WASHINGTON, Jan. 1 (Xinhua) -- The U.S. Department of Health and Human Services (HHS) is halting all federal child care payments to states beyond Minnesota amid an alleged large-scale fraud scandal.
Jim O'Neill, deputy secretary of Health and Human Services, announced on social media that the HHS is implementing new requirements for child care payments across the country.
From now on, payments handled by the Administration for Children and Families (ACF), a division of the HHS, will "require a justification and a receipt or photo evidence before we send money to a state," O'Neill said.
"We have turned off the money spigot and we are finding the fraud," he said. "Funds will be released only when states prove they are being spent legitimately."
The move comes amid a high-profile investigation into allegations of systemic misappropriation of federal funds by child care centers in Minnesota.
The scam involved alleged fraudsters receiving massive funds from the federal government for child care centers that didn't exist, with some reportedly profiting by millions of U.S. dollars.
A significant number of the defendants charged are either of Somali descent or immigrants from the African nation of Somalia.
Federal prosecutors said in December 2025 that fraud across 14 state programs in Minnesota has cost taxpayers at least 18 billion U.S. dollars since 2018.
The ACF gives Minnesota an annual 185 million dollars for childcare.
"Turning off payments and forcing verification before taxpayer money flows out the door is one of the most important steps we can take to end the fraud in Minnesota," said Vice President JD Vance on social media.
Governor of Minnesota Tim Walz, who ran for vice president in 2024 on the Democratic ticket, said on social media that he has "spent years cracking down on fraudsters."
"This is Trump's long game," he said. "It's a serious issue -- but this has been his plan all along. He's politicizing the issue to defund programs that help Minnesotans."
Clay Ramsay, a researcher at the Center for International and Security Studies at the University of Maryland, said, "The key thing to understand here is that the Trump administration is escalating this."
"They are explicitly saying they are implementing a nationwide cutoff of federal funds to daycare. They are not focusing this on Minnesota or Somali-Americans," Ramsay said.
"There is an underlying ideological belief that children's day care should get no federal support, and events happen to create an opportunity," he added. ■