Federal agents executed multiple searches across Minnesota on Tuesday as part of an ongoing investigation into what prosecutors estimate could be as much as $9 billion in stolen federal funds from publicly funded social programs—a massive fraud case that has already resulted in 65 convictions and exposed vulnerabilities in oversight of taxpayer-funded childcare and nutrition programs. The searches were carried out in Minneapolis and elsewhere in Minnesota, and armed agents were seen at childcare centers in the Minneapolis area. KSTP-TV said one crew even had a battering ram.
The searches occurred months after right-wing influencer Nick Shirley posted a video that said members of Minnesota's Somali community were running fake childcare centers to collect federal subsidies. The video caught the attention of the Trump administration and conservative activists, though inspectors said the centers were operating as expected. The investigation began during the Biden administration.
Scale of the Problem
Minnesota has been dogged by fraud. At least 65 people, many of them Somali Americans, have been convicted of ripping off a federal program that was meant to provide food to children. Separately, a federal prosecutor in December said as much as $9 billion in federal funds that supported 14 Minnesota-run programs since 2018 may have been stolen.
The searches were being conducted at daycares, businesses and some residences, according to a person familiar with the matter who spoke to The Associated Press on the condition of anonymity because they were not authorized to publicly discuss the investigation. Various state and federal agencies, including the Department of Homeland Security, participated in the searches. At least two of the sites were in Shirley's video. Officers from Minnesota's Bureau of Criminal Apprehension were removing boxes at some locations.
DHS said, "The American people deserve to know how their taxpayer money was abused. ... No stone will be left unturned," and noted the cooperation of local and state authorities. On social media, FBI Director Kash Patel mocked Democratic Gov. Tim Walz for taking credit "while we smoke out the fraud plaguing Minnesota under your governorship."
Targets and Scope
Jason Steck, an attorney who represents childcare centers, said some of the targeted businesses were operated by Somali immigrants. He said they were not his clients. Steck described the sweep as "A few childcare centers, a few autism centers, a few healthcare agencies of some type," and said it appeared to be a "particular sweep for fraud."
Candace Yates, the executive director of Child Care Aware of Minnesota, said, "The majority are in business to do good business. You're going to come across individuals who try to capitalize on systems that are broken and need to be fixed."
Democratic Gov. Tim Walz said, "We catch criminals when state and federal agencies share information. Joint investigations work, and securing justice depends on it." Walz had ended his bid for a third term as governor in early January amid President Donald Trump's focus on fraud allegations and the state's Somali community. Trump has used dehumanizing rhetoric, calling Somali immigrants "garbage" and "low IQ."
Federal-State Tensions
Tensions between Walz and the federal government subsequently rocketed during an extraordinary immigration crackdown that led to the deaths of two people before Operation Metro Surge was eased in February. In February, Vice President JD Vance said the government would temporarily halt $243 million in Medicaid funding to Minnesota over fraud concerns. Minnesota sued in response, warning it may have to cut healthcare for low-income families, but a judge 22 days ago declined to grant a restraining order. Walz told Congress 1 month ago that he wanted to work with the federal government in fraud investigations, but that the immigration surge had made it more difficult. He said, "The people of Minnesota have been singled out and targeted for political retribution at an unparalleled scale."
Why This Matters:
The potential $9 billion in stolen federal funds represents one of the largest fraud cases involving social programs in recent history, raising fundamental questions about oversight mechanisms and accountability in taxpayer-funded programs. The 65 convictions already secured demonstrate that fraud was systematic rather than isolated, suggesting program design flaws that allowed abuse to flourish. The federal government's decision to withhold $243 million in Medicaid funding—upheld by a federal judge 22 days ago—reflects the administration's determination to use financial leverage to compel state cooperation in rooting out fraud. The case highlights tensions between ensuring program integrity and maintaining access to legitimate services, with implications for how federal-state partnerships manage billions in social program spending nationwide.