MINNEAPOLIS — A viral video alleging widespread fraud at Somali-run child care centers in Minnesota has triggered a federal funding freeze and multiple investigations, but state officials say the centers featured in the footage are operating normally. The 43-minute YouTube video, posted on December 26 by 23-year-old conservative content creator Nick Shirley, claimed without substantial evidence that these centers were exploiting federal funds intended for low-income families. Boosted by high-profile figures including Vice President JD Vance and Elon Musk, the video amassed millions of views, leading to swift repercussions including heightened scrutiny from federal agencies.
The fallout was immediate. On December 30, the U.S. Department of Health and Human Services (HHS) announced it was freezing all child care payments to Minnesota, a move that affects approximately $185 million in annual federal funding supporting care for about 19,000 children. HHS Deputy Secretary Jim O’Neill stated, “Funds will be released only when states prove they are being spent legitimately,” and demanded a “comprehensive audit” of the centers highlighted in the video from Minnesota Governor Tim Walz.
State investigators from the Minnesota Department of Children, Youth, and Families conducted on-site compliance checks at all the centers shown in Shirley's video. According to a department news release, “Children were present at all sites except for one – that site was not yet open for families for the day when inspectors arrived.” The release added that investigators “gathered evidence and initiated further review,” with ongoing probes into four of the centers. Across the state, the department reports 55 open investigations involving providers receiving Child Care Assistance Program (CCAP) funding.
Despite these initial findings casting doubt on the video's fraud claims, the federal response remains firm. HHS Deputy Assistant Secretary for Media Relations Andrew Nixon told CNN, “The onus is on the state to provide additional verification, and until they do so, HHS will not allow the state to draw down their matching funds for the CCDF program.” Minnesota officials have until January 9 to submit detailed information to the Trump administration, including payment amounts for five specific centers and administrative data such as names and Social Security numbers for all federal fund recipients, per a bulletin sent to providers on Friday.
The funding freeze has left thousands of Minnesota families in uncertainty. Rep. Carlie Kotyza-Witthuhn, co-chair of the Children and Families Committee, said over the weekend, “We have thousands of families wondering if they’re going to be able to get the care that their kids need, if they’re going to be able to go to work next week.” Child care providers, many operating as small businesses, face similar woes, with the bulletin noting that if responses are deemed unsatisfactory, the federal government “may withhold CCDF and impose other penalties.” Additional guidance is expected from HHS on January 5.
This crisis unfolds against a backdrop of long-standing concerns about child care fraud in Minnesota. A 2014 report from the Office of Inspector General identified “a pattern of child care fraud activities that involves deception and exploitation.” In response, the state launched the “Early and Often” program several years ago, featuring multiple unscheduled visits to newly licensed centers. Under Governor Walz, efforts have intensified: the administration has referred cases to law enforcement, shut down high-risk programs, hired new auditors, and appointed former FBI agent and Judge Tim O’Malley as Director of Program Integrity.
Federal agencies beyond HHS are deeply involved. The Department of Homeland Security (DHS) has deployed Homeland Security Investigations and ICE officers to Minnesota, posting videos of agents at potential fraud sites. Assistant Secretary Tricia McLaughlin stated, “Right now in Minneapolis, Homeland Security Investigations are on the ground conducting a large scale investigation on fraudulent daycare and healthcare centers, as well as other rampant fraud.” This follows a December ICE operation targeting Somalis in the Twin Cities, though no arrests related to the latest crackdown have been confirmed.
The FBI has also ramped up its presence. Director Kash Patel noted that the bureau sent additional resources to Minnesota “before the public conversation escalated online,” posting on X, “Fraud that steals from taxpayers and robs vulnerable children will remain a top FBI priority in Minnesota and nationwide.” Neither DHS nor the FBI has commented on how the state's early findings might impact their probes.
Shirley's video specifically targeted centers run by Somalis, a community of about 108,000 in Minnesota, the vast majority U.S. citizens. He did not identify most owners by name. The allegations echo years of criticism from President Trump and Republicans toward the Somali population. In a prior scandal under Walz, dozens—mostly of Somali descent—were charged with fraud involving a nonprofit that falsely claimed to provide meals to children during the COVID-19 pandemic.
The scope of potential fraud could be vast, according to First Assistant U.S. Attorney Joe Thompson, who said on December 18 that half or more of the roughly $18 billion in Medicaid funds supporting 14 Minnesota programs since 2018 may have been stolen. Walz has contested this, stating at a December 19 news conference, “You should be equally outraged about one dollar or whatever that number is, but they’re using that number without the proof behind it.” He added, “I am accountable for this, and more importantly, I am the one that will fix it.”
Political pressure is mounting. Republican lawmakers have called for Walz's resignation amid the allegations, according to WCCO. In a statement, Rep. James Comer said, “Minnesota Governor Tim Walz and Attorney General Keith Ellison have either been asleep at the wheel or complicit in a massive fraud involving taxpayer dollars in Minnesota’s social services programs.” Walz pushed back on X last week, saying, “We’ve spent years cracking down on fraud - referring cases to law enforcement, shutting down and auditing high-risk programs,” and linking to his December 12 commentary in The Minnesota Star Tribune.
Upcoming congressional hearings will intensify scrutiny. On January 7, three Minnesota House Republicans—Kristin Robbins, Walter Hudson, and Marion Rarick—will testify before the House Oversight Committee on “fraud and misuse of federal funds.” Walz and Attorney General Keith Ellison are scheduled for a February 10 investigative panel. Governor Walz is set to hold a press conference on Monday at 11 a.m. local time, though the topics remain undisclosed amid growing criticism.
The controversy has rippled through the Somali community and child care sector. At least one Somali-run day care not in the video was vandalized in the aftermath, prompting the Council on American-Islamic Relations to call for a bias investigation, citing “serious concerns about the real-world consequences of anti-Somali, anti-immigrant and anti-Muslim hate speech circulating online.” Providers have reported harassing calls and threats; the state department noted some centers received “harassing or threatening communications.”
Kassim Busuri, owner of a day care near Minneapolis, told CNN, “It’s just random calls, extra things that we don’t need to focus on. We need to focus on our children that we care for.” An influx of suspicious inquiries about enrollment and hours has disrupted operations, with calls often not from genuine parents.
The video's influence has extended beyond Minnesota. Similar content has emerged in states with large Somali populations, like Ohio, Washington, and Oregon, where self-styled investigators attempt to enter locked child care centers, interpreting security measures as evidence of fraud. Columbus Mayor Andrew Ginther's office stated, “Actions that disrupt licensed childcare operations or create fear in these spaces are inappropriate.” Washington Attorney General Nick Brown posted on X, “Showing up on someone’s porch, threatening, or harassing them isn’t an investigation. Neither is filming minors who may be in the home. This is unsafe and potentially dangerous behavior.” As the January 9 deadline approaches, the fate of child care funding—and the broader debate over fraud allegations—remains unresolved, with families and providers awaiting clarity amid heightened tensions.