\n The impact was swift: DHS and the FBI ramped up their presence in the state, and federal funding for child care in the entire state was frozen. Then, on Monday, Gov. Tim Walz announced<\/a> he is dropping his reelection campaign as the controversy continues.\n <\/p>\n \n Walz made his announcement<\/a> a little more than a week after the video erupted on social media, sparking calls for him to resign. He defended himself against allegations he had overlooked fraud and criticized the politicization of the scandal, saying President Donald Trump and his allies \u201cwant to make our state a colder, meaner place.\u201d\n <\/p>\n \n Investigators last week visited all of the child care centers accused of fraud in the video, and all were operating as expected, state officials say.\n <\/p>\n \n The state\u2019s initial findings cast doubt on the claims of fraud articulated in the viral video. Still, investigations into alleged wrongdoing are ongoing.\n <\/p>\n \n Minnesota officials have until Friday to provide the Trump administration with information about providers and parents who receive federal funds for child care, according to a bulletin sent Friday by the state Department of Children, Youth, and Families to child care providers and shared with CNN.\n <\/p>\n \n The Trump administration\u2019s demands are the latest step in a yearslong saga that started with investigations into theft of government funds<\/a> in Minnesota under the Biden administration.\n <\/p>\n \n Here\u2019s what we know about the investigations and what comes next as crucial funding for child care hangs in the balance for thousands of Minnesota families.\n <\/p>\n \n In his Monday statement announcing the end of his reelection campaign, Walz acknowledged the controversy over fraud contributed to his decision. But he defended his record and said Republicans \u201care playing politics with the future of our state.\u201d\n <\/p>\n \n \u201cFor the last several years, an organized group of criminals have sought to take advantage of our state\u2019s generosity,\u201d Walz said. \u201cAnd even as we make progress in the fight against the fraudsters, we now see an organized group of political actors seeking to take advantage of the crisis.\u201d\n <\/p>\n \n He said he continued to believe he would have won if he stayed in his campaign.\n <\/p>\n \n \u201cBut as I reflected on this moment with my family and my team over the holidays, I came to the conclusion that I can\u2019t give a political campaign my all,\u201d he said. \u201cEvery minute I spend defending my own political interests would be a minute I can\u2019t spend defending the people of Minnesota against the criminals who prey on our generosity and the cynics who prey on our differences.\u201d\n <\/p>\n \n On December 30, Department of Health and Human Services Deputy Secretary Jim O\u2019Neill announced the agency was freezing all child care payments<\/a> to Minnesota. The state typically receives about $185 million<\/a> annually in federal child care funding, supporting care for 19,000 children.\n <\/p>\n \n \u201cFunds will be released only when states prove they are being spent legitimately,\u201d he added. He said he had demanded Walz provide a \u201ccomprehensive audit\u201d of the centers featured in the video.\n <\/p>\n \n The proof must be shared with the government by Friday, according to the email sent by state officials to child care providers. The email said HHS has requested specific details, including the total amount of Child Care and Development Fund<\/a> payments received by five child care centers and administrative data \u2013 like names and social security numbers \u2013 for all recipients of federal money. The fund is the main source of federal support for child care and includes the state Child Care Assistance Program<\/a>, which Nick Shirley<\/a>, the creator of the viral video, alleged was being exploited in Minnesota.\n <\/p>\n \n An HHS spokesperson confirmed the Friday deadline to CNN.\n <\/p>\n \n Investigators with the Minnesota Department of Children, Youth, and Families conducted \u201con-site compliance checks\u201d at all the centers shown in the video, the department said in a news release. \u201cChildren were present at all sites except for one \u2013 that site, was not yet open for families for the day when inspectors arrived,\u201d the release stated. Investigators \u201cgathered evidence and initiated further review,\u201d according to the release.\n <\/p>\n \n The department has ongoing investigations into four of the centers mentioned in the video. In total across the state, the department \u201chas 55 open investigations involving providers receiving CCAP funding,\u201d according to the release.\n <\/p>\n \n Asked whether the state\u2019s early findings would affect the funding freeze, HHS Deputy Assistant Secretary for Media Relations Andrew Nixon told CNN, \u201cThe onus is on the state to provide additional verification, and until they do so, HHS will not allow the state to draw down their matching funds for the CCDF program.\u201d\n <\/p>\n \n In the meantime, thousands of Minnesota families who rely on federal funding for child care are in limbo<\/a>. It is unclear how quickly funding could be restored if the state meets the Friday deadline, although the bulletin sent to child care providers says the government will provide the state more information Monday.\n <\/p>\n \n And if Minnesota\u2019s responses are not \u201csatisfactory,\u201d the federal government \u201csays it may withhold CCDF and impose other penalties,\u201d according to the email sent to child care providers.\n <\/p>\n \n The Minnesota Department of Children, Youth, and Families announced Monday it was increasing \u201con-site compliance checks\u201d for centers receiving government funding, \u201cas part of an ongoing commitment to oversight.\u201d\n <\/p>\n \n Child care fraud has been on state authorities\u2019 radar for more than a decade before the viral video. A 2014 report<\/a> from the Office of Inspector General identified \u201ca pattern of child care fraud activities that involves deception and exploitation.\u201d A few years ago, the state implemented the \u201cEarly and Often\u201d program, which involves multiple unscheduled visits to newly licensed centers to ensure they are operating properly.\n <\/p>\n DHS and FBI also investigating Minnesota fraud<\/p>\n \n Along with HHS, DHS has dispatched Homeland Security Investigations and ICE officers to the state, posting videos of agents visiting what they call potential fraud sites.\n <\/p>\n \n DHS did not directly address CNN\u2019s questions about how the state\u2019s findings that the centers in the viral video were operating normally would affect its investigations, but sent CNN statements from several officials.\n <\/p>\n \n \u201cRight now in Minneapolis, Homeland Security Investigations are on the ground conducting a large scale investigation on fraudulent daycare and healthcare centers, as well as other rampant fraud,\u201d read a statement from Assistant Secretary Tricia McLaughlin.\n <\/p>\n \n It is unclear whether any arrests have been made for fraud or other crimes in DHS\u2019 latest crackdown, which comes after an ICE operation targeting Somalis in the Twin Cities<\/a> was announced in December. CNN has asked DHS for more information.\n <\/p>\n \n It is notable DHS \u2014 the overarching federal department handling immigration and national security \u2014 is central to the investigations. Shirley claimed in the viral video child care centers run by Somalis in Minnesota were committing fraud but did not provide the identities of the owners of most of the centers. The vast majority of the state\u2019s Somali population, which numbers around 108,000<\/a> in total, are US citizens.\n <\/p>\n \n FBI Director Kash Patel also said<\/a> the bureau had already sent additional resources to Minnesota even \u201cbefore the public conversation escalated online.\u201d Patel pledged to stamp out fraud, saying in a post on X, \u201cFraud that steals from taxpayers and robs vulnerable children will remain a top FBI priority in Minnesota and nationwide.\u201d\n <\/p>\n \n CNN has reached out to the FBI for information about whether the state\u2019s initial findings have affected its investigations or whether any arrests have been made.\n <\/p>\n \n Just ahead of the Friday deadline, Minnesota lawmakers will testify before the Republican-led US House Oversight Committee. The Wednesday hearing<\/a> will be centered on \u201cfraud and misuse of federal funds\u201d and feature testimony from three members of the Minnesota House of Representatives: Kristin Robbins, Walter Hudson and Marion Rarick.\n <\/p>\n \n In a separate hearing February 10, Walz and Minnesota Attorney General Keith Ellison are called to appear before the committee\u2019s investigative panel. Walz is still expected to appear after announcing he will drop his reelection bid.\n <\/p>\n \n \u201cMinnesota Governor Tim Walz and Attorney General Keith Ellison have either been asleep at the wheel or complicit in a massive fraud involving taxpayer dollars in Minnesota\u2019s social services programs,\u201d US Rep. James Comer, a Republican, said in a Wednesday statement <\/a>about the upcoming hearings.\n <\/p>\n \n Walz, in a statement on X<\/a> last week, pushed back on the allegation that the state wasn\u2019t taking fraud seriously, saying, \u201cWe\u2019ve spent years cracking down on fraud – referring cases to law enforcement, shutting down and auditing high-risk programs,\u201d linking to his December 12 commentary in The Minnesota Star Tribune<\/a>.\n <\/p>\n \n In the commentary, he laid out some of the steps that had been taken to combat fraud such as the replacement of key leaders, hiring of new auditors and investigators, bringing in an outside firm to audit payments to high-risk programs and the recent appointment of Judge Tim O\u2019Malley<\/a> \u2013 a former FBI agent and superintendent of the Minnesota Bureau of Criminal Apprehension \u2013 as the director of program integrity tasked with strengthening fraud prevention across the state.\n <\/p>\n \n The Walz administration\u2019s response to the day care controversy initially resulted in more confusion, as the governor\u2019s office and the Department of Children, Families, Youth, And Children both said last Monday one of the businesses shown in Shirley\u2019s video \u2013 Quality Learning Center \u2013 had already voluntarily closed its doors.\n <\/p>\n \n But children were seen arriving at the business that same afternoon. The agency later told the Star Tribune<\/a> it had only just learned that the owners had reversed themselves and decided to stay open.\n <\/p>\n \n CNN has been unable to reach Quality Learning Center or its owner through their listed numbers, and a CNN reporter was told to leave the property last week when attempting to make contact.\n <\/p>\n \n Dozens of people, the vast majority of Somali descent, were charged in a previous fraud scandal<\/a> under Walz\u2019s tenure involving a nonprofit prosecutors say falsely claimed to be providing meals to needy children during the Covid-19 pandemic.\n <\/p>\n Somali community and child care providers under pressure<\/p>\n \n The viral video and cascade of investigations have presented turmoil for the Somali community \u2013 already the target of years of vitriol from the president and from Republicans \u2013 and for child care providers.\n <\/p>\n \n At least one Somali-run day care, which was not featured in Shirley\u2019s video, was broken into and vandalized in the aftermath, according to the Minnesota Star Tribune<\/a>. The Council on American-Islamic Relations called for an investigation of possible bias in the incident, which they said \u201craises serious concerns about the real-world consequences of anti-Somali, anti-immigrant and anti-Muslim hate speech circulating online.\u201d\n <\/p>\n \n Some licensed child care centers have received \u201charassing or threatening communications\u201d since the scandal, the Minnesota Department of Children, Youth, and Families said in its bulletin to providers.\n <\/p>\n \n Several day care providers told CNN<\/a> they have faced an influx of calls asking about enrollment, hours of operation, and availability which do not seem to be coming from genuinely interested parents and distract from their work.\n <\/p>\n \n \u201cIt\u2019s just random calls, extra things that we don\u2019t need to focus on,\u201d said Kassim Busuri, who owns a day care near Minneapolis. \u201cWe need to focus on our children that we care for.\u201d\n <\/p>\n \n And the ongoing funding freeze poses uncertainty for child care providers and the families they serve.\n <\/p>\n \n \u201cWe have thousands of families wondering if they\u2019re going to be able to be able to get the care that their kids need, if they\u2019re going to be able to go to work next week,\u201d state Rep. Carlie Kotyza-Witthuhn, co-chair of the Children and Families Finance and Policy Committee, told CNN over the weekend.\n <\/p>\n \n \u201cWe have child care providers and small business owners who rely on the work of those parents, not knowing if they\u2019ll be able to keep their doors open, depending on how this freeze proceeds.\u201d\n <\/p>\n Scrutiny spreads to Washington and Ohio<\/p>\n \n The explosive impact of Shirley\u2019s video seems to have inspired self-styled investigators in other states with significant Somali populations, too.\n <\/p>\n \n Videos have popped up showing other content creators trying, like Shirley, to enter child care centers \u2013 and using their locked doors as evidence they are committing fraud. It is not unusual for child care centers to lock their doors and to deny entry to unexpected visitors, especially if they are filming.\n <\/p>\n \n The mayor of Columbus, Ohio, said in a statement he was aware of the videos and the state has strong safeguards to prevent theft of government child care funds.\n <\/p>\n \n \u201cActions that disrupt licensed childcare operations or create fear in these spaces are inappropriate,\u201d read a statement from Mayor Andrew Ginther\u2019s office.\n <\/p>\n![\"Nick](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/01\/still-22236987-2771379-438-still.jpg\")
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