WASHINGTON, D.C. January 21, 2026 – The House Judiciary GOP has drawn attention to allegations of rampant fraud in Minnesota’s government-funded childcare programs through a video clip shared on X from a subcommittee hearing held on January 21, 2026. The post, captioned “Fraud. Waste. Abuse. Democrat-run Minnesota,” features testimony highlighting suspicious daycares receiving millions in taxpayer dollars despite apparent irregularities.
The hearing, conducted by the Subcommittee on Crime and Federal Government Surveillance and titled “When Public Funds Are Abused: Addressing Fraud and Theft of Taxpayer Dollars,” included testimony from conservative YouTuber and investigator Nick Shirley, who gained prominence for his exposés on Minnesota’s childcare system. Shirley, whose videos allegedly uncovered fraud, described visiting facilities in Minneapolis where multiple daycares operated in the same building with no children present, yet they continued to receive funding from the state’s Child Care Assistance Program (CCAP).
In the shared clip, Rep. Barry Moore (R-AL) questions Shirley about his findings. Shirley recounts instances where daycares were shut down by authorities only to reopen under different names the same day, allowing them to keep accessing CCAP funds. He noted that fraudulent operations appeared to evade the rigorous audits faced by legitimate providers, such as witness Ms. Larson, who runs an autism center and reported losing funding due to the fallout from the investigations.
Shirley testified that over $185 million in funds have been frozen as part of the probe, with no affected businesses able to prove their legitimacy so far. Broader estimates suggest the total fraud in Minnesota’s social services programs, including childcare and feeding initiatives, could exceed $1 billion, much of it tied to Somali-owned operations and involving suspicious money transfers abroad.
The scandal has placed significant pressure on Minnesota Gov. Tim Walz (D), who opted not to seek reelection amid the revelations. In response, the Trump administration froze federal funding to childcare providers in the state, a move that has sparked backlash for impacting genuine services and prompting legal challenges from attorneys general.
Democrats on the committee, including Ranking Member Jamie Raskin (D-MD), argued that the fraud was initially uncovered and prosecuted under the Biden administration through local journalists, whistleblowers, and auditors—not recent social media efforts. They accused Republicans of hypocrisy, pointing to overlooked fraud and pardons during the previous Trump term.
Additional witnesses, including former state investigator Scott Dexter, highlighted systemic vulnerabilities in Minnesota’s approval processes for funds, such as the lack of electronic records and security measures, which enabled the abuse. The hearing builds on prior congressional scrutiny, including probes by the House Oversight and Energy committees, amid ongoing federal investigations into related schemes like the Feeding Our Future nonprofit, which allegedly defrauded $250 million during the COVID-19 pandemic.
As investigations continue, the fallout underscores ongoing debates over oversight of federal funds in state-run programs, with calls for stricter safeguards to prevent future abuse while protecting essential services for vulnerable communities.
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