Fraud, Investigations, & the Month of December
Friends,
(Fair warning, this is a long update but worth the read)
December marked a turning point in Minnesota’s ongoing fraud and oversight failures. What had been a serious statewide concern quickly became a near-daily subject of national media attention, leading to increased federal scrutiny and, by the end of the month, active federal investigations on the ground.
Here is how the month unfolded.
 Timeline of Notable Events
Early December: Social Media Allegations Gain National Attention
In early December, an X account run by current and former DHS employees went viral and drew national attention for posts alleging internal agency retaliation for raising fraud concerns and ultimately cast blame for the fraud crisis at the Governor’s office. (1)(2)
Dec. 3: DHS freezes 245D group home licenses
On Dec. 3, DHS moved to freeze new 245D group home licenses for two years. DHS later described the licensing pause as a response to unprecedented growth in new applications and said the intent was to focus on improving oversight of existing providers. (3)(4)(7)
Dec. 16: DHS Pauses Adult Day Center Licensing
On Dec. 16, immediately ahead of the Committee’s Dec. 17 hearing—DHS announced a two-year pause on licensing for adult day centers, describing it as likely running Feb. 1, 2026, through Jan. 31, 2028. DHS stated the pause would free resources to focus oversight on existing providers and cited provider capacity exceeding need in the high-risk Medicaid program. (5)(6)
Dec. 17: Fraud Committee Hearing Revelations and Disagreements Center on Trust
The Committee’s Dec. 17 hearing covered assisted living and adult day oversight. The hearing notably concluded with Chair Kristin Robbins walking the Committee through a “web” of individuals and their various entities receiving state/federal payments. The web identified multiple Medicaid programs (including Non-Emergency Medical Transportation, adult day services, and autism-related services, among others) that certain individuals appeared to be receiving payments across simultaneously, outlined shared brokerage services, mapped relationships across entities, and highlighted (1) an indicted Feeding Our Future defendant still receiving state payments based on publicly available payment data, and (2) an additional individual flagged for unusual out-of-state/out-of-country indicators. (8)(9)(10)
That walkthrough prompted questions and concerns from DHS and DFL Committee members about withholding actionable details that could be used for investigations. Chair Robbins’ response centered on a basic trust and accountability gap, stating that whistleblowers “have expressed fears of retaliation through internal channels,” and emphasizing that protecting them sometimes requires keeping information out of the same agency pipelines until a safer handoff path is established. (8)(9)
Dec. 18 US Attorney’s Office Press Conference
On Dec. 18, federal authorities announced additional defendants tied to Medicaid-funded schemes (including autism-related services and Housing Stabilization Services activity) and disclosed a search warrant connected to Integrated Community Services (ICS).
The same day, the U.S. Attorney’s Office press conference reframed the month’s scope. U.S. Attorney Joe Thompson described an “industrial scale” fraud environment, advancing the estimate that suspected fraud exposure tied to 14 high-risk Medicaid service categories could plausibly exceed $9 billion. Thompson also introduced the term “fraud tourism,” explaining it as a situation where “weak controls and high-dollar opportunity can attract out-of-area exploitation.” (11)(12)
Minnesota Attorney General Keith Ellison issued a statement praising the federal charges and referencing joint work through the Medicaid Fraud Control Unit. (13)
Dec. 26–30: Viral Accelerant; National Microscope; Federal Intervention
Content creator Nick Shirley became a household name after Christmas when he posted videos visiting daycares around the Twin Cities showing no children and minimal ability to speak with staff or owners at the respective businesses. The videos rapidly gained over 100 million views on X and - following subsequent media and state agency follow-ups to the locations - magnified the microscope on Minnesota. (14)
In the viral fallout, conflicting claims emerged about the operational status of the centers at the time of filming versus afterward, prompting swift investigations. National commentators, state officials, local reporting, and statements made by daycare owners did little to objectively clarify the facts. Competing information, allegations, and narratives largely muddied the facts and veracity of the original video, ultimately establishing new national narrative battlelines along largely partisan lines. (15)
The week culminated in visible federal enforcement escalation. On Dec. 29, U.S. Secretary of Homeland Security Kristi Noem announced that Homeland Security agents were in Minneapolis conducting a “massive investigation” related to childcare and fraud allegations. DHS officials confirmed to media that Homeland Security Investigations (HSI) expected to inspect more than 30 sites in a single day. (15)(16) By Dec. 31, federal officials tightened childcare payment requirements nationwide, including pauses in higher-scrutiny cases pending submission of administrative data and additional records such as attendance and licensing/inspection documentation. (17)
By month’s end, the U.S. House Oversight Committee announced a January hearing focused on fraud and misuse of federal funds in Minnesota. (18)
Dec. 30: DHS Suspends Payments to Home Care Providers
On Dec. 30, the Department of Human Services abruptly suspended Medical Assistance payments to home care providers across Minnesota. This decision created immediate financial stress for legitimate providers and disrupted care for vulnerable Minnesotans.
For years, concerns about fraud and weak oversight inside DHS were raised and left unaddressed. When the administration finally acted, it did so in a way that swept in every provider instead of focusing on those who were abusing the system.
Just before Christmas, DHS changed a Medical Assistance billing deadline without properly notifying providers or the Home Care Association. Providers continued submitting claims based on the published deadline. Those claims were not paid.
Nearly 40 percent of home care providers were affected. Many depend almost entirely on Medical Assistance payments to meet payroll. When payments were delayed, providers were forced to use credit lines or take on significant debt, in some cases exceeding $500,000, simply to keep staff employed. Even short payment disruptions have serious consequences in an industry that operates on very thin margins. (19)
The impacts are already being felt. Heartland Homecare, which served 32 counties for more than 40 years, is closing after being unable to cover payroll following these payment disruptions. Providers across the state report facing similar financial strain, despite repeated assurances that new DHS systems would not create hardship.
This situation was avoidable. It reflects years of poor oversight followed by a rushed response that failed to consider real-world impacts. The state’s failure to manage this transition responsibly now puts up to half a billion dollars in federal matching funds at risk. Jobs are being lost, providers are being forced out of business, and Minnesotans who rely on these services are left facing uncertainty.
Fraud must be addressed, but it must be done carefully and competently. DHS should immediately correct this error, release withheld payments to legitimate providers, and ensure that future enforcement efforts focus on bad actors without harming those who are following the rules.
Minnesotans expect their government to be responsible stewards of taxpayer dollars and to avoid creating new problems while trying to fix existing ones. Accountability and competence must come first.
Bibliography
- Center of the American Experiment (Dec. 1, 2025) – “The Fraud Next Time” (@Minnesota_DHS suspension): https://www.americanexperiment.org/the-fraud-next-time/
- Denver Gazette / Wire Services (Nov. 30, 2025) – DHS employees’ X allegations: https://www.denvergazette.com/2025/11/30/minnesota-human-services-employees-blame-walz-for-massive-fraud/
- MPR News (Dec. 3, 2025) – 245D licensing freeze reporting: https://www.mprnews.org/story/2025/12/03/minnesota-sets-2year-ban-on-new-group-home-licenses-using-antifraud-powers
- Minnesota DHS (Dec. 9, 2025) – Licensing pause rationale: https://mn.gov/dhs/media/news/index.jsp?id=1053-715720
- Minnesota DHS (Dec. 16, 2025) – Adult day center licensing pause announcement: https://mn.gov/dhs/media/news/index.jsp?id=1053-716445
- MPR News (Dec. 16, 2025) – Adult day licensing pause reporting: https://www.mprnews.org/story/2025/12/16/minnesota-pauses-new-adult-day-care-licenses-amid-fraud-concerns
- League of Minnesota Cities (Dec. 22, 2025) – DHS to pause new 245D Home and Community-Based Services licenses: https://www.lmc.org/news-publications/news/all/dhs-to-pause-new-245d-home-and-community-based-services-licenses/
- KTTC (Dec. 18, 2025) – Fraud Committee hearing coverage / procedural dispute capsule: https://www.kttc.com/2025/12/18/latest-mn-fraud-committee-hearing-gop-dfl-continue-butt-heads-over-how-tackle-fraud/
- KSTP (Dec. 17, 2025) – Whistleblower tip routing dispute: https://kstp.com/kstp-news/top-news/house-fraud-committee-withholding-whistleblower-tips-from-dhs-investigators/
- Minnesota Reformer (Dec. 17, 2025) – “Web” walkthrough / FOF-related payment reference: https://minnesotareformer.com/2025/12/17/fraud-chair-alleges-another-feeding-our-future-defendant-received-state-money-while-awaiting-trial/
- Minnesota Reformer (Dec. 18, 2025) – Joe Thompson press conference; “fraud tourism”; $9B framing: https://minnesotareformer.com/2025/12/18/u-s-attorney-fraud-likely-exceeds-9-billion-in-minnesota-run-medicaid-services/
- Associated Press (Dec. 18, 2025) – “Industrial-scale” fraud across 14 programs: https://apnews.com/article/fbad68312012dc02a4060852474f72ee
- Minnesota Attorney General (Dec. 18, 2025) – Statement praising federal charges: https://www.ag.state.mn.us/Office/Communications/2025/12/18_HSS.asp
- Axios (Dec. 29, 2025) – Nick Shirley reach and storyline: https://www.axios.com/2025/12/29/nick-shirley-minnesota-fraud-vance-fbi-somali
- CBS News (Dec. 29, 2025) – Daycare investigations / operational claims: https://www.cbsnews.com/news/minnesota-fraud-nick-shirley-video-day-care-investigation/
- Associated Press (Jan. 7, 2026) – DHS/ICE/HSI operational claims: https://apnews.com/article/immigration-enforcement-ice-noem-minnesota-somali-db661df6de1131a034da2bda4bb3d817
- Reuters (Dec. 31, 2025) – Federal child care payment pauses and scrutiny: https://www.reuters.com/legal/litigation/trump-administration-freezes-child-day-care-payments-minnesota-2025-12-31/
- U.S. House Oversight Committee (Dec. 31, 2025) – January hearing announcement: https://oversight.house.gov/release/chairman-comer-announces-hearings-on-rampant-fraud-in-minnesotas-social-services-programs/
- Minnesota Reformer (Dec. 30) - DHS Suspends Payments to Home Care Providers DHS abruptly delayed all payments to providers of 14 Medicaid services in fraud prevention effort
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