Contrary to the truism, great investigators know smoke doesn’t always equal fire.
Nick Shirley, a 23-year-old YouTuber whose viral video about Minneapolis child care centers claimed to uncover one of the largest frauds in U.S. history, has fanned immense smoke. So much so that the Trump administration froze billions of dollars in child care funding and unleashed an immigration crackdown in Minnesota causing confrontations that left two citizens dead.
Last week, Shirley came to San Diego and teamed up with Amy Reichert, a local self-styled independent researcher with a private investigator’s license. They showed up at multiple Somali-run day care centers with video cameras, asking where the kids were. In Minneapolis, Shirley alleged that empty day cares were collecting government money, while providing no service.
After seeing Shirley’s Minneapolis video, Reichert took up his mantle here in San Diego. She started looking into state licensing records and claiming on X that she had discovered “ghost daycare” centers – much like Shirley claimed in Minneapolis.
Shirley hasn’t dropped his video about San Diego yet, but he’s promised it’s coming soon — and that the fraud in California may be even worse than what he claims to have found in Minneapolis.
Understanding the difference between smoke and fire couldn’t be more vital — and not just because of the viral heat Shirley brought down on Minneapolis. A local group is currently proposing a ballot measure for a half-cent sales tax that would, in part, support child care funding.
With that in mind, here’s our guide to what Shirley did and didn’t find in Minneapolis, as well as what Reichert has found in San Diego and what it would take to prove fraud here.
What Shirley Found in Minneapolis – and What He Didn’t
In Shirley’s mega-viral video, he claimed to have found nearly a dozen vacant child care centers, transparently defrauding taxpayers of more than $100 million.
To many acquainted with Minnesota’s checkered history with social services fraud, Shirley’s video was confirmation that the conspiracies were even grander than had been previously reported. At one point in his video, he described it as “potentially the largest fraud scandal in U.S. history.”
But while the images did raise valid questions, what Shirley ultimately found was, at best, wholly insufficient to justify the sweeping conclusions he came to and, at worst, entirely misleading. Still, that hasn’t stopped figures like Vice President JD Vance and Elon Musk from celebrating Shirley’s work.
In his 43-minute video, Shirley and David Hoch — whom Minnesota-Star Tribune reporter Jeffrey Metroidt described as a “political gadfly” — visited 11 Minneapolis day care centers that Shirley and Hoch alleged were scams. The day care operators were collecting government subsidies, even though they didn’t actually serve children, they claimed.
Some of the centers appeared closed. Others had locked doors, a common practice for facilities with children. At the centers where they encountered employees, Shirley and Hoch demanded they prove children were present. As one might expect, none of the providers allowed the two strangers with a camera, who were accompanied by a handful of others, some masked, inside their facilities.
Those encounters led the pair to assume that each facility was operating entirely fraudulently, but subsequent reports paint a different picture.
Follow-up visits by state regulators after the video’s release found nine of the facilities operating as expected. Eight had children present, while one hadn’t yet opened the day investigators visited. Reporters from the Minnesota Star-Tribune who visited some of the locations similarly found normal child care operations at work.
It’s possible that some degree of fraud is occurring, reporter Jeffery Meitrodt told On the Media. State officials were already investigating four of the providers Hoch and Shirley visited in their video. Regulators opened 100 additional investigations across the state in the video’s aftermath.
The video claims these providers do not, and never have, served any children – that they were, in essence, ghost towns using imaginary children to siphon taxpayer funds. Meanwhile, one of the providers showed reporters timestamped videos featuring families dropping children off prior to Shirley’s arrival. At one facility licensed for 40 children, 30 were inside when Shirley visited.
It’s common for child care facilities not to have all children present all the time. Different parents have different schedules and drop their children off at different times and on different days.
It’s also common for day care centers to sometimes be completely empty. Some child care centers, for instance, serve night workers.
As Kim McDougall, who leads childcare operations for the YMCA of San Diego County, told the Union-Tribune: “There are many reasons why children may not be present.”
What They’re Claiming in San Diego
Beginning in early January, soon after Shirley’s Minneapolis video, Reichert began posting about child care centers in San Diego.
Using public inspection records, she claimed to find several “ghost daycare” centers within her first hour of searching.
What was Reichert’s bar for a supposed ghost center? For each, she made the determination based on whether a regulator had ever visited the center and found no children present. If a center had one or more documented instances with no children at the site, she defined it a “ghost” center.
That may – or it just as likely may not — mean a center has committed fraud.
What Would Prove Fraud?
In order for a child care center to be committing fraud, the operators need to be billing for services they haven’t provided.
Reichert, by her own admission, knows nothing about what these facilities have been billing.
Here’s how the money normally flows:
The federal government sends money — which low-income families can use for child care — to the state. California then sends that money to each county, which designates a “resource and referral” agency, such as the local YMCA, to distribute the money.
Low-income families must go to the referral agency to prove who they are and how much money they make. If they qualify for the subsidy, they can then use it at any state-licensed child care center they choose.
When the licensed provider submits a report on how many hours they cared for a child, the report must be signed by the provider and family, before being sent to the referral agency for payment.
That makes fraud hard, but not impossible.
The president of UMI Learning Center in San Diego, along with several co-defendants, pled guilty to exactly such a scam in recent years.
Prosecutors say Mohamed Muriidi Mohamed gave parents kickbacks in order to sign paperwork that verified children were in UMI’s care, when they actually weren’t. He was sentenced to 27 months in prison and ordered to repay $3.7 million.
Like in Minneapolis, that conviction may lay fertile groundwork for claims of widespread fraud. That’s because Shirley’s original video was built on some kernels of truth.
In the wake of the pandemic, federal prosecutors uncovered a series of schemes by which scammers bilked the federal government of more than $1 billion in funds meant to support the needy. Many of the 59 people convicted in those cases are part of the state’s Somali-American community.
For more than a decade, critics and investigators have also raised concerns about fraud within Minnesota’s robust social services programs. Multiple investigations and audits have pointed to serious deficiencies in the oversight of the state’s childcare program. Those previous audits and investigations, however, have been conflated with Shirley’s video. Most of the places Shirley visited have since been found to have been operating normally by reporters and investigators.
On X, Reichert hasn’t been shy about announcing to the world that she discovered ghost child care centers. In an interview on FOX News, she gleefully laid out what she’d found.
“Minnesota is really just the tip of the iceberg. The massive fraud is happening right here in California,” she told newscaster Will Cain.
In an interview with Voice of San Diego, she was more circumspect, acknowledging she hadn’t actually proven fraud.
“I’ve never claimed there was fraud,” she said.
Reichert also said she hasn’t purposefully targeted the Somali community. She said she went through child care reports alphabetically, looking for each report that mentions no children being present.
We asked Reichert whether she would be disappointed if Shirley portrays their findings as definite, proven fraud — as opposed to smoke.
“I don’t think he will [portray the findings that way]” she said.
On the Ground in San Diego
Whatever he eventually finds – or purports to find – Shirley’s visit and original video sent a chill through San Diego’s Somali community.
Safiyo Jama, who runs a childcare center out of her home in City Heights, has been on the receiving end of Shirley and Reichert’s recent visits. When we spoke with her last Friday afternoon, children played in the adjoining front yards of her home and the day care next door. A mother in a minivan pulled into the driveway to pick up her child.
Jama confirmed that Shirley had come to her home earlier that day. She knew who he was and said she spoke to him through her doorbell camera, telling him to go away.
“We have kids here. It’s dangerous. It’s harassment,” said Jama.
Jama said this wasn’t the first time someone had tried to surveil her home. Starting after Shirley’s Minnesota video was posted, strangers began calling and texting.
She received texts of eye emojis, indicating she was being watched, she said. Another featured a photo of Minneapolis Congresswoman Ilhan Omar in handcuffs. Earlier this month, another individual also approached her home demanding to know if children were present.
Jama is not the only Somali-American day care operator in San Diego to experience something similar.
Jama struck a defiant tone. She said people like Shirley are just trying to generate propaganda. While she’s worried the controversy may frighten the families she serves away, she also said she had nothing to fear. The state already does inspections, she said, and she welcomes them.
Still, she underlined just how high the stakes are for her and other home day care providers.
“This is our home. It’s scary. At night, somebody can take a gun and say, ‘Okay, we’re doing this,’” she said, miming someone holding a gun.
Rami Alarian contributed to this report.