Key points: A viral 43-minute video alleging fraud at Somali-run Minnesota daycares triggered federal investigations and an HHS freeze on roughly $185 million in annual child care payments. State inspectors reported the centers in the video were operating normally during on-site checks, but further reviews continue and Minnesota must submit detailed CCDF records by January 9. Federal involvement (HHS, DHS/HSI/ICE, FBI) and scheduled congressional hearings have heightened scrutiny while families and providers face uncertainty and harassment concerns for the Somali community.
Minnesota Daycare Fraud Claims: Viral Video Sparks Federal Freeze, State Visits Find Centers Operating Normally
Children read at ABC Learning Center Inc. in Minneapolis on December 30. - Renee Jones Schneider/The Minnesota Star Tribune/Getty Images
A viral 43-minute video alleging that Somali-run child care centers in Minnesota were diverting federal funds prompted a swift federal response — including a freeze on state child care payments — even as state inspectors reported that the centers named in the clip were operating normally when visited.
Nick Shirley speaks outside of Quality Learning Center in Minneapolis on December 30. - CNN
What Happened
The video, posted to YouTube the day after Christmas by a 23-year-old conservative content creator and amplified by high-profile figures online, drew millions of views. In the days that followed, federal agencies increased their presence in Minnesota and the Department of Health and Human Services (HHS) announced on December 30 that it was freezing all child care payments to the state.
People enter Quality Learning Center in Minneapolis on December 30. - CNN
Federal Freeze And Documentation Demand
HHS Deputy Secretary Jim O'Neill said the state typically draws about $185 million a year in federal child care funds that support roughly 19,000 children. HHS demanded a "comprehensive audit" and specific documentation from Minnesota by January 9, including total Child Care and Development Fund (CCDF) payments for five named centers and administrative records (such as names and Social Security numbers) for recipients of federal assistance. Federal officials said more guidance would be provided to the state on January 5.
Minnesota Gov. Tim Walz listens during a hearing with the House Oversight and Accountability Committee at the US Capitol on June 12, in Washington, DC. - Anna Moneymaker/Getty Images
State Inspections And Ongoing Reviews
Investigators from the Minnesota Department of Children, Youth, and Families conducted on-site compliance checks at the centers featured in the video and reported that children were present at each site except one (which had not yet opened for the day). The department said investigators gathered evidence and initiated further review; four of the named centers are under active investigation. Statewide, officials reported 55 open investigations involving providers receiving Child Care Assistance Program (CCAP) funding.
Children watch television at ABC Learning Center in Minneapolis on December 31. - Mark Vancleave/AP
Federal Agencies Involved
Along with HHS, the Department of Homeland Security (DHS) — including Homeland Security Investigations and ICE — and the FBI have deployed resources to Minnesota. DHS described a large-scale probe of suspected fraud; the FBI said it had moved additional resources to the state. It remains unclear whether arrests have been made in connection with these most recent inquiries.
Impact On Families And The Somali Community
The funding freeze has left thousands of families and child care providers uncertain about access to care. Minnesota officials warned providers that unsatisfactory responses to federal requests could lead to continued withholding of CCDF funds and other penalties.
The episode has also produced harassment and safety concerns for Minnesota's Somali community. At least one Somali-run daycare not featured in the video was reportedly vandalized, and licensed centers have received threatening or harassing communications. Advocacy groups have called for investigations into possible bias and warned about the real-world consequences of inflammatory online rhetoric.
Political Fallout And Next Steps
Lawmakers and state leaders face heightened scrutiny. Minnesota representatives will testify before the House Oversight Committee on January 7, and Gov. Tim Walz and Attorney General Keith Ellison are scheduled to appear before a House investigative panel on February 10. The state must submit the requested records by January 9; federal officials will review the documentation before deciding whether funds can be restored.
Context
Concerns about child care fraud in Minnesota are not new: a 2014 Office of Inspector General report documented patterns of abuse, and the state has used unscheduled compliance checks for newly licensed centers. Prosecutors in earlier cases charged dozens of people — many of Somali descent — over alleged fraud involving a nonprofit during the COVID-19 pandemic. Officials and advocates emphasize the importance of thorough, evidence-based investigations and caution against harassment of providers and families.
Bottom line: Initial state visits found the centers named in the viral video operating normally, but federal agencies continue investigations and have frozen millions in child care funds while Minnesota compiles detailed documentation by the January 9 deadline.
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