Federal investigations into alleged fraud in social services programs have intensified, beginning in Minnesota and expanding to California. These developments follow the dissemination of viral online videos by a YouTube personality, leading to federal funding freezes, an immigration enforcement operation, and scrutiny of public officials. Simultaneously, the U.S. Attorney's Office in Minnesota has experienced a significant wave of resignations, impacting major fraud cases.
Federal Responses and Investigations
The Trump administration initiated several measures following the release of a 42-minute video by YouTube personality Nick Shirley. The video alleged widespread fraud at Minnesota daycare centers, primarily operated by individuals of Somali descent.
In response, the administration announced a freeze on $10 billion in federal funding, including for childcare and cash welfare payments, directed to five Democratic-led states: Minnesota, California, Colorado, Illinois, and New York.
Additionally, 2,000 federal agents were deployed to Minnesota for an immigration enforcement operation. President Trump characterized Minnesota as a "hub of fraudulent money laundering activity" and suggested California was "more corrupt." The U.S. Department of Health and Human Services (HHS) also mandated new submission requirements for Medicaid-supported daycare claims across all states. A federal judge subsequently issued a temporary ruling requiring the federal government to continue funding childcare subsidies in Minnesota.
Federal prosecutors estimate the total fraud in Minnesota social services programs could exceed $9 billion. Former First Assistant U.S. Attorney Joe Thompson stated in December that investigators were examining approximately $18 billion spent on such programs in the state since 2018, suggesting a significant portion could be fraudulent.
Minnesota Fraud Cases
The Feeding Our Future SchemeA separate $250 million fraud scheme involving a COVID-era federal child nutrition program led to criminal charges against at least 78 individuals, many from the Somali community in Minnesota. Of these, over 60 have pleaded guilty or been convicted.
Aimee Bock, 45, the head of the nonprofit Feeding Our Future, was convicted on all counts in connection with this scheme. Prosecutors alleged Bock approved reimbursement claims for millions of unserved meals and collected bribes, with funds reportedly spent on luxury items. Bock, who denied being the mastermind, claimed her organization believed it was protecting the program and relied on approvals from Minnesota state officials.
Her organization's meal claims increased from $3.4 million in 2019 to nearly $200 million in 2021, a rise she attributed to loosened pandemic guidelines. Bock had also filed a lawsuit alleging discriminatory application processing by the Minnesota Education Department (MDE) against Somali American applicants, which resulted in a settlement. MDE officials stated they referred Bock to the FBI in 2021 and reported feeling intimidated by legal threats and negative media attention.
Other Minnesota Fraud AllegationsBeyond Feeding Our Future, an additional fraud case involved a housing program for seniors and people with disabilities. State officials closed this program in August due to "large-scale fraud." Eight individuals were charged in September with defrauding this program through fake and inflated billing.
Political and Online Influence
The release of Shirley's video, amplified by figures including Vice President J.D. Vance, Elon Musk, and Attorney General Pam Bondi, garnered over 138 million views on X. While claims made in the video regarding specific daycares and businesses receiving public funds without providing services remain unsubstantiated, the video has been referenced in policy and political discussions.
White House Press Secretary Karoline Leavitt cited "independent journalists like Nick Shirley" in uncovering fraud and referenced President Trump's view that Minnesota Governor Tim Walz is "criminally liable."
Governor Walz announced on Monday that he would not seek a third term, citing a need to prioritize state governance over his campaign. Pro-Trump commentators, including Rogan O'Handley, linked Walz's decision to the fraud allegations.
Minnesota state officials from the Department of Children, Youth and Families reported visiting nine daycares featured in Shirley's video. They found children present at eight locations; the ninth was not yet open for families. One daycare highlighted in the video had been closed since 2022.
Academics studying online information trends have observed that online content alleging issues like fraud can be utilized by policymakers to support policy changes they intend to pursue. Childcare employees featured in Shirley's video have reported receiving threatening phone calls and experiencing acts of vandalism.
Expansion of Allegations to California
Following the events in Minnesota, right-wing content creators shifted their focus to California's social welfare programs. Nick Shirley announced his arrival in California, stating intentions to investigate Somali-run childcare centers and reportedly collaborating with private investigator Amy Reichert, who claims to be investigating "ghost daycares."
Shirley's investigative method involves visiting facilities and requesting to see children; refusal to grant entry was interpreted by his team as evidence of a "sham operation," though state inspections in Minneapolis had confirmed children were present and facilities "operating as expected."
Benny Johnson, another content creator, released a video alleging a multimillion-dollar "homeless industrial complex" in California, claiming fraudulent use of federal funding for the unhoused and that the state was "using these federal dollars to rig national elections." Johnson also alleged that California's homeless shelters primarily house undocumented immigrants, citing an unidentified "whistleblower." California Governor Gavin Newsom's office rejected Johnson's claims, describing the video as a "conspiracy theory meme" and his claim regarding undocumented immigrants as not factual.
Local childcare providers in San Diego have reported harassment, including encountering individuals with cameras outside their homes. Doug Moore, executive director of United Domestic Workers of America, stated that Somali childcare providers in California have experienced harassment from "internet vigilantes" seeking to expose fraud, describing these actions as "stalking and intimidating our members."
U.S. Attorney's Office Resignations
The U.S. Attorney's Office for the District of Minnesota has experienced a wave of resignations, including the four prosecutors who were leading the $250 million Feeding Our Future fraud case: Joe Thompson, Harry Jacobs, Daniel Bobier, and Matthew Ebert.
These departures have reduced the office's staff to as few as 17 assistant U.S. attorneys, a decrease from 70 during the previous administration.
Harry Jacobs, who recently headed the criminal division, was also involved in another prominent prosecution. The Feeding Our Future case has been reassigned to Rebecca Kline and Matthew Murphy, who joined the office in January 2024.
Sources close to the departing attorneys cited multiple factors for the staff turnover, including caseload management concerns, structural issues within the office, the influence of the Trump administration, and issues related to Operation Metro Surge, an ongoing immigration enforcement initiative in the Twin Cities. Stacey Young, founder of Justice Connection, an organization of former Justice Department employees, characterized the situation as "alarming."
The Justice Department has attempted to supplement Minnesota's prosecutorial staff with attorneys from neighboring districts, the Department of Homeland Security, and military services. In one instance, a DHS attorney reportedly expressed dissatisfaction in court and was subsequently removed from the Minnesota assignment.