MINNESOTA FRAUD CRISIS: Federal agents launch a “massive” investigation into $18 billion in Medicaid and day care fraud. Read about the Nick Shirley viral video, the FBI’s $9 billion fraud claims, and the political battle between Gov. Walz and the Trump administration.
Federal law enforcement agencies, led by Homeland Security Investigations (HSI) and the FBI, have launched what officials are calling a “massive investigation” into a sprawling fraud network within Minnesota’s state-run public assistance programmes.
The operation, which intensified on Monday, December 29, 2025, follows a weekend of viral allegations and a stinging rebuke from federal prosecutors who describe the situation as “staggering, industrial-scale fraud.”
The investigation has pushed the state into a political and legal firestorm, with federal authorities suggesting that as much as half of the $18 billion paid out by Medicaid to Minnesota programmes since 2018 may have been stolen or misappropriated.
The Viral Catalyst: YouTube Video Sparks Federal Action
While federal agencies have been tracking various schemes for years, the latest surge in activity was triggered by a 42-minute investigative video posted by independent journalist Nick Shirley on December 26. The video, which has amassed millions of views, alleged that nearly a dozen day care centers in the Twin Cities area were receiving massive amounts of taxpayer funding while providing zero services.
In response, DHS Secretary Kristi Noem confirmed on Monday that HSI agents were on the ground in Minneapolis conducting door-to-door inquiries.”The American people deserve answers on how their taxpayer money is being used,” Noem stated on X (formerly Twitter), accompanying her post with footage of agents questioning individuals at suspected “fly-by-night” operations.
Beyond Day Care: A $9 Billion Crisis
The scope of the investigation extends far beyond child care. Assistant U.S. Attorney Joe Thompson recently detailed a “multilayered” web of corruption targeting 14 different state-run programs. Key areas of focus include:
- Housing Stabilization Services (HSS): Prosecutors allege that providers billed for the maximum amount of housing support while recipients were either already in stable housing or entirely unaware of the services. In one instance, two defendants from Philadelphia allegedly engaged in “fraud tourism,” traveling to Minnesota specifically to exploit the HSS program for over $3.5 million.
- Autism Services (EIDBI): Millions of dollars intended for Early Intensive Developmental and Behavioral Intervention were reportedly diverted. Investigators found that funds meant for children with autism were instead used to purchase luxury vehicles, Mediterranean coastal property in Turkey, and high-end jewelry.
- Medicaid Exploitation: Thompson warned that the “magnitude cannot be overstated,” noting that companies were created solely to pocket federal funds for international travel to destinations like London, Istanbul, and Dubai.
Political Fallout and the ‘Feeding Our Future’ Shadow
The current crisis is deeply rooted in the legacy of the Feeding Our Future scandal—the largest pandemic-era fraud scheme in U.S. history—which saw over $250 million stolen from a federal child nutrition program. FBI Director Kash Patel announced this week that the agency is deploying a surge of resources to Minnesota, claiming the previous convictions were just “the tip of the iceberg.”
The scandal has become a central point of contention between the Trump administration and Minnesota Governor Tim Walz. President Trump has repeatedly labeled the state a “hub of fraudulent money laundering activity,” while Governor Walz has defended his administration’s efforts to strengthen oversight, stating, “I am accountable for this, and I am the one that will fix it.”
Community Impact and Next Steps
As federal agents continue to execute search warrants and subpoena bank records, the impact on Minnesota’s vulnerable populations is becoming clear. Programs designed to help the impoverished, the unhoused, and the disabled are now under intense scrutiny, potentially delaying aid to those who genuinely need it.
State officials have already shut down several facilities cited in recent reports, and an independent audit due in late January 2026 is expected to provide the first official estimate of the total taxpayer loss.
