HHS cuts off Minnesota child care payments over alleged daycare fraud scheme

HHS Deputy Secretary Jim O'Neill in a YouTube announcement. (HHSTV1 via YouTube)

The U.S. Department of Health and Human Services will freeze all child care payments to Minnesota, the agency said Tuesday, amid the scrutiny surrounding alleged fraud involving child daycare centers across the state.

"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," HHS Deputy Secretary Jim O'Neill wrote on X. 

In a video message, O'Neill cited the viral video released last week by independent journalist Nick Shirley that highlighted alleged fraud involving Minnesota childcare and learning centers. 

'NO WAY' WALZ ADMINISTRATION WAS UNAWARE OF MINNESOTA FRAUD SCANDAL, EMMER SAYS

Quality Learning Center in Minnesota was found at the center of an alleged childcare fraud scandal in the state. (Fox News)

In the video, many of the facilities appeared non-operational despite allegedly receiving millions of dollars in government aid.

"We believe the state of Minnesota has allowed scammers and fake daycares to siphon millions of taxpayer dollars over the past decade," he said. 

In an effort to combat fraud, O'Neill said he ordered that all Administration for Children and Families payments made across the country require justification and receipt or photo evidence before money is sent to a particular state. 

Secondly, the agency is demanding that Minnesota Gov. Tim Walz hand over a comprehensive audit of these centers featured in Shirley's video, including attendance records, licenses, complaints, investigations and inspections.

FEDS LAUNCH 'MASSIVE' INVESTIGATION AFTER VIRAL VIDEO ALLEGES MINNESOTA DAYCARE FRAUD

HHS Deputy Secretary Jim O'Neill in a YouTube announcement. (HHSTV1 via YouTube)

In addition, HHS has launched a hotline to report fraud.

Alex Adams, the assistant secretary for HHS' Administration for Children and Families, said his office has provided Minnesota with $185 million in child funds annually. 

"That money should be helping 19,000 American children, including toddlers and infants. Any dollars stolen by fraudsters is stolen from those children," Adams said.

Adams said he spoke with the head of Minnesota Child Care Services office on Monday.

Independent journalist Nick Shirley's video about the daycares went viral.  (Fox News)

CLICK HERE TO DOWNLOAD THE FOX NEWS APP

"She could not tell me with confidence whether those allegations of fraud are isolated or whether there's fraud stretching statewide," he said. 

Louis Casiano is a reporter for Fox News Digital. Story tips can be sent to [email protected].