The federal government has ceased all child care payments to Minnesota amid the Democratic state's ongoing daycare fraud scandal. 

Deputy Secretary of Health and Human Services (HHS) Jim O'Neill announced on Thursday that funding has been frozen and demanded that Governor Tim Walz audit the centers allegedly involved. 

'We have turned off the money spigot and we are finding the fraud,' O'Neill declared in his statement. 

The move from the Administration for Children and Families (ACF), the HHS division that oversees child care, comes after independent journalist Nick Shirley shared footage of an apparently empty Minnesota daycare.

The facility has reportedly received millions in taxpayer funds, leading Shirley to claim that Minnesota has allowed for the 'largest fraud in US history' to go unchecked.

'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 wrote. 

O'Neill said he has activated the 'spend defend system for all ACF payments,' meaning that all payments going forward across the country will require proof and reasoning before the money is allocated. 

He added that he and ACF Assistant Secretary Alex Adams have identified the people involved in the scheme that Shirley allegedly unveiled. 

Independent journalist Nick Shirley shared video from an apparently empty daycare in Minnesota

The HHS has demanded that Governor Tim Walz (pictured with his wife, Gwen) audit the centers allegedly involved in the fraud scandal

In another effort to combat money funneling under the guise of childcare, a 'fraud-reporting' hotline and email address have been set up.

'Whether you are a parent, provider, or member of the general public, we want to hear from you,' O'Neill wrote. 

Walz said in response that the action was just part of Trump's plan to hurt innocent people and blame Democrats.  

'This is Trump’s long game. We’ve spent years cracking down on fraudsters. It’s a serious issue - but this has been his plan all along,' Walz said. 

'He’s politicizing the issue to defund programs that help Minnesotans.' 

The Minneapolis facility that Shirley highlighted notably featured a misspelled sign, which the business named Quality 'Learing' Center instead of Quality 'Learning' Center.

Despite reportedly receiving  through Minnesota's Child Care Assistance Program (CCAP), Shirley noted that no children were in sight.