By Guy Page
Federal officials have frozen all child care payments to the state of Minnesota amid allegations that millions of taxpayer dollars were funneled to fraudulent day care providers over the past decade.
Deputy Secretary of Health and Human Services Jim O’Neill announced the action Monday, saying the freeze is part of a broader effort to halt what he described as widespread abuse of federal child care funding.
“We have frozen all child care payments to the state of Minnesota,” O’Neill said on X. “We are turning off the money spigot and we are finding the fraud.” He said the Administration for Children and Families has activated its “defend the spend” system nationwide, requiring documentation such as receipts or photo evidence before any federal payments are released.
O’Neill also said he and Alex Adams have requested a comprehensive audit from Gov. Tim Walz, citing concerns raised in recent investigative reporting. The audit will examine attendance records, licensing, complaints, investigations and inspections tied to child care centers.
In addition, federal officials have launched a fraud-reporting hotline and email portal through ChildCare.gov, urging parents, providers and the public to report suspected abuse while the investigation continues.
Fraud within the Minneapolis African community – one example resulting in a conviction
Although much of the national media attention focused on fraud in Minnesota’s largely Somali immigrant community has been recent, this is not a new story. Large-scale fraud in Minneapolis involving the immigrant community goes back to the Covid-era federal funding for child nutrition, as outlined by a March, 2025 U.S. Department of Justice statement, published verbatim below:
In March, an immigrant from Africa pleaded guilty to $250 million fraud of a federally funded non-profit, Feeding Our Future.
Abdihakim Ali Ahmed, a Minneapolis man, pleaded guilty to wire fraud and money laundering for his role in the $250 million fraud scheme that exploited a federally funded child nutrition program during the COVID-19 pandemic, announced Acting U.S. Attorney Lisa D. Kirkpatrick.
According to court documents, from September 2020 through January 2022, Abdihakim Ali Ahmed, 40, claimed to be operating a child nutrition site in St. Paul, Minnesota. As part of the scheme, on or about Sept. 4, 2020, Ahmed registered ASA Limited LLC with the Minnesota Secretary of State.
Four days later, Ahmed applied for ASA Limited to operate a purported food site in the Federal Children Nutrition Program under the sponsorship of Feeding Our Future at the Gurey Deli, a small market located in a St. Paul strip mall. Ahmed submitted his application together with Aimee Bock, Feeding Our Future’s executive director. Within just three weeks of creating the ASA Limited site, Ahmed and his co-conspirators falsely claimed to be serving meals to 2,000 or 3,000 children each day, seven days a week. During the one-year period from September 2020 to September 2021, Ahmed his co-conspirators fraudulently claimed to have served more than 1.6 million meals at the ASA Limited site.
To accomplish his scheme, Ahmed submitted multiple fake attendance rosters that purported to identify both the names and ages of approximately 2,000 children who attended the ASA Limited site’s “after-school program” in September through December 2021. The lists of names and ages were fake, and Ahmed’s roster spreadsheets contained a formula that inserted a random number between 7 and 17 in the age column for each “child” on the list.
According to court documents, rather than use fraudulently obtained money to serve meals or feed children, Ahmed and his co-conspirators misappropriated much of it. Ahmed transferred hundreds of thousands of dollars to himself and other co-conspirators, which included transferring fraud proceeds to a shell company he created called 1130 Holdings Inc. He and his co-conspirators also created another shell company called Five A’s Projects LLC, where they transferred more than $1 million in Federal Child Nutrition Program funds. Ahmed used these proceeds to purchase the former location of Kelly’s 19th Hole, a bar and restaurant in Brooklyn Park, Minnesota, which will be now forfeited to the United States. Ahmed used more fraudulent proceeds to purchase a 2022 Mini Cooper vehicle, which has been seized and will be forfeited to the United States.
According to court documents, Ahmed paid more than $49,000 in bribes and kickbacks to Abdikerm Eidleh, a Feeding Our Future employee, in exchange for sponsoring and facilitating ASA Limited’s fraudulent participation in the Federal Child Nutrition Program. In exchange, Feeding Our Future received nearly $400,000 in administrative fees for sponsoring ASA Limited’s participation in the program.
In total, Ahmed and his co-conspirators caused a loss of $7.3 million to Federal Child Nutrition Programs based on fraudulent claims submitted through Feeding Our Future.
No known fraud investigations, allegations in Vermont Somali community
Much of the focus about fraud allegations in Minnesota has focused on the Minneapolis Somali immigrant community. Many VDC readers have asked whether similar allegations of fraud have been made against day care providers, or providers of other services, in Vermont’s Somali community. There are as yet no known allegations of, or known investigations into, fraud in Vermont’s Somali community. VDC will continue to follow this story, wherever it leads.
Here are some Somali – Vermont population statistics.
The Chittenden County city of Winooski has a large foreign immigrant population, by Vermont standards. U.S. census figures for foreign-born persons in 2019-2023 show 4.3% for Vermont, 7.2% for Burlington, 8.2% in Chittenden County and 14.3% for Winooski.
Of these immigrants, an estimated 467 of Vermont’s 482 Somalian residents (presumably not including their U.S.-born children) live in Chittenden County. They comprise .28% of the county’s population, compared to .075% of the Vermont population. Vermont’s percentage of Somali residents are about 50% more than the national average of .049%.
As might be expected for a low-income immigrant community in Vermont, and especially in Winooski which has a 150-year history of welcoming immigrants (Irish, French and other European immigrants, and most recently African, Asian and Eastern Europeans), there are several federal and state social services programs, utlilizing local partners, referencing Winooski’s African community.
Here is one example of federal funding to benefit the Winooski African community. No fraud is alleged.
In November, 2020, the Boston Federal Reserve Bank announced a three-year, $300,000 grant aimed at building equity infrastructure. The City of Winooski and its grant partners used the funds to:
- Establish an Equity Commission geared towards making sure diverse voices are included in community decision-making processes.
- Expand the existing Community Cultural Liaison roles to build and strengthen partnerships between the city, school district, businesses, and community organizations.
- Hire a city Equity Director who would lead these changes.
The Boston Fed press release cites as the grant’s team members:
- Association of Africans Living in Vermont
- US Committee for Refugees and Immigrants
- Winooski Housing Authority
- Winooski School District
- City of Winooski
The City hired Yasamin Gordon as its first equity director in 2021. The hire didn’t work out – she left after what a colleague called ‘structural racism and micro-aggressions’ from other city employees. As of 2024 she was employed with a Vermont outdoor non-profit, Vermont Parks Forever.