UPDATE: All child care payments in Minnesota have been frozen as authorities investigate a significant daycare fraud scandal. The U.S. Department of Health and Human Services (HHS) announced this drastic measure on December 31, 2025, amid allegations of millions in taxpayer funds being funneled to fraudulent daycare centers.
Deputy Secretary Jim O’Neill declared, “We have turned off the money spigot and we are finding the fraud.” This urgent crackdown follows shocking revelations from independent journalist Nick Shirley, who exposed a seemingly empty daycare facility in Minneapolis, which has reportedly received $4 million in federal funding.
The HHS has mandated that Governor Tim Walz conduct audits on the daycare centers implicated in this scandal. O’Neill emphasized the establishment of a ‘spend defend system’ that requires proof of legitimacy before any future funds are allocated across the nation.
Footage released by Shirley, which has garnered over 65 million views in just two days, shows the Quality Learning Center with a misspelled sign, leading many to question how such a facility could receive substantial federal support without scrutiny. Nearby residents expressed disbelief, claiming they had never seen children at the center, raising concerns over potential misconduct.
Politicians are now demanding accountability from Walz’s administration. Gubernatorial candidate Lisa Demuth stated, “Fraud is easy to find – if you’re willing to look for it.” Fellow politician Tom Emmer criticized the administration on social media, pointing to the glaring issues in oversight that allowed such fraud to persist.
In response to the growing outrage, officials have set up a hotline for fraud reporting, inviting parents, providers, and the public to come forward with any information. O’Neill stated, “We want to hear from you.”
Adding to the controversy, the facility’s owner’s son, Ibrahim Ali, defended the business against accusations, stating that it had not yet opened when Shirley filmed and blamed a graphic designer for the misspelled sign. He claimed the operation hours are from 2 PM to 10 PM, Monday to Thursday.
As this story develops, the focus remains on the ramifications for Governor Walz and the integrity of Minnesota’s child care funding system. The urgency of this investigation highlights a critical need for transparency and accountability in the distribution of taxpayer dollars.
Stay tuned as we continue to follow this breaking story.
