MINNEAPOLIS (NewsNation) — Federal agencies descended on Minnesota this week to investigate suspected fraud at child care centers and other facilities after a viral YouTube video claimed to uncover $110 million in fraudulent payments, intensifying scrutiny of the state’s oversight of public assistance programs.
The Department of Homeland Security, FBI, Immigration and Customs Enforcement and the Small Business Administration launched coordinated investigations following the video by YouTuber Nick Shirley, which showed licensed day care facilities that appeared empty or abandoned despite receiving millions in taxpayer funds.
“We are working hand-in-hand with partners like @SecScottBessent, @Sec_Noem, @SecretaryTurner, and @SecretaryLCD to continue unraveling this scheme – and we will continue charging and convicting those behind it. The people of Minnesota deserve better,” Attorney General Pam Bondi said in a post on X.
The investigations mark an escalation of federal involvement in Minnesota’s fraud crisis, which has already resulted in 86 indictments and over $1 billion in losses tied to the Feeding Our Future scandal, the largest known COVID-19 fraud case in the country.
Viral video shows empty daycares that received $110M in payments
Shirley’s 42-minute video, which has garnered over 40 million views, documented visits to multiple licensed child care facilities in Minnesota that appeared inactive or deserted.
Among the locations featured:
Quality Learning Center, which misspelled “learning” on its building sign, received $1.9 million in 2025 and $4 million total despite appearing abandoned. The center is licensed for 99 children.
Future Leaders Early Learning Center, licensed for 90 children, received $6.67 million over two years but appeared completely empty when Shirley visited.
Mako and Mini Child Care centers, licensed for a combined 120 children, received $4.6 million over three years.
State records show Quality Learning Center’s most recent inspection in June 2023 found at least 10 violations, including areas in disrepair, poor supervision, unsafe cribs and use of unqualified personnel. The facility’s license remains active until December 2026.
A spokesperson for the Minnesota Department of Children, Youth and Families clarified that Mako Child Care has been closed since 2022. Quality Learning Center was believed earlier to have closed or been in the process of closing, but officials later said the owners informed the state they have decided to remain open.
State, Gov. Walz defends oversight efforts
The Minnesota Department of Children, Youth, and Families said all locations shown in the video had been inspected within the past six months and were being revisited.
“Fraud has no place in Minnesota’s public programs,” the department said in a statement Monday. “Each of the facilities mentioned in the video has been visited at least once in the last six months as part of our typical licensing process. Our staff are out in the community today to visit each of these sites again so that we can look into the concerns raised in the video.”
Gov. Tim Walz’s office said the governor “has worked for years to crack down on fraud” and has strengthened oversight by launching investigations, hiring an outside firm to audit high-risk programs, shutting down the Housing Stabilization Services program entirely and supporting criminal prosecutions.
However, state Republican lawmakers and federal officials say the response has been insufficient.
“Governor Walz has not fired a single agency commissioner or anyone over seven years with fraud,” said state Rep. Lisa Demuth, the Republican speaker of the Minnesota House who is running for governor. “Democrats in the House of Representatives here in Minnesota continually blocked efforts by Republicans to put in internal controls and other things that would have helped prevent this fraud.”
SBA halts Minnesota funding; identifies $430M in suspected PPP fraud
Small Business Administration Administrator Kelly Loeffler announced Dec. 23 that the agency was halting $5.5 million in annual funding to Minnesota pending further review. The SBA identified 13,600 PPP loans in Minnesota totaling $430 million suspected as fraudulent, including $3 million in loans to individuals indicted in the Feeding Our Future fraud scheme.
“Minnesota cannot be trusted to administer federal tax dollars,” Loeffler said. “Its socialist welfare system has enabled fraud at industrial scale, at the expense of honest Americans.”
FBI: Pattern of fraud spans multiple programs in Minnesota
FBI Director Kash Patel said the bureau had already surged personnel to Minnesota before the viral video to investigate large-scale fraud schemes.
“The FBI believes this is just the tip of a very large iceberg,” Patel said in a statement. “We will continue to follow the money and protect children, and this investigation very much remains ongoing.”
To date, the FBI has dismantled a $250 million fraud scheme tied to the Feeding Our Future network that resulted in 78 indictments and 57 convictions. The investigation exposed sham vendors, shell companies and large-scale money laundering. Defendants received sentences including a 10-year prison term and nearly $48 million in restitution.
State officials acknowledge fraud extends beyond childcare to adult day care services, non-emergency transportation and other programs receiving federal and state funds.
Congress expands probe; demands data from Walz administration
House Speaker Mike Johnson announced that the House Oversight Committee has expanded its investigation into Minnesota’s fraud schemes, requesting data from Walz, Minnesota Attorney General Keith Ellison, the Treasury Department and the Justice Department.
“This jaw-dropping reporting is an indictment of both the national news media and feckless, dangerous office holders in Minnesota like Tim Walz, who have allowed these massive fraud schemes to occur for years,” Johnson said.
Rep. Tom Emmer, R-Minn., criticized Walz for posting about “Caturday” on social media Saturday instead of addressing the fraud allegations.
“What Walz refused to address for seven years, Nick Shirley uncovered in one day,” Emmer said. “The fraud in Minnesota is so brazen and so vast that it’s impossible Walz’s administration didn’t know about it.”
Vice President JD Vance called the Minnesota situation “a microcosm of the immigration fraud in our system,” stating that “politicians like it because they get power. Welfare cheats like it because they get rich.”
Patel said many defendants in fraud cases are being referred to immigration officials for possible denaturalization and deportation proceedings where eligible.
Minnesota is home to approximately 80,000 Somali Americans, one of the largest Somali diaspora communities in the United States. Of the 86 people indicted in the Feeding Our Future case, 79 are of Somali descent, according to federal sources.
