(NewsNation) — The Department of Homeland Security is going door-to-door as it continues to investigate fraud in Minnesota.
Local and federal authorities are ramping up investigations after dozens of people have already been convicted or pleaded guilty, with more facing federal charges for diverting money from programs including childhood nutrition, housing assistance and services for people with autism.
Homeland Security Secretary Kristi Noem posted a video showing agents speaking to someone at a local business.
The scrutiny follows a viral video by YouTuber Nick Shirley, who claims to have uncovered $110 million in fraud tied to state child care subsidies, showing daycare centers that appeared empty despite receiving public funds.
State officials say that all locations in the video were inspected within the past six months and are being revisited, as federal agencies, including DHS, ICE, the FBI, and the Small Business Administration, launch parallel investigations.
DHS also posted on X, saying agents were going to suspected fraud sites in Minneapolis.
The social media posts each included a short clip of two federal investigators, who were wearing “Police HSI” uniforms, asking individuals who appeared to be employees about the business dealings at their respective workplaces.
The video drew the ire of several members of the Trump administration and much of President Trump’s conservative base, who claimed Minnesota Gov. Tim Walz (D) failed to adequately crack down on fraud — allegations the governor’s office adamantly rejects.
Earlier this month, federal prosecutors announced they were significantly broadening an investigation into fraud of Minnesota’s social services programs that previously focused on three safety net programs run by state agencies.
Now, prosecutors say they are looking into suspicious billing practices in 14 Medicaid-funded programs, The New York Times reported, adding that authorities say a preliminary assessment suggests that more than half of the $18 billion in taxpayer funding spent on the programs was likely stolen.
All but eight of the 86 people previously charged in connection to the fraud are of Somali ancestry, the Times previously reported, citing prosecutors. As prosecutors expanded their investigation this month, they charged another six people in connection to the fraud, bringing the total to 92 people.
Some Minnesota officials have expressed concern about the narrow targeting of the Somali community, especially as the Trump administration has highlighted the fraud scandal as part of its crackdown on immigration in the community.
Walz has criticized the Trump administration’s actions but has maintained that anyone committing fraud should go to prison.
Small Business Administration Administrator Kelly Loeffler said the agency would be pausing funding to the state.
“SBA is pausing annual funding to Minnesota while we investigate $430 million in suspected PPP fraud across the state. This Admin will not continue to hand out blank checks to fraudsters – and we will not rest until we clean up the criminal networks that have been stealing from American taxpayers,” she said on X.
Authorities are still calculating the cost of fraud in the state, where they say entire businesses were set up for the purposes of defrauding federally funded programs dedicated to things like childcare, housing and autism support. There have already been 92 people charged.
The state receives $18 billion in federal dollars for such programs.
“I’m sure everyone is wondering how much of this $18 billion was fraud,” First Assistant U.S. Attorney Joe Thompson said. “That’s the $18 billion question.”
Trump has attacked Minneapolis’s large Somali American community in response, stating that he doesn’t want Somali immigrants in the U.S.
Local leaders have urged people not to stigmatize the community based on the actions of a few people.
Trump has also blamed state leaders, particularly Walz, for the fraud. Walz was former Vice President Kamala Harris’ running mate in the 2024 election.
Walz ordered a third-party audit of programs and stopped payments for some programs for 90 days in response to the investigations. He also said the state is increasing resources for fraud detection.
Sen. Jim Banks, R-Ind., also attacked Walz, demanding a full federal investigation and accusing the governor of looking the other way.
House Majority Whip Tom Emmer, R-Minn, accused Walz of incompetence and poor leadership. Emmer said Walz must be held accountable, adding that Republicans have warned about the issue for years as national attention now turns to Minnesota.
“He must answer for the millions of dollars he’s allowed to be stolen by Somali criminals,” Emmer said in a post on X.
The Minnesota Department of Human Services identified 14 state-run programs as high risk because of program vulnerabilities, evidence of fraudulent activity or suspicious billing patterns. Thompson said investigators are seeing more red flags than legitimate claims and that many suspects created entities that billed multiple programs at once.
More charges are expected.
Minnesota child care department responds to viral video alleging fraud
Minnesota officials responded to the viral video alleging widespread child care fraud, saying “fraud has no place in Minnesota’s public programs.” The Department of Children, Youth and Families said every site shown in the video was inspected within the past six months and that staff are returning to the facilities to address growing concerns.
Fraud has no place in Minnesota’s public programs. Fraudulent actions hurt the families who need services and erode the public’s trust. Minnesota’s Department of Children, Youth, and Families has no tolerance for fraud, and we’re committed to doing everything we can to investigate allegations and quickly respond to issues. Our program integrity efforts are strong, and we know that fraudsters are always changing their tactics so we are always evolving our efforts.
We’re aware of the video circulating online that has raised concerns about several child care centers in Minnesota. We take the concerns raised in this video very seriously. 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.
We are committed to making sure that every dollar of the Child Care Assistance Program, and other programs, is going where it’s supposed to go and being used as intended. We will not stand for fraud being committed, and if any of the concerns raised in the video are found to be true we will take every action within our authority to address the issues.
– The Minnesota Department of Children, Youth, and Families
The Associated Press contributed to this report.