Minnesota officials probe child care centers over alleged fraud

Minnesota child care centers at the heart of widespread fraud allegations fueled by a viral video were operating as expected when visited by investigators, the state Department of Children, Youth, and Families said in a news release Friday.

“Children were present at all sites except for one – that site, was not yet open for families for the day when inspectors arrived,” the agency said.

The agency gathered evidence and initiated further review, noting the investigation into four centers was ongoing, the report stated.

The report comes days after YouTube content creator Nick Shirley, who has created anti-immigrant and anti-Muslim videos in the past, posted a viral video in which he claimed to find widespread fraud at Somali-run child care centers.

The video, which includes limited evidence for the creator’s allegations, has received 3 million views on YouTube as of Friday and gained traction after being reposted by Vice President JD Vance and former Department of Government Efficiency leader Elon Musk.

The conservative activist’s 42-minute video posted the day after Christmas quickly spread, prompting stepped up immigration enforcement, frozen federal funds and more biting rhetoric against the Somali community from President Donald Trump.

The state Department of Children, Youth, and Families on Friday warned distribution of “unvetted or deceptive claims and misuse of tip lines can interfere with investigations, create safety risks for families, providers, and employers, and has contributed to harmful discourse about Minnesota’s immigrant communities.”

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“DCYF remains committed to fact-based reviews that stop fraud, protect children, support families, and minimize disruption to communities that rely on these essential services,” the report said.

After the video’s release, Health and Human Services froze all child care payments to the state for review, as the FBI and Department of Homeland Security investigate allegations of fraud. CNN on Friday reached out to the FBI and DHS for comment on the preliminary state findings.

HHS, through a spokesperson, did not respond directly to the state findings Friday and reiterated its call for a more robust verification process to prevent fraud. “The onus is on the state to provide additional verification,” said Andrew Nixon, HHS deputy assistant secretary for media relations.

The Trump administration has given Minnesota officials until next Friday to provide verifying information about providers and parents who receive federal funds for child care, according to an email sent Friday by DCYF to child care providers shared with The Associated Press. CNN has reached out to HHS and state officials for clarification.

In addition to demanding a state audit of the Minnesota day care centers featured in the video, Health and Human Services secretary Jim O’Neill said the agency would now require justification and receipts or photo evidence for all payments to states from the department’s Administration of Children and Families.

At issue in allegations made in the controversial video were funds from the Child Care Assistance Program – known as CCAP – for 2025.

The report listed the amount of CCAP funding the centers in the video received in fiscal 2025, ranging from $470,000 to $3.6 million, and totaling over $17 million.

One center mentioned in the video has been closed since 2022, the report said.

CCAP does not take applications directly from day care centers. Instead, qualified working parents and other eligible caregivers who make less than the program’s income limit apply directly to the state for assistance, which is paid to the day care center.

The accusations leveled in the video were the most recent in a series of fraud scandals involving state social service programs that provided meals for needy children during the pandemic, Medicaid housing assistance and other safety nets which benefit needy families.

The scandals go back nearly a decade and include allegations of fraud in the Somali community focused on Feeding Our Future, a nonprofit prosecutors said falsely claimed to provide meals to needy children during the Covid-19 pandemic. Federal charges were brought against dozens of people — most of them Somali — beginning in 2022.