Independent journalist Nick Shirley has arrived in California to investigate alleged daycare fraud following a federal freeze of over $10 billion in childcare funding across five states.
Federal Investigation Sparks California Probe
The Department of Health and Human Services restricted access to childcare funds on January 6, 2026, citing serious concerns about widespread fraud. Shirley gained national attention after his Minnesota investigation alleged nearly a dozen daycare centers collected public funds without serving children. Republican lawmakers suggest similar patterns of suspicious billing and inactive facilities may be draining California’s taxpayer-funded childcare subsidies.
During a recent House Judiciary Committee hearing, Representative Kevin Kiley asked Shirley about potential California fraud. Shirley testified that fraud in California might be worse than in Minnesota, pointing to the state’s struggles with accountability across multiple programs. Kiley referenced $24 billion in homelessness spending, where a state audit couldn’t determine where the money went or what outcomes resulted.
Confrontation at California Daycare
Shirley’s investigation has already generated controversy. A viral video showing over 1.3 million views captures a heated confrontation at a San Diego-area daycare. When Shirley questioned why no children were present despite 14 enrolled students, the facility operator became defensive, asking why he came to California after Minnesota. The factual basis of Shirley’s specific claims remains unverified by state regulators.
What This Means Going Forward
Critics accuse Governor Gavin Newsom’s administration of allowing fraud to prosper through inadequate oversight. First Assistant U.S. Attorney Bill Essayli launched a corruption task force in April, focusing on homeless programs. Shirley plans to release his first full-length California investigation video this week. Local law enforcement warns that this could lead to additional confrontations at home-based daycare sites. State officials must address the federal funding freeze by providing proof that taxpayer dollars reach actual students.