OAN Staff Cory Hawkins
11:20 AM – Thursday, January 22, 2026
Independent journalist and YouTuber Nick Shirley testified before the House Judiciary Subcommittee on Crime and Federal Government Surveillance regarding widespread fraud in Minneapolis childcare centers.
Shirley detailed “red flags” he observed firsthand at facilities like “The Learning Center,” arguing that taxpayers are being defrauded and warning that similar schemes are likely operating in other states, including California.
“I’m here today to speak on behalf of all hardworking, law-abiding, taxpaying citizens here inside of the United States,” Shirley said during his opening remarks. “We the people have had enough of our hard-earned money going towards fraudsters, as if it’s no big deal.”
“[Governor Tim] Walz has said that he’s been fighting fraud in Minnesota since 2019 and said the buck stops with him,” he later added. “How long would it take for you to notice $1 million leaving your bank account and not knowing where it was going?”
Shirley testified that numerous centers receiving millions in state and federal funding appeared abandoned or empty during business hours. He noted that many highly funded daycares lacked basic requirements to receive such funding, such as playgrounds or even children themselves. Shirley described facilities with blacked-out windows, broken doorbells, and misspelled signage, despite being licensed to care for over a hundred children.
Public records indicate that these locations received substantial payments from the Child Care Assistance Program (CCAP). Shirley’s testimony is part of a growing focus on systemic fraud in Minnesota, which estimates suggest could reach into the billions.
This scrutiny also follows the Feeding Our Future scandal, a COVID-era scheme where a nonprofit misappropriated at least $250 million meant for student meals. When the Minnesota Department of Education originally paused funding due to oversight concerns, the organization sued the state, claiming the scrutiny was rooted in “discrimination based on race and national origin.”
The performative allegations of discrimination brought by the nonprofit were largely rooted in the demographic makeup of the investigation’s suspects, as a significant majority — upward of 85% — of the defendants charged in the “Feeding Our Future” and related childcare fraud cases are of Somali descent.
Somalia is one of the most corrupt countries in the world when compared internationally, based largely on the Corruption Perceptions Index (CPI) published by Transparency International. In the most recent rankings, Somalia scored 9 out of 100 and placed 179th out of 180 countries, meaning it is perceived as more corrupt than nearly every other nation assessed.
Legal representatives for the accused tried to argue that the state’s “aggressive” oversight was a form of “selective enforcement,” targeting the Minnesota Somali community specifically, while state and federal investigators maintained that the focus was based strictly on the flow of misappropriated funds within specific networks.
In response to the viral investigative videos and subsequent hearings, the Trump administration — coordinated through the Department of Health and Human Services (HHS) — froze hundreds of millions of dollars in childcare subsidies. This freeze impacted Minnesota and four other states, California, Colorado, Illinois, and New York, with the federal government demanding stricter documentation and verified proof of legitimacy before releasing the funds.
Governor Tim Walz (D-Minn.) and state officials have since pushed back against Shirley’s claims, asserting that many of the cited centers “passed recent inspections.” However, acknowledging the severity of the issue, the state recently appointed a statewide program integrity director to centralize oversight.
Financial estimates of the total loss remain a point of intense debate. While many assume the figure exceeds $1 billion, former U.S. Attorney Joseph H. Thompson estimated last month that the total fraud could surpass $9 billion. Walz, who recently dropped his reelection bid amidst the fallout of the scandal, has publicly questioned the accuracy of Thompson’s $9 billion figure.
The House Oversight Committee has requested Walz’s testimony next month to further investigate the state’s handling of the funds.
In addition to his findings in Minnesota, Shirley highlighted fiscal transparency issues in California, citing a recent state audit that revealed the state lacked a consistent method for tracking the outcomes of $24 billion allegedly “spent on state homelessness” over the past five years.
The California State Auditor report found that the state, after spending $24 billion over five years, did not consistently track whether that spending improved outcomes or measure where all the money went and what results it achieved. The audit noted that the body responsible for coordination and oversight — the California Interagency Council on Homelessness (Cal ICH) — last produced a comprehensive report covering 2018–2021 and has, suspiciously, not tracked spending or outcomes since then.
Shirley also pointed to the California High-Speed Rail project as a primary example of government waste.
Initially projected to cost roughly $33 billion with an early completion goal of 2020, the project’s estimated price tag has since skyrocketed to between $89 billion and $128 billion. Despite construction beginning in 2015, the project has been marred by significant delays and other issues, with the full line from Los Angeles to San Francisco still years away from completion.
“Fraud in California might be worse than the fraud in Minnesota,” Shirley said during the Wednesday hearing.
Shirley says he first encountered signs of fraud in June 2025 while filming an unrelated project in Minneapolis. Local residents, recognizing his investigative style, approached him to ask if he was there to cover the widespread misconduct in the state’s childcare system.
Intrigued by these reports, Shirley then began gathering evidence and received a specific tip suggesting that several daycare centers he had already driven past were essentially “ghost” facilities that served no children, seemingly meant to collect fraudulent funds. This information served as the catalyst for his return to Minnesota to conduct a full-scale investigation into the legitimacy of these highly-funded locations.
“We go to a daycare, and I’m instantly surprised by what we see,” Shirley said. “We continued to go to other daycares, and we noticed the same pattern: no children, blacked out windows. I made this video to document the widespread fraud taking place, as I truly believe all fraud is bad, and people like me, my generation, we’re sick of seeing tax dollars going to fraud.”
Federal prosecutors have expanded their investigation beyond Feeding Our Future, identifying fraud in 14 Medicaid programs administered by Minnesota, with preliminary estimates indicating that half or more of the $18 billion spent since 2018 could be fraudulent.
Overview: Physical and Operational Red Flags Shirley Witnessed
- Ghost facilities: Shirley reported visiting numerous centers during peak business hours that appeared to be entirely empty. Despite being licensed for dozens or even over 100 children, no children or staff were present.
- Lack of essentials: Many locations lacked mandatory daycare necessities, such as playgrounds, age-appropriate furniture, or educational materials.
- Obscured visibility: Shirley highlighted centers with “blacked-out” windows, making it impossible for the public or regulators to see if any activity was occurring inside.
- Neglected exteriors: He noted broken doorbells, dilapidated entrances and misspelled or unprofessional signage at facilities that had received millions of dollars in taxpayer subsidies.
- Non-responsive staff: When knocking on doors, Shirley often received no response, or he was met with hostility and immediate calls to the police rather than professional greetings typical of a service-oriented business.
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