President Trump didn’t let New Year’s festivities stop him from taking aim at Minnesota’s daycare fraud scandal, telling Mar-a-Lago partygoers the problem extends far beyond one state.

“Can you imagine they stole $18 billion,” the president said during remarks made at his annual New Year’s Eve celebration. “That’s just what we’re learning about. That’s peanuts. And California is worse, Illinois is worse and sadly New York is worse.”

“We’re going to get to the bottom of all those. It was a giant scam.”

Mr. Trump added that he’d seen Minnesota Republican congressman, Tom Emmer, discussing the alleged fraud involving the Somali community on television earlier Wednesday.

“He was talking about the Somalia population and not very nicely,” he said.

The comments were made during the yearly celebration, with this year’s event seeing Emirati billionaire Hussain Sajwani, film producer Brett Ratner, Homeland Security Secretary Kristi Noem, and United States Attorney for the District of Columbia Jeanine Pirro among the guests.

Mr. Trump’s comments came as Minnesota reels from widespread fraud allegations, with losses estimated at up to $1 billion. Federal prosecutors have indicted dozens in connection with the alleged scheme.

White House press secretary Karoline Leavitt issued a stark warning Wednesday during an interview with Fox News, claiming that “people will be in handcuffs” as fallout expands from the fraud allegations.

The Department of Health and Human Services has also frozen all childcare payments in Minnesota amid an investigation into the rampant fraud scheme. Mr. Walz has faced mounting scrutiny since the scandal broke. He’s publicly acknowledged the problem and pledged to fix it, saying the situation “is on my watch” and that he is “accountable” for addressing it.

“We have frozen all childcare payments to the state of Minnesota,” HHS Deputy Secretary Jim O’Neill announced in a post on X, which included a video in which he and Assistant Secretary Alex Adams, who oversees the Administration for Children and Families, outline the actions that the department is taking.

“Intrepid journalists have made shocking and credible allegations of extensive fraud in Minnesota’s childcare programs,” he said in the video. “We believe the State of Minnesota has allowed scammers and fake daycares to siphon millions of taxpayer dollars over the past decade.”

The officials said that they have also identified individuals seen in the video produced by Nick Shirley and have demanded from Governor Tim Walz’s office a comprehensive audit of the day care centers highlighted in the exposé.

HHS will also begin to tighten ACF’s payment requirements nationwide, asking recipients to provide justification and a receipt or photo evidence. They have also launched a “fraud reporting hotline” for tipsters to contact ACF with allegations of fraud.

Mr. Walz responded to the move by HHS in a post on X accusing President Trump of playing a “long game” against the state.

“We’ve spent years cracking down on fraudsters. It’s a serious issue – but this has been his plan all along,” he wrote. “He’s politicizing the issue to defund programs that help Minnesotans.”