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The Trump administration said it is freezing child care funds to Minnesota and demanding audits of some day care centers after what federal officials described as fraud involving government programs in recent years. Deputy Health and Human Services Deputy Secretary Jim O’Neill said the action is aimed at addressing “blatant fraud that appears to be rampant in Minnesota and across the country,” adding that federal investigators have been looking at the situation.
Minnesota Gov. Tim Walz pushed back on the federal announcement, saying fraudsters are an ongoing concern the state has spent years cracking down on. Walz said the freeze is part of “Trump’s long game” and argued the administration is using the allegations to undermine programs that he said help Minnesota families.
O’Neill said the administration’s request for audits follows reports that a right-wing influencer posted a video claiming he found that day care centers operating in Minneapolis by Somali residents had committed up to $100 million in fraud. O’Neill said he demanded Walz submit an audit of those centers that includes attendance records, licenses, complaints, investigations and inspections.
O’Neill said the administration had “turned off the money spigot and we are finding the fraud,” describing the funding freeze as a way to identify and address alleged wrongdoing before payments proceed. He also said that an announcement comes after U.S. Homeland Security officials were in Minneapolis conducting a fraud investigation by visiting unidentified businesses and questioning workers.
The federal announcement drew on a broader backdrop of fraud investigations connected to other federal programs in Minnesota. The Associated Press report cited prior investigations that included a $300 million pandemic food fraud scheme revolving around the nonprofit Feeding Our Future, for which 57 Minnesota defendants have been convicted. It also noted that prosecutors said the organization was at the center of the country’s largest COVID-19-related fraud scheme, involving a state-run, federally funded program meant to provide food for children.
The report also said a federal prosecutor alleged earlier this month that half or more of about $18 billion in federal funds supporting 14 Minnesota programs since 2018 may have been stolen, and that most of the defendants in schemes involving child nutrition, housing services and autism program funding are Somali Americans, according to the U.S. Attorney’s Office for Minnesota.
O’Neill, who the report described as acting director of the Centers for Disease Control and Prevention, said the administration is also tightening payment requirements nationally through the Administration for Children and Families, a unit in the U.S. Department of Health and Human Services. He said payments across the country will now require “justification and a receipt or photo evidence” before money is sent, and that the administration has launched a fraud-reporting hotline and email address.
The Associated Press report said Assistant Secretary Alex Adams provided additional context about the scale of the funding at issue, saying the Administration for Children and Families provides $185 million in child care funds annually to Minnesota. Adams said that money should be helping 19,000 American children, including toddlers and infants, and argued that “Any dollar stolen by fraudsters is stolen from those children.” Adams also said he spoke Monday with the director of Minnesota’s child care services office and that she was unable to say “with confidence whether those allegations of fraud are isolated or whether there’s fraud stretching statewide.”
The dispute also became tied to wider political arguments. The report said Trump has criticized Walz’s administration over the fraud cases and used them to target the Somali diaspora in the state, which has the largest Somali population in the U.S. Walz, meanwhile, said an audit due by late January should better clarify the extent of the fraud and said his administration is taking aggressive action to prevent additional fraud. Minnesota’s prominent Somali American member of Congress, Democratic U.S. Rep. Ilhan Omar, urged people not to blame an entire community for actions by a relative few, according to the report.