The cold winter air in Minnesota just got even frostier for state officials. In a move that has sent shockwaves from the Twin Cities to the halls of Congress, the Department of Health and Human Services (HHS)—under the leadership of Secretary Robert F. Kennedy Jr.—has officially dropped the hammer. The news is definitive: HHS has frozen all federal child care payments to the state of Minnesota, effective immediately.
The decision marks a dramatic escalation in the “America First” administration’s crackdown on what they describe as “rampant, systemic fraud.” For years, whispers of “ghost daycares” and siphoned taxpayer millions have haunted the state’s Child Care Assistance Program (CCAP). Today, those whispers have turned into a full-blown federal freeze.
Turning Off the Money Spigot
“We have turned off the money spigot, and we are finding the fraud,” declared Deputy HHS Secretary Jim O’Neill in a statement that underscored the administration’s aggressive new stance. The action targets the roughly $185 million in annual federal child care funding that Minnesota receives.
The catalyst for this sudden move? A series of explosive allegations suggesting that millions—potentially billions—of taxpayer dollars have been funneled into fraudulent daycares over the past decade. The administration points specifically to a massive web of “shell” child care centers, many of which are allegedly connected to a localized fraud ring that exploited pandemic-era loopholes and long-standing oversight failures.
The “Nick Shirley” Investigation: The Video That Sparked the Fire
While federal investigators have been eyeing Minnesota since the $250 million “Feeding Our Future” scandal, the immediate trigger for this week’s action was a viral investigative report by independent journalist and YouTuber Nick Shirley.
In his video—which has garnered over 130 million views—Shirley visited several locations in Minneapolis listed as active, million-dollar child care centers. What he found was jarring: locked doors, darkened windows, and “learning centers” with misspelled signs (one famously spelled “Learing”). Residents interviewed on camera claimed they hadn’t seen a child enter those buildings in years, despite state records showing they were supposedly serving hundreds of children daily.
HHS officials confirmed they have identified the specific centers featured in Shirley’s work and are using the footage as a roadmap for their “massive investigation.”
The Three-Pronged Federal Penalty
The freeze is not just a pause; it is a systemic overhaul of how federal money enters the state. HHS has activated three severe “penalty actions” designed to dismantle the fraud infrastructure:
- “Defend the Spend” Activation: Starting today, all Administration for Children and Families (ACF) payments—not just in Minnesota, but across the nation—are under a strict new protocol. No money will be sent to a state without justification, a receipt, or photo evidence proving the funds are going to legitimate, active providers.
- The Walz Audit Demand: HHS has demanded that Governor Tim Walz submit a comprehensive audit of every center flagged in recent investigations. This audit must include attendance records, licensing history, complaint logs, and detailed inspection reports. The message is clear: if the state won’t police its own, the feds will.
- A National Fraud Hotline: A dedicated reporting hub has been launched at childcare.gov. HHS is bypassing state bureaucracy and appealing directly to parents, providers, and whistleblowers to report suspicious activity.
The Political Fallout: A “Long Game” or Long Overdue?
The reaction from St. Paul was swift and defensive. Governor Tim Walz has pushed back, calling the freeze a “reckless decision” that could force a collapse of the child care system for thousands of low-income families. Walz argued that the state has been cracking down on fraud for years and accused the Trump administration of “politicizing” the issue to defund social programs.
“This is Trump’s long game,” Walz stated. “He is using a social media video to punish Minnesotans who rely on these essential services.”
However, critics point out that the sheer scale of the alleged fraud—estimated by some federal prosecutors to potentially reach $9 billion across various Minnesota Medicaid and child care programs—suggests that “business as usual” was no longer an option. For the “America First” movement, the freeze is a necessary “surgical strike” to protect the American taxpayer.
The End of the “Money Laundering” Era?
As federal agents from Homeland Security and the FBI surge into the Twin Cities, the question remains: is this the end of the Minnesota “money laundering” machine? The crackdown is being viewed as a template for other blue states, with White House officials hinting that California and New York could be next on the list for “Defend the Spend” audits.
For the parents in Minnesota who legitimately rely on these subsidies, the coming weeks will be filled with uncertainty. But for the taxpayer, the message from RFK Jr. and the HHS is one of accountability: the “spigot” is off, and the search for the truth has only just begun.
