President Donald Trump's administration announced on Tuesday that it is freezing child care funds to Minnesota and demanding an audit of fraud schemes involving government programs.
Deputy Secretary of Health and Human Services Jim O’Neill said on the social platform X that the move is in response to “blatant fraud that appears to be rampant in Minnesota and across the country.”
Minnesota Gov. Tim Walz pushed back on X, saying fraudsters are a serious issue that the state has spent years cracking down on but that this move is part of “Trump’s long game.”
“He’s politicizing the issue to defund programs that help Minnesotans,” Walz said.
O'Neill referenced a right-wing influencer who posted a video Friday claiming he found that day care centers operated by Somali residents in Minneapolis had committed up to $100 million in fraud. O’Neill said he has demanded Walz submit an audit of these centers that includes attendance records, licenses, complaints, investigations and inspections.
“We have turned off the money spigot and we are finding the fraud,” O’Neill said.
The announcement comes one day after U.S. Homeland Security officials were in Minneapolis conducting a fraud investigation by going to unidentified businesses and questioning workers.
There have been years of investigations that included a $300 million pandemic food fraud scheme revolving around the nonprofit Feeding Our Future, for which 57 defendants in Minnesota have been convicted. Prosecutors said the organization was at the center of the country’s largest COVID-19-related fraud scam, when defendants exploited a state-run, federally funded program meant to provide food for children.
A federal prosecutor alleged earlier this month that half or more of the roughly $18 billion in federal funds that supported 14 programs in Minnesota since 2018 may have been stolen. Most of the defendants in the child nutrition, housing services and autism program schemes are Somali Americans, according to the U.S. Attorney’s Office for Minnesota.
O’Neill, who is serving as acting director of the Centers for Disease Control and Prevention, also said in the social media post Tuesday that payments across the U.S. through the Administration for Children and Families, an agency within the U.S. Health and Human Services Department, will now require “justification and a receipt or photo evidence” before money is sent. They have also launched a fraud-reporting hotline and email address.
The Administration for Children and Families provides $185 million in child care funds annually to Minnesota, according to Assistant Secretary Alex Adams.
“That money should be helping 19,000 American children, including toddlers and infants," he said in a video posted on X. "Any dollar stolen by fraudsters is stolen from those children.”
Adams said he spoke Monday with the director of Minnesota's child care services office and she wasn't able to say "with confidence whether those allegations of fraud are isolated or whether there’s fraud stretching statewide.”
Trump has criticized Walz’s administration over the fraud cases, capitalizing on them to target the Somalia diaspora in the state, which has the largest Somali population in the U.S.
Walz, the 2024 Democratic vice presidential nominee, has said an audit due by late January should give a better picture of the extent of the fraud. He said his administration is taking aggressive action to prevent additional fraud. He has long defended how his administration responded.
Minnesota’s most prominent Somali American, Democratic U.S. Rep. Ilhan Omar, has urged people not to blame an entire community for the actions of a relative few.
FILE - Minnesota Gov. Tim Walz speaks during a House Committee on Oversight and Government Reform hearing, June 12, 2025, at the U.S. Capitol in Washington. (AP Photo/Julia Demaree Nikhinson, File)
FILE - State Sen. Michelle Benson reacts at a news conference on Wednesday, April 10, 2019 at the Minnesota State Capitol in St. Paul to a report by the state's legislative auditor on combatting fraud in Minnesota's Child Care Assistance Program. (AP Photo/Steve Karnowski,File)
