The viral December 2025 video by YouTuber Nick Shirley alleging daycare fraud in Minnesota produced two main lawsuits and a related criminal case. Five Democratic-led states sued the Trump administration over its resulting freeze of federal childcare funds and won a preliminary injunction, three Minneapolis-area daycares featured in the video sued the state of Minnesota over suspended payments, and federal prosecutors have since charged the operator of one featured center with wire fraud.
What Shirley Alleged
On December 26, 2025, Shirley posted a 41-minute video titled “I Investigated Minnesota’s Billion Dollar Fraud Scandal,” claiming to have uncovered roughly $100 million in fraud in a single day at nearly a dozen federally supported childcare centers in Minneapolis. He pointed to locked doors, blacked-out windows, and empty-looking facilities as evidence. The video drew more than 100 million views on X and nearly 3 million on YouTube, and was amplified by Elon Musk, Vice President J.D. Vance, and FBI Director Kash Patel.1CBS News Minnesota. Minneapolis Daycare Fraud Federal Raids Timeline2WRAL. Nick Shirley Profile
Within days, the Department of Health and Human Services froze Minnesota’s $185 million annual federal childcare payment. HHS Deputy Secretary Jim O’Neill cited “serious allegations that the state of Minnesota has funneled millions of taxpayer dollars to fraudulent daycares” over the past decade.3BBC News. Trump Administration Freezes Minnesota Childcare Funds The freeze was then extended to California, Colorado, Illinois, and New York. That expansion triggered the first lawsuit.
The Multistate Lawsuit Against the Federal Funding Freeze
On January 8, 2026, Minnesota Attorney General Keith Ellison joined the attorneys general of California, Colorado, Illinois, and New York in suing the Trump administration in the U.S. District Court for the Southern District of New York. The case is State of New York v. Administration for Children and Families, No. 1:26-cv-00172.4Minnesota Attorney General. ACF Funding Freeze
The court moved quickly. On January 9, 2026, Judge Vernon Broderick granted a temporary restraining order blocking the freeze. On February 6, 2026, he issued a preliminary injunction ordering the administration to remove restrictions on the states’ ability to draw down funds from the Child Care Development Fund, Temporary Assistance for Needy Families, and Social Services Block Grants.4Minnesota Attorney General. ACF Funding Freeze
In a follow-up opinion issued March 10, 2026, Judge Broderick found the states were likely to succeed on their claims under the Administrative Procedure Act. He ruled that the Administration for Children and Families had acted “arbitrarily and capriciously” by offering no reasoned explanation beyond “vague fraud concerns,” and that the agency had violated statutory procedures for restricting funds.5Civil Rights Litigation Clearinghouse. State of New York v. Administration for Children and Families
The injunction remained in effect as of mid-2026, and the underlying case was still open. In practical terms, the states are receiving their federal childcare funds while the litigation proceeds.
The Daycare Providers’ Lawsuit Against Minnesota
On February 17, 2026, three childcare centers featured in Shirley’s video filed their own lawsuit against the Minnesota Department of Children, Youth and Families, Commissioner Tikki Brown, and two unnamed department employees. The plaintiffs are Hopkins Child Care Center LLC, Cloud Academy LLC, and St. Cloud Childcare Inc.6KSTP. Child Care Centers Featured in Viral Video Sue DCYF After Payments Suspended
The centers allege that after Shirley’s video went viral, the state conducted targeted compliance visits and suspended their Child Care Assistance Program payments to “appease the federal government.” They claim the state failed to conduct an objective investigation and that the centers were singled out based on Somali ancestry. The complaint seeks:
- Rescission of the CCAP payment suspensions
- A permanent injunction against further retaliatory action
- Damages exceeding $50,000
The case was active as of mid-2026.6KSTP. Child Care Centers Featured in Viral Video Sue DCYF After Payments Suspended
Criminal Charges Against a Featured Center’s Operator
While the civil suits proceeded, federal prosecutors brought a criminal case tied directly to one of the centers Shirley visited. On May 20, 2026, they charged Fahima Egeh Mahamud, CEO of Future Leaders Early Learning, with wire fraud and conspiracy to defraud the United States. Prosecutors allege Mahamud submitted approximately 13,000 false claims to Minnesota’s Child Care Assistance Program, collecting more than $4.6 million, and received an additional $850,000 through the federal child nutrition program by falsely claiming to serve thousands of meals. Her daycare, located near George Floyd Square, had closed in January 2026.7FOX 9. Minneapolis Day Care Owner Featured in Nick Shirley Video Charged
Mahamud was placed under house arrest after prosecutors alleged she had attempted to flee to London the same day she notified the state her center was closing.8CBS News Minnesota. Daycare Feeding Our Future Fraud Charges Flee Country9MPR News. Federal Search Warrants Criminal Investigation Minneapolis Daycare Providers10St. Cloud Times. FBI Raids Minnesota Childcare Centers in Fraud Probe
Mahamud is one operator among the roughly ten centers featured in the video. Her case is the only criminal charge to date arising directly from the facilities Shirley visited.
How Shirley’s Specific Claims Held Up in Court and Elsewhere
The judicial and journalistic scrutiny of Shirley’s underlying evidence helps explain why the funding-freeze case went against the federal government and why the featured daycares felt confident suing the state.
Tikki Brown, commissioner of the Minnesota Department of Children, Youth and Families, told CNN that the centers in the video had active licenses and that ongoing investigations into several had not uncovered findings of fraud.11The Hill. CNN Reporter Confronts YouTuber Minnesota Daycares A CBS News analysis found that most of the featured centers had been visited by state regulators within six months with no recorded evidence of fraud, and one center provided security footage showing children being dropped off on the day of Shirley’s visit.1CBS News Minnesota. Minneapolis Daycare Fraud Federal Raids Timeline
Snopes examined Shirley’s claims and left them formally unrated. The outlet reported that DCYF found Shirley’s cited funding figures for CCAP to be “broadly correct” but noted the agency did not allege the funding was fraudulently obtained. State investigators conducted compliance visits at nine of the ten featured centers and found children present at all but one, which had not yet opened for the day.12Snopes. Nick Shirley Minnesota Daycare Fraud Snopes separately rated as false a related viral claim that Minnesota daycares had donated $35 million to political campaigns; the figure represented total CCAP funding tracked by a website, not campaign donations.13Snopes. Minnesota Day Care Donate Campaign
Reporting republished by the Louisiana Illuminator added context on the evidentiary weaknesses. Most childcare centers use locked doors and obscured windows for safety, children are kept in classrooms and not typically visible from reception areas, and some featured centers operated on schedules for second-shift workers, meaning they were legitimately closed during Shirley’s daytime visits. Several centers refused entry because Shirley arrived with “masked men,” prompting fears of an ICE raid. A 2025 federal audit found an 11% improper payment rate in Minnesota’s childcare payments, slightly above the 10% federal threshold, though experts noted that “improper payments” include administrative errors and are not synonymous with fraud.14Louisiana Illuminator. Minnesota Child Care
Shirley is not named as a defendant in any of the lawsuits.
Where the Cases Stand
As of mid-2026:
- The preliminary injunction in State of New York v. Administration for Children and Families remains in force, and the underlying APA challenge is ongoing.
- The Hopkins Child Care Center, Cloud Academy, and St. Cloud Childcare lawsuit against DCYF and Commissioner Brown is active.
- The criminal case against Fahima Egeh Mahamud is pending, with Mahamud under house arrest.
The wider federal criminal picture predates the video. Since 2021, authorities have charged 92 people in broader fraud schemes tied to Minnesota public assistance and nutrition programs, with 67 convictions, many stemming from the separate Feeding Our Future case rather than from the centers Shirley visited.10St. Cloud Times. FBI Raids Minnesota Childcare Centers in Fraud Probe