Trump Announces Federal Fraud Investigation Into CA After Minnesota Scandal
President Donald Trump announced Tuesday that a federal investigation into alleged fraud in California has begun, signaling a widening crackdown after similar revelations of systemic abuse in Minnesota’s state-run childcare programs.
“California, under Governor Gavin Newscum, is more corrupt than Minnesota, if that’s possible,” Trump wrote on Truth Social, using a mocking version of Gov. Gavin Newsom’s name. “The fraud investigation of California has begun.”
Trump did not immediately provide details about the scope of the California probe, but the declaration comes less than 24 hours after his administration froze all federal childcare payments to Minnesota amid reports that Somali-run daycare and healthcare operators stole more than $9 billion in taxpayer funds.
The president’s new statement marks the first time California has been formally linked to the widening federal effort to track down fraudulent spending in social programs. His comments follow a series of public warnings to Democratic governors he accuses of mismanaging state welfare systems.
“Tim Walz destroyed Minnesota,” Trump said Monday, “but Newsom, Pritzker, and Hochul have done, in my opinion, an even more dishonest and incompetent job.
Federal officials have not released specifics of the California case, though multiple law enforcement and oversight agencies have been mobilized in recent days following the Health and Human Services Department’s announcement of a nationwide anti-fraud sweep.
HHS Deputy Secretary Jim O’Neill confirmed Tuesday that the agency has “turned off the money spigot” to Minnesota and imposed new nationwide verification measures to prevent further abuse of taxpayer funds.
“You have probably read the serious allegations that the state of Minnesota has funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade,” O’Neill said. “Today we have taken three actions against the blatant fraud that appears to be rampant in Minnesota and across the country.”
Under the new HHS directives:
All federal childcare payments will now require receipts or photo evidence before funds are released to a state.
Individuals identified in investigative journalist Nick Shirley’s viral video — which captured empty daycare centers receiving millions in public money — have been flagged for full audits.
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A dedicated fraud-reporting hotline and email system has been launched through ChildCare.gov
for parents and whistleblowers.“We have turned off the money spigot and we are finding the fraud,” O’Neill declared.
The announcement follows a dramatic escalation in Minnesota, where Homeland Security Investigations (HSI) agents began door-to-door raids in Minneapolis on Monday targeting businesses suspected of laundering welfare funds through fake childcare centers and health programs.
“Homeland Security Investigations @ICEgov are on the ground in Minneapolis right now conducting a massive investigation on childcare and other rampant fraud,” DHS Chief Kristi Noem confirmed in a post on X. “More coming.”
The coordinated response comes after Shirley’s footage from Minneapolis’s “Quality Learning Center” — which appeared virtually empty despite receiving millions in public funds — went viral last week, prompting widespread outrage and bipartisan calls for accountability.
In the video, a woman at the facility shouted, “Don’t open up! It’s ICE!” after being approached by investigators. The center’s sign misspelled “learning” as “learing,” a detail that became emblematic of the alleged scheme’s brazenness.
Federal audits later found that the daycare and several similar facilities had received large sums despite repeated state violations and minimal oversight from Gov. Tim Walz’s administration.
Officials say the Minnesota scandal, potentially the largest case of welfare fraud in U.S. history, may have diverted as much as $9 billion in federal and state funds — some of which authorities believe was funneled abroad to terrorist-linked networks in Somalia.
Trump’s decision to link California to the expanding investigation reflects growing concern that similar networks may be operating in other blue states with lax oversight and massive welfare budgets.
“California has a long history of corruption in its social spending programs,” said one senior administration official speaking on background. “The president is making it clear that this investigation won’t stop with Minnesota.”
Top DHS Special Agent And His Wife Found Dead
A Department of Homeland Security special agent and his wife were found dead in their New Jersey home in what appears to be a murder-suicide, prosecutors said.
Police in Sayreville responded to the couple’s home on Glynn Court around 8 p.m. July 3 and found Kelly Latauro, 46, dead inside the residence, the Middlesex County Prosecutor’s Office said.
Her husband, 52-year-old Christopher Latauro, was discovered dead in the backyard.
Both appear to have been shot.
Authorities said Christopher is believed to be the shooter and the case is being investigated as a murder-suicide.
Police told residents to keep away from Glynn Court, from Deerfield Road to Scarlet Drive, briefly because of police activity.
The area was reopened about 40 minutes later, but police remained on scene.
According to NJ101.5, citing DHS records from 2019 and 2020, Christopher was a special agent for the Department of Homeland Security.
Authorities have not said what may have sparked the violence.
Kelly’s sister-in-law Robyn Perlman-Spencer confirmed her death in a Facebook post on July 7, remembering her in a heartbreaking tribute.
“As many of you may now know, my beautiful sister in law Kelly Iatauro was senselessly and suddenly taken from us on Friday. Kelly was a bright light- kind, thoughtful, hysterical, inappropriate, and just one of the most amazing people I’ve ever known. She left a lasting impression on anyone that was lucky enough to know her,” Robyn wrote in part.
Sayreville police confirmed officers responded to the Glynn Court residence on July 3 and found both people dead of gunshot wounds.
The incident is being treated as a murder-suicide, and Christopher is suspected to be the shooter, the spokesperson said.
The Department of Homeland Security and Middlesex County Prosecutor’s Office did not immediately respond to additional requests for comment on the case.
What began as a heavy police response to a deadly scene left two people dead and the quiet Middlesex County neighborhood stunned.
Investigators are still trying to piece together what happened inside the home leading up to the gunfire.
Separately, Homeland Security Secretary Markwayne Mullin made headlines last week with an election-related announcement.
Mullin on Friday said officials who don’t cooperate with the administration’s election security efforts may be slapped with fines — and potentially prison time.
“If the election officials, once we gave them the information they need to secure their elections — and they chose not to — then those individuals can also be held accountable by fines, by penalties, and even, depending on how far it goes, prison time,” Mullin said during a press conference at the Eisenhower Executive Office Building.
Mullin also promised DHS would work to “speed up our security enhancements” for states.
He vowed to hold up federal election security grants until state officials took steps the administration demanded, including running their voter registration lists through a system that checks for non-citizen voters on the rolls.
Mullin made his comments after President Donald Trump’s primetime address on election security Thursday night, when he repeated already known concerns about the security of voting systems, alleged Chinese efforts to get into voter rolls, and aired old gripes about the results of the 2020 election, which he lost to Joe Biden.
In his remarks on Friday, the DHS secretary focused on DHS’s work with states to secure election systems and scrub voter registration rolls for fraud and concerns about noncitizen voting.
The Justice Department also sent letters this month threatening prosecution to election officials across the country if they don’t remove noncitizens from their voter rolls.
On Friday, Mullin seemed to suggest that the agency was able to estimate the numbers using the Systematic Alien Verification for Entitlements (SAVE) system at the U.S. Citizenship and Immigration Services and said 23 states are already working with DHS to analyze voter rolls.
And he criticized the legal challenges that are hindering the administration’s efforts: Last month, a judge blocked the Trump administration from creating a database of information about Americans, including Social Security numbers and citizenship status.
