‘Turned Off The Money Spigot’: Trump Admin Freezes Childcare Funds To Minnesota Over Alleged Fraud

Last Updated:December 31, 2025, 07:16 IST

The Trump administration says the freeze follows fraud concerns, as Minnesota’s governor pushes back and says the move risks hurting families and children.

Trump officials say stricter oversight and audits will now govern childcare funding after fraud allegations in Minnesota. (IMAGE: REUTERS)

The administration of US President Donald Trump has announced that it is freezing federal childcare funds to the state of Minnesota, citing what it described as widespread fraud linked to publicly funded programmes.

The decision was announced on Tuesday by Jim O’Neill, Deputy Secretary of the US Department of Health and Human Services. In a post on social media platform X, O’Neill said the move was prompted by “blatant fraud that appears to be rampant in Minnesota and across the country."

Minnesota Governor Tim Walz pushed back strongly, accusing the Trump administration of using fraud allegations as a political tool. In his own post on X, Walz said fraud was a serious issue that his administration had been working to address for years, but argued that the funding freeze was part of a broader effort to defund social programmes.

“He’s politicising the issue to defund programs that help Minnesotans," Walz was quoted as saying by the Associated Press.

O’Neill said the decision followed claims made by a right-wing influencer who alleged that daycare centres operated by Somali residents in Minneapolis had committed fraud worth up to $100 million. While the claims have not been independently verified, O’Neill said he had asked the Minnesota government to submit a detailed audit of the centres, including attendance records, licences, complaints, inspections and investigation reports, according to a report by the Associated Press.

“We have turned off the money spigot and we are finding the fraud," O’Neill said.

Probe Targets Unidentified Businesses

The announcement came a day after officials from the US Department of Homeland Security visited Minneapolis as part of an ongoing fraud investigation. Officials reportedly went to several unidentified businesses and questioned workers.

Minnesota has faced scrutiny over fraud in public programmes in recent years. Investigations intensified after the exposure of a $300 million scam involving the non-profit organisation Feeding Our Future. Federal prosecutors said the group was at the centre of the largest COVID-19-related fraud case in the US, with defendants exploiting a federally funded programme meant to provide food for children. Fifty-seven defendants in Minnesota have been convicted so far.

$18 billion in federal funds stolen

Earlier this month, a federal prosecutor alleged that half or more of the roughly $18 billion in federal funds that supported 14 Minnesota programmes since 2018 may have been stolen. Prosecutors said many of the defendants in these cases are Somali Americans.

O’Neill, who is also serving as acting director of the US Centers for Disease Control and Prevention, said the administration is tightening oversight nationwide. He said future payments through the Administration for Children and Families, an agency under Health and Human Services, will require justification along with receipts or photographic evidence before funds are released. A fraud reporting hotline and email address have also been launched.

According to Assistant Secretary Alex Adams, the Administration for Children and Families provides about $185 million in childcare funding to Minnesota each year.

Money Stolen From Children

“That money should be helping 19,000 American children, including toddlers and infants," Adams said in a video posted online. “Any dollar stolen by fraudsters is stolen from those children."

Adams said he spoke with the director of Minnesota’s childcare services office earlier this week, but was told that officials could not say with confidence whether the alleged fraud was isolated or spread across the state.

Walz said his administration would continue cooperating with federal authorities and reiterated that fraud would not be tolerated. He said an audit expected by late January should provide a clearer picture of the scale of the problem, and that the state is taking steps to prevent further misuse of funds.

Democratic US Representative Ilhan Omar, one of the most prominent Somali American lawmakers in Congress, urged caution in public discourse, warning against blaming an entire community for the actions of a small number of individuals.

News world ‘Turned Off The Money Spigot’: Trump Admin Freezes Childcare Funds To Minnesota Over Alleged Fraud

Read More