Minnesota Daycare Owner Charged Over Alleged Daycare Fraud Scheme

The charges come months after video featuring empty and closed daycare centers receiving large sums of tax dollars went viral.

Minnesota State Capitol building in Minneapolis on June 20, 2020. Stephen Maturen/Getty Images

A Minneapolis daycare owner was charged on May 20 with conspiracy to defraud the United States.

Fahima Egeh Mahamud, 50, CEO of Future Leaders Early Learning Center, allegedly submitted more than 13,000 false claims to Minnesota’s Child Care Assistance Program (CCAP) between 2022 and 2025, according to a federal indictment unsealed on Wednesday. About 6,144 of these claims required co-payments to be collected from families.

Prosecutors say Mahamud falsely certified that those payments had been collected, allowing her daycare business to receive $4.6 million in improper reimbursements.

Mahamud was initially charged in February with wire fraud for her alleged involvement in the Feeding Our Future meal fraud scheme.

Prosecutors alleged that from December 2020 to July 2021, Mahamud claimed to serve tens of thousands of meals to children at the Future Leaders site each month, when it served only a fraction of those meals, and submitted inflated meal counts, rosters, and invoices for reimbursement.

An attorney for Mahamud could not be reached.

Daycare is one of the services that has been subject to scrutiny amid allegations of widespread welfare fraud in Minnesota.

The Future Leaders Early Learning Center was one of the Minneapolis daycares referenced or featured in YouTuber Nick Shirley’s viral video in December.

Just weeks before Shirley’s viral video outlined possible fraud, a federal prosecutor suggested that more than half of the roughly $18 billion in federal funds supporting 14 programs in Minnesota since 2018 may have been stolen.

Attorney General Pam Bondi said in a December post on X that 98 people—85 of Somali descent—had been indicted, and more than 60 individuals have been convicted in welfare fraud cases in the state.

Minnesota receives $185 million in child care funds from the Administration for Children and Families each year, according to HHS Assistant Secretary Alex Adams.

HHS’s Child Care Funding Freeze

The Department of Health and Human Services (HHS) announced on Jan. 6 that access to federal child care assistance funds was frozen for California, Colorado, Illinois, Minnesota, and New York state.

In a statement, the department cited “concerns about widespread fraud and misuse of taxpayer dollars in state-administered programs.”

Those funds will be frozen until the Administration for Children and Families within HHS completes a review and is satisfied that the states are compliant with federal requirements.

The freeze applies to three programs under HHS’s Administration for Children and Families, including nearly $2.4 billion in the Child Care and Development Fund (CCDF), which distributes federal support for low-income families.

In fiscal year 2024, there were nearly 6.3 million children aged 5 and younger who qualified for the assistance, but fewer than 840,000, or about 13 percent, actually received it.

HHS has also frozen $7.35 billion for the Temporary Assistance for Needy Families program and $869 million for the Social Services Block Grant. Combined, the funding to those three programs for the states in question totaled more than $10 billion.

“Families who rely on child care and family assistance programs deserve confidence that these resources are used lawfully and for their intended purpose,” HHS Deputy Secretary Jim O’Neill said at the time. “This action reflects our commitment to program integrity, fiscal responsibility, and compliance with federal requirements.”

This came just days after the Trump administration announced that child care funding would be frozen for all 50 states until providers completed additional verification steps.

Savannah Hulsey Pointer and Jackson Richman contributed to this report.