Minnesota Fraud Scandal: Tim Walz Poised to Quit 2026 Governor Race After Viral Row

Minnesota Governor Tim Walz may face increased political pressure following developments linked to a large welfare fraud investigation in the state.

The Democratic governor, who was Kamala Harris's running mate in the 2024 presidential election, is the subject of renewed scrutiny as Republicans criticise his administration's oversight.

Reports suggest Walz is considering whether to run for a third term as governor in 2026. He is scheduled to hold a press conference at 11 a.m. on Monday, though his office has not confirmed any announcement regarding his political future. Federal prosecutors have described the fraud case as involving large-scale misuse of public funds, though Walz has not been accused of wrongdoing.

The reports follow a meeting over the weekend between Walz and Senator Amy Klobuchar. Minnesota political commentator Blois Olson said sources believe the governor may withdraw from the race. Walz has been in office since January 2019 and was re-elected in 2022. No Minnesota governor has won a third term since four-year terms were introduced in 1962.

The Viral Video That Ignited Minnesota Fraud Scandal Fury

The accelerant for Walz's apparent political demise arrived in the form of a 42-minute video posted by conservative YouTuber Nick Shirley just after Christmas. The footage, which has since amassed 3 million views on YouTube and a staggering 135 million on X, documents visits to multiple daycare centres across Minneapolis. The most damning segment features the Quality Learning Center, a facility licensed to care for 99 children and recipient of roughly £3.2 million in state funding, yet appearing eerily devoid of activity when Shirley and his companion arrived.​

The centre's misspelled signage reading 'Quality Learing Center' became an instant symbol of alleged government incompetence, with House Majority Whip Tom Emmer taking to social media to demand answers: '4 million dollars of hard-earned tax dollars going to an education centre that can't even spell learning correctly. Care to explain this one, Tim Walz?' State records revealed the facility had accumulated 95 violations between 2019 and 2023, ranging from failure to keep hazardous materials away from children to having no documentation for more than a dozen listed children.​

Shirley's investigation gained explosive traction after being amplified by billionaire Elon Musk, Vice President J.D. Vance, and Attorney General Pam Bondi.

Within days of the video's release, the Trump administration announced it was freezing £147 million in federal child care payments to Minnesota, with President Trump branding the state 'a hub of fraudulent money laundering activity'. The Department of Health and Human Services demanded comprehensive audits and announced sweeping changes requiring 'a justification and a receipt or photo evidence before we send money to a state'.​

Minnesota Fraud Scandal: The Staggering Scale of Deception

The daycare video, whilst incendiary, represents merely the visible tip of an iceberg that federal prosecutors now estimate could involve up to £7.2 billion in fraudulent claims. First Assistant U.S. Attorney Joe Thompson stunned observers in December when he revealed that half or more of the roughly £14.4 billion Minnesota has spent since 2018 on 14 high-risk Medicaid programmes may have been siphoned away by fraudsters.​

'The magnitude cannot be overstated', Thompson declared at a December press conference. 'What we see in Minnesota is not a handful of bad actors committing crimes. It's staggering, industrial-scale fraud'.​

The largest single scheme, known as Feeding Our Future, involved a Minneapolis nonprofit that claimed to distribute federally funded meals to tens of thousands of children during the pandemic. Federal prosecutors allege the organisation submitted fraudulent invoices for meals that never existed, diverting an estimated £200 million into luxury vehicles, homes, and overseas real estate. To date, 78 individuals have been indicted, with 56 pleading guilty and seven convicted at trial. Only approximately £60 million has been recovered, as much of the stolen funds were spent on unrecoverable expenses or transferred overseas.​

Beyond Feeding Our Future, investigators uncovered a web of interconnected fraud. Minnesota's Housing Stabilisation Services programme, originally projected to cost £2.1 million annually in 2020, ballooned to £83 million by 2024 as fraudsters exploited lax oversight.

The programme became so notorious for 'easy money' that two Philadelphia men allegedly engaged in what prosecutors termed 'fraud tourism', travelling to Minnesota to enrol their companies, then returning to Pennsylvania to submit £2.8 million in false claims from across the country.​

An autism therapy programme meant to help vulnerable children saw providers falsely certify Somali children as eligible and pay parents kickbacks for participation, resulting in losses exceeding £11.2 million. In total, 92 individuals have been charged across various schemes, with 82 defendants of Somali descent, a demographic reality that has drawn intense scrutiny and racially charged rhetoric from the Trump administration.​

Political Fallout and the Path Forward

The scandal has swiftly reshaped Minnesota's political terrain, with former party chair Mike Erlandson predicting the crisis will be 'ever-present in all 2026 races'. Lieutenant Governor Peggy Flanagan faces uncertain prospects; despite her historic status as the nation's highest-ranking Native American executive, her own gubernatorial ambitions may now be compromised by her proximity to the scandal-plagued administration.

With Walz likely to withdraw, Senator Amy Klobuchar and Secretary of State Steve Simon have emerged as leading contenders. Meanwhile, Republicans have intensified their offensive, with President Trump branding the state a 'hub of money laundering' and Attorney General Pam Bondi promising further prosecutions beyond the 98 individuals already charged.

Walz has condemned Trump's rhetoric targeting the Somali community as 'vile, racist lies', insisting his administration was already investigating the suspicious facilities. Yet the political damage appears irreversible: FBI Director Kash Patel has alleged prior investigations were 'buried' to protect allies, whilst House Republicans have launched a formal inquiry.

Monday's announcement could make Walz the first governor in 60 years to abandon a third-term bid under such a cloud, as this 'industrial-scale' fraud claims its most prominent casualty.