Trump admin freezes child care funds to Minnesota, demands audit after series of fraud schemes

US President Donald Trump administration announced on Tuesday that it would suspend child care funding to Minnesota while calling for an audit into alleged fraud involving government assistance programs, AP reported.

Deputy Secretary of Health and Human Services Jim O’Neill said on the social platform X that the move is in response to “blatant fraud that appears to be rampant in Minnesota and across the country.”

Minnesota Gov. Tim Walz pushed back on X, saying fraudsters are a serious issue that the state has spent years cracking down on but that this move is part of “Trump’s long game.”

“He’s politicizing the issue to defund programs that help Minnesotans,” Walz said.

O'Neill referenced a right-wing influencer who posted a video Friday claiming he found that day care centers operated by Somali residents in Minneapolis had committed up to $100 million in fraud. O’Neill said he has demanded Walz submit an audit of these centers that includes attendance records, licenses, complaints, investigations and inspections.

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

The announcement followed a day after U.S. Homeland Security officials visited Minneapolis to conduct a fraud investigation, during which they approached undisclosed businesses and questioned employees.

The move comes amid long-running investigations, including a $300 million pandemic-era food fraud case linked to the nonprofit Feeding Our Future. In that case, 57 defendants in Minnesota have been convicted after prosecutors said the organisation played a central role in the nation's largest COVID-19-related fraud scheme, exploiting a state-administered, federally funded program intended to provide meals for children.

A federal prosecutor alleged earlier this month that half or more of the roughly $18 billion in federal funds that supported 14 programs in Minnesota since 2018 may have been stolen. Most of the defendants in the child nutrition, housing services and autism program schemes are Somali Americans, according to the U.S. Attorney's Office for Minnesota.

O’Neill, who is serving as acting director of the Centers for Disease Control and Prevention, also said in the social media post Tuesday that payments across the U.S. through the Administration for Children and Families, an agency within the U.S. Health and Human Services Department, will now require “justification and a receipt or photo evidence” before money is sent. They have also launched a fraud-reporting hotline and email address.

The Administration for Children and Families provides $185 million in child care funds annually to Minnesota, according to Assistant Secretary Alex Adams.

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

Adams said he spoke Monday with the director of Minnesota's child care services office and she wasn't able to say "with confidence whether those allegations of fraud are isolated or whether there’s fraud stretching statewide.”

Trump has criticized Walz’s administration over the fraud cases, capitalising on them to target the Somalia diaspora in the state, which has the largest Somali population in the U.S, AP reported.

Walz, the 2024 Democratic vice presidential nominee, has said an audit due by late January should give a better picture of the extent of the fraud. He said his administration is taking aggressive action to prevent additional fraud. He has long defended how his administration responded.

Minnesota’s most prominent Somali American, Democratic U.S. Rep. Ilhan Omar, has urged people not to blame an entire community for the actions of a relative few.

(With inputs from AP)