Independent Journalist Testifies on Child Care Fraud in Minnesota

Independent journalist and YouTuber Nick Shirley presented his findings to the House Judiciary Committee’s Subcommittee on Crime and Federal Oversight, highlighting issues of fraud in Minneapolis child care centers.

Shirley pointed out various “red flags” he noticed at these facilities, describing how taxpayers were potentially being defrauded. He expressed concerns that such fraudulent activities might also be taking place in states like California.

“I’m here today to speak on behalf of all hard-working, law-abiding, tax-paying citizens of the United States,” Shirley stated. “We’re tired of seeing our hard-earned money being misused by scammers as if it’s no big deal.”

He referenced Governor Tim Walz’s ongoing struggle against fraud in Minnesota, mentioning that, “I wonder how long it will be before he realizes $1 million is out of his bank account and he doesn’t know where it’s going.”

Shirley observed that many of the heavily funded centers appeared deserted during business hours. He described facilities lacking basic necessities for funding, such as playgrounds or even children. Some centers had blacked-out windows, broken doorbells, and misspelled signs, despite being licensed for more than 100 children.

Records indicate that these facilities received considerable funds from the Child Care Assistance Program (CCAP). Shirley’s testimony coincides with growing awareness of organized fraud in Minnesota, estimated to cost taxpayers billions.

This scrutiny follows a scandal involving “Feeding Our Future,” where nonprofits misappropriated at least $250 million for student meals during the pandemic. When funding was initially suspended due to surveillance concerns, the organization filed a lawsuit claiming discrimination based on race and national origin.

Allegations of discrimination stem primarily from the demographics of those charged in related cases; over 85% of defendants in these child care fraud cases are of Somali descent. Somalia ranks as one of the most corrupt countries globally, receiving a mere 9 points on the Corruption Perceptions Index, placing it 179th out of 180 countries.

While defense attorneys argued that state oversight unfairly targeted Minnesota’s Somali community, investigators asserted their focus was simply on tracing the flow of misappropriated funds.

In light of viral investigative reports and public hearings, the Trump administration halted hundreds of millions of dollars in child care subsidies through the Department of Health and Human Services (HHS). This freeze affected Minnesota and several other states, requiring stricter verification before funds could be released.

State officials, including Gov. Walz, have contested Shirley’s claims, asserting that many mentioned centers had recently passed inspections. Yet, in light of the serious allegations, Minnesota appointed a director for program integrity to enhance oversight.

Estimates regarding total losses remain contentious, with some projections exceeding $1 billion. Conversely, former U.S. Attorney Joseph H. Thompson suggested that fraud could surpass $9 billion. Walz has questioned Thompson’s figure, especially following his withdrawal from the re-election race amidst the scandal.

The House Oversight Committee has requested Walz to testify next month as part of the investigation into the handling of these funds.

In addition to Minnesota’s findings, Shirley pointed to California’s issues with fiscal transparency. A recent state audit revealed no consistent tracking of approximately $24 billion spent on homelessness efforts over the past five years.

The report indicated that while the California Interagency Council on Homelessness last provided a comprehensive report from 2018 to 2021, they have failed to track subsequent spending or outcomes.

Shirley also cited California’s high-speed rail project as an instance of poor government management. Initially expected to cost around $33 billion and complete by 2020, the project’s estimated costs have surged to between $89 and $128 billion, with extensive delays still ahead.

“The fraud in California may be worse than the fraud in Minnesota,” Shirley commented during his testimony.

Shirley initially stumbled upon signs of fraud while filming an unrelated project in Minneapolis back in June 2025. Local residents drew his attention to fraudulent activities in the state’s child care system, prompting him to investigate further.

During his investigation, Shirley documented a trend of centers that appeared to be “ghost” operations, effectively raising fraudulent funds without providing actual services. This led him back to Minnesota to explore how funds were being utilized.

“We went to daycare and I was immediately struck by what I saw,” Shirley recounted. “We visited other centers and noticed the same pattern: no kids, no activity. I made this video to expose the rampant fraud because I believe it’s simply unacceptable. People my age are tired of seeing our tax dollars wasted on fraud.”

The scope of the federal investigation is expanding beyond “Nourishing Our Future,” with fraud identified in 14 Medicaid programs managed by Minnesota. Preliminary estimates suggest that fraud may account for over half of the $18 billion spent since 2018.

Overview: Physical and Operational Red Flags Shirley Witnessed

• Ghost Facility: Shirley detailed visiting multiple centers that seemed completely empty during peak hours, despite being licensed for many children.

• Missing Essentials: Many facilities lacked basic childcare necessities, such as play areas, appropriate furniture, and educational resources.

• Obstructed View: He pointed out centers with blacked-out windows, hindering visibility for public or regulatory oversight.

• Ignored Signs: Centers displayed broken doorbells, worn-down entrances, and poorly worded signs, receiving substantial taxpayer subsidies in spite of it.

• Unresponsive Staff: Shirley frequently received no answer at his knocks, or faced hostility rather than the professionalism expected in service-oriented businesses.