The Department of Health and Human Services says it will freeze all childcare payments in Minnesota amid an investigation into the rampant fraud scheme that has rocked the midwestern state.

The latest move is part of a federal investigation into daycare centers across the state over allegations of fraud that reportedly bilked millions from federal funds launched after a viral video exposé

“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.

“Yesterday, I spoke directly with the director of the Minnesota Childcare Services office. She could not tell me with confidence whether those allegations of fraud are isolated or whether there’s fraud stretching statewide,” Mr. Adams said in the video.

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.

“Let me be crystal clear. ACF expects every state to uphold the highest standards of oversight, monitoring, and accountability for federal dollars,” Mr. Adams said. “Minnesota is no exception.”

Mr. Walz is under increasing pressure from Republican officials at both the state and federal levels. Lawmakers are questioning the extent and timing of his knowledge about the fraud. The situation has escalated to the point where a criminal referral to the Justice Department is being considered.

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.”