characterized the action as a response to "blatant fraud that appears to be rampant in Minnesota and across the country."
In response, Minnesota Governor Tim Walz contested the federal move on X, acknowledging the serious nature of fraud but underscoring the state's ongoing efforts to identify and mitigate these issues over several years. Walz criticized the federal approach as politically motivated, asserting that it aimed to undermine vital services for Minnesotans. "He’s politicizing the issue to defund programs that help Minnesotans," Walz remarked.
O'Neill’s comments referenced a video posted by a right-wing social media influencer on Friday, alleging fraudulent activities amounting to as much as $100 million at daycare centers in Minneapolis operated by Somali residents. In reaction, O’Neill has demanded that Governor Walz submit an audit including detailed documentation — such as attendance records, licensing status, complaints, investigations, and inspection results for these centers.
"We have turned off the money spigot and we are finding the fraud," O’Neill stated, emphasizing the suspension of funding pending evidence of proper use.
The announcement coincides with a recent U.S. Department of Homeland Security operation in Minneapolis, where officials visited unspecified businesses and interviewed staff as part of a fraud inquiry.
Previously, Minnesota has grappled with significant fraud investigations, including a $300 million pandemic-related food assistance fraud connected to the nonprofit Feeding Our Future. This scheme led to convictions of 57 individuals in the state, identified by prosecutors as the largest COVID-19-related fraud at the national level. The fraudulent activity exploited a state-administered, federally funded child food assistance program.
A federal prosecutor disclosed earlier in the month that approximately half or more of the estimated $18 billion in federal funding supporting 14 different Minnesota programs since 2018 could have been misappropriated. The criminal defendants involved in schemes concerning child nutrition, housing assistance, and autism services have predominantly been Somali Americans, as reported by the U.S. Attorney’s Office for Minnesota.
Jim O’Neill, also acting as the director of the Centers for Disease Control and Prevention, announced via social media that the Administration for Children and Families (ACF)—an agency within HHS—will implement more stringent oversight for fund disbursement nationwide. Future payments will require detailed justifications alongside receipt or photographic proof before funds are released. Furthermore, a dedicated fraud-reporting hotline and email have been launched by the agency.
The ACF currently allocates approximately $185 million annually in child care funding to Minnesota, according to Alex Adams, Assistant Secretary of the agency. Adams emphasized the intended beneficiaries of these funds, noting that the money supports roughly 19,000 American children, including infants and toddlers. "Any dollar stolen by fraudsters is stolen from those children," he stated in a video message posted on X.
During a discussion on Monday, Adams spoke with the director of Minnesota's child care services about the fraud allegations. The director reportedly was unable to confidently determine whether the suspected fraud is isolated or extends across the entire state.
Governor Walz, who is also the 2024 Democratic vice presidential nominee, has frequently defended his administration's response to fraud investigations. He expects a comprehensive audit to be completed by late January, which should clarify the scope and scale of fraudulent activities. Walz asserted that his administration is taking aggressive measures to curb further fraudulent misuse of funds.
The controversy has been politically charged, with President Trump repeatedly criticizing Walz’s handling of the fraud cases and highlighting them to target Minnesota’s Somali diaspora, the largest in the United States. Representative Ilhan Omar, Minnesota’s most prominent Somali American and a Democrat, has cautioned against stigmatizing an entire community for the actions of a few individuals.