Trump Announces Federal Fraud Investigation Into CA After Minnesota Scandal

President Donald Trump announced Tuesday that a federal investigation into alleged fraud in California has begun, signaling a widening crackdown after similar revelations of systemic abuse in Minnesota’s state-run childcare programs.

“California, under Governor Gavin Newscum, is more corrupt than Minnesota, if that’s possible,” Trump wrote on Truth Social, using a mocking version of Gov. Gavin Newsom’s name. “The fraud investigation of California has begun.”

Trump did not immediately provide details about the scope of the California probe, but the declaration comes less than 24 hours after his administration froze all federal childcare payments to Minnesota amid reports that Somali-run daycare and healthcare operators stole more than $9 billion in taxpayer funds.

The president’s new statement marks the first time California has been formally linked to the widening federal effort to track down fraudulent spending in social programs. His comments follow a series of public warnings to Democratic governors he accuses of mismanaging state welfare systems.

“Tim Walz destroyed Minnesota,” Trump said Monday, “but Newsom, Pritzker, and Hochul have done, in my opinion, an even more dishonest and incompetent job.

Federal officials have not released specifics of the California case, though multiple law enforcement and oversight agencies have been mobilized in recent days following the Health and Human Services Department’s announcement of a nationwide anti-fraud sweep.

HHS Deputy Secretary Jim O’Neill confirmed Tuesday that the agency has “turned off the money spigot” to Minnesota and imposed new nationwide verification measures to prevent further abuse of taxpayer funds.

“You have probably read the serious allegations that the state of Minnesota has funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade,” O’Neill said. “Today we have taken three actions against the blatant fraud that appears to be rampant in Minnesota and across the country.”

Under the new HHS directives:

All federal childcare payments will now require receipts or photo evidence before funds are released to a state.
Individuals identified in investigative journalist Nick Shirley’s viral video — which captured empty daycare centers receiving millions in public money — have been flagged for full audits.
A dedicated fraud-reporting hotline and email system has been launched through ChildCare.gov
for parents and whistleblowers.
“We have turned off the money spigot and we are finding the fraud,” O’Neill declared.

The announcement follows a dramatic escalation in Minnesota, where Homeland Security Investigations (HSI) agents began door-to-door raids in Minneapolis on Monday targeting businesses suspected of laundering welfare funds through fake childcare centers and health programs.

“Homeland Security Investigations @ICEgov are on the ground in Minneapolis right now conducting a massive investigation on childcare and other rampant fraud,” DHS Chief Kristi Noem confirmed in a post on X. “More coming.”

The coordinated response comes after Shirley’s footage from Minneapolis’s “Quality Learning Center” — which appeared virtually empty despite receiving millions in public funds — went viral last week, prompting widespread outrage and bipartisan calls for accountability.

In the video, a woman at the facility shouted, “Don’t open up! It’s ICE!” after being approached by investigators. The center’s sign misspelled “learning” as “learing,” a detail that became emblematic of the alleged scheme’s brazenness.

Federal audits later found that the daycare and several similar facilities had received large sums despite repeated state violations and minimal oversight from Gov. Tim Walz’s administration.

Officials say the Minnesota scandal, potentially the largest case of welfare fraud in U.S. history, may have diverted as much as $9 billion in federal and state funds — some of which authorities believe was funneled abroad to terrorist-linked networks in Somalia.

Trump’s decision to link California to the expanding investigation reflects growing concern that similar networks may be operating in other blue states with lax oversight and massive welfare budgets.

“California has a long history of corruption in its social spending programs,” said one senior administration official speaking on background. “The president is making it clear that this investigation won’t stop with Minnesota.”