URGENT UPDATE: The federal government has frozen all child care payments to Minnesota amid a shocking daycare fraud investigation that has erupted into a scandal targeting Governor Tim Walz. This decisive action was confirmed by Deputy Secretary of Health and Human Services Jim O’Neill just hours ago on December 31, 2025.
This unprecedented freeze in funding comes as allegations surface that millions in taxpayer dollars have been funneled to fraudulent daycare centers across the state. O’Neill stated, “We have turned off the money spigot and we are finding the fraud,” signaling a significant crackdown on the misuse of public funds.
Controversy erupted after independent journalist Nick Shirley revealed footage of the Quality Learing Center, a Minnesota daycare reportedly receiving $4 million in federal funding despite appearing empty. This facility has been accused of being part of what Shirley claims is the “largest fraud in US history.”
In response to these alarming findings, O’Neill has activated the “spend defend system” for all payments distributed by the Administration for Children and Families (ACF), requiring strict proof before funds are allocated. He also called on Governor Walz to conduct a thorough audit of the implicated centers.
As part of the government’s effort to combat financial misconduct, a new fraud-reporting hotline has been established for parents, providers, and the public to report suspicious activity. “We want to hear from you,” O’Neill urged.
The scandal has drawn fierce criticism from local politicians, with Gubernatorial candidate Lisa Demuth asserting, “Fraud is easy to find – if you’re willing to look for it.” State Representative Tom Emmer also expressed outrage, questioning Walz’s oversight: “Four million dollars of hard-earned tax dollars going to an education center that can’t even spell learning correctly. Care to explain this one, Tim Walz?”
Shirley’s shocking video has garnered over 65 million views in just two days, raising eyebrows about the operational status of the daycare. Local residents reported never seeing children at the facility, leading many to believe it was permanently closed. In a twist, it was later suggested that the center “trucked in” children after Shirley’s visit.
Amid the outrage, Ibrahim Ali, son of the daycare’s owner, defended the facility, claiming it was not yet open when filmed and blaming a graphic designer for the misspelled sign—”Quality Learing Center.” He insisted the error would be corrected, stating, “That’s gonna be fixed.”
This story continues to develop as authorities work to unravel the full extent of the alleged fraud. With the future of child care funding in Minnesota hanging in the balance, all eyes are on Governor Walz and the ongoing investigation. More updates are expected as this urgent situation unfolds.
