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Federal officials halted child care payments to Minnesota, ordered audits and stricter documentation, and launched a fraud hotline following investigations into alleged misuse of billions in taxpayer-funded programmes.
New Delhi,UPDATED: Dec 31, 2025 06:46 IST
The Trump administration on Tuesday froze all federal child care payments to Minnesota, escalating a crackdown on alleged fraud that officials say has siphoned millions of taxpayer dollars from programs meant to support families.
The move was announced by Jim O’Neill, acting director of the Centers for Disease Control and Prevention, in a post on X. O’Neill said the freeze follows years of concerns that funds had been diverted to fraudulent day care operators.
“We have frozen all child care payments to the state of Minnesota,” O’Neill wrote. “We have turned off the money spigot and we are finding the fraud.”
We have frozen all child care payments to the state of Minnesota.
You have probably read the serious allegations that the state of Minnesota has funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade.
Today we have taken three actions pic.twitter.com/VYbyf3WGop
According to O’Neill, the US Department of Health and Human Services has ordered a comprehensive audit of child care centers across the state and activated a new “defend the spend” system for all payments handled by the Administration for Children and Families. Under the new rules, states must provide justification along with receipts or photo evidence before funds are released.
“Starting today, all ACF payments across America will require a justification and a receipt or photo evidence before we send money to a state,” O’Neill said.
He added that federal officials have demanded a full review of day care centers identified in investigative reporting, including attendance records, licenses, complaints, inspections and past investigations. A dedicated fraud-reporting hotline and email address have also been launched to encourage parents, providers and the public to flag suspected abuse.
The funding freeze comes after years of investigations into fraud in Minnesota, beginning with the $300 million Feeding Our Future case. Prosecutors have said the nonprofit was at the center of the largest COVID-19-related fraud scheme in the United States, exploiting a federally funded programme intended to provide meals for children. Fifty-seven defendants in Minnesota have been convicted in that case, according to the Associated Press.
Earlier this month, a federal prosecutor alleged that half or more of the roughly $18 billion in federal funds supporting 14 programmes in Minnesota since 2018 may have been stolen. Prosecutors noted that many of the defendants are Somali Americans.
Minnesota Governor Tim Walz, the 2024 Democratic vice-presidential nominee, said fraud would not be tolerated and pledged continued cooperation with federal authorities.
“We will continue to work with federal partners to ensure fraud is stopped and fraudsters are caught,” Walz said, adding that an audit due by late January should clarify the scope of the problem. He has maintained that his administration is taking aggressive steps to prevent further abuse.
Democratic Representative Ilhan Omar, Minnesota’s most prominent Somali American lawmaker, urged caution against targeting entire communities.
- Ends
Published By:
Aashish Vashistha
Published On:
Dec 31, 2025
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