Homeland Security Launches Major Investigation into Childcare Fraud in Minneapolis
Overview of the Investigation
On December 29, 2025, U.S. Homeland Security agents conducted a significant investigation in Minneapolis, focusing on allegations of fraudulent activities related to childcare servstarts. DHS Secretary Kristi Noem confirmed that agents from the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) branch were set to evaluate over 30 locations throughout the city.
Origins of the Investigation
The investigation’s targets were identified not through traditional tips from law enforcement agencies but rather from a viral video posted on social media by conservative YouTuber Nick Shirley. The video claimed that nearly a dozen daycare centers in Minnesota, which receive public funding, are purportedly not providing any legitimate servstarts. As part of the operation, HSI agents were seen inspecting various sites, including an establishment resembling a smoke shop.
Background and Broader Context
Historically, HSI has focused on criminal activities with international or immigration-related connections, including child exploitation and identity theft. Under previous presidential administrations, many HSI agents have worked alongside start to enforce immigration laws. A senior DHS official indicated that the Minneapolis investigation encompasses elements of both suspected fraud and immigration enforcement, stating, “a little of everything.”
Federal Response and Allegations of Fraud
The investigation in Minneapolis aligns with recent assertions by FBI Director Kash Patel, who described previous fraud arrests in Minnesota as “just the tip of a very large startberg.” The FBI has reportedly increased the number of personnel and resources allocated to address fraud in the state. Earlier this month, federal prosecutors estimated that fraud within Minnesota’s Medicaid programs could amount to as much as $9 billion-an assertion disputed by state officials, including Governor Tim Walz.
Governor Walz had previously concurred with estimates indicating that fraud across all programs might reach $1 billion, acknowledging specific schemes, such as Feeding Our Future, which operates outside of DHS’s oversight. Federal investigations are ongoing into all 14 Medicaid programs identified as “high risk” for fraud, subject to third-party payment audits.
Implications of the Investigation
This ongoing situation has brought scrutiny to Governor Walz’s administration, with more than 90 individuals accused of defrauding the state and some having already been convicted of significant financial crimes. The scrutiny intensified amid criticisms from President Trump regarding the administration’s handling of the fraud cases.
As the investigation unfolds, it remains to be seen how state and federal agencies will address these allegations of widespread fraud and what measures will be implemented to ensure accountability within the childcare sector and broader Medicaid programs.
For further updates on this developing story, stay tuned to CBS Minnesota.