The Donald Trump administration has frozen federal funding for childcare programs in Minnesota following allegations of daycare fraud.
According to a statement dated Wednesday, December 31, 2025, Jim O’Neill, the deputy secretary of health and human services, said the freeze was a result of rampant fraud that appeared to be widespread in Minnesota and across the country.
“We have frozen all childcare 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,” said Jim O’Neill.
Several actions have been taken, including activating Americans defend the spending system for all ACF payments and launching a dedicated fraud-reporting hotline and email address.
Past Fraud Cases in Minnesota
Minnesota has been under the spotlight for years for Medicaid fraud, including a massive $300 million pandemic fraud case involving the nonprofit Feeding Our Future. Prosecutors said it was the country’s largest COVID-19-related fraud scam and that defendants exploited a state-run, federally funded program intended to provide food for children.
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In 2022, during President Joe Biden’s administration, 47 people were charged. The number of defendants has since grown to 78 throughout the ongoing investigation. So far, 57 people have been convicted, either by pleading guilty or by losing at trial.
However, a federal prosecutor alleged earlier in December that half or more of the roughly $18 billion in federal funds that supported 14 programs in Minnesota since 2018 may have been stolen.
New Conditions to End Fraud Cases in the U.S.
O’Neill highlighted that nationwide payments through the Administration for Children and Families, an agency within the health department, will now require justification and a receipt or photo evidence before money is sent.
“I have activated our defend the spend system for all ACF payments. Starting today, all ACF payments across America will require a justification and a receipt or photo evidence before we send money to a state,” said O’Neill.
In addition, he noted that the department launched a fraud reporting hotline and email address.
“We have launched a dedicated fraud-reporting hotline and email address at https://childcare.gov. Whether you are a parent, provider, or member of the general public, we want to hear from you. We have turned off the money spigot, and we are finding fraud,” read part of the statement.
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Also, O’Neill said he has demanded that Minnesota’s governor, Tim Walz, submit an audit of daycare centers that includes attendance records, licenses, complaints, investigations, and inspections.
“I have demanded from Governor Walz a comprehensive audit of these centers. This includes attendance records, licenses, complaints, investigations, and inspections,”read part of the statement.
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