Investigator and YouTuber Nick Shirley released a video on Tuesday, March 18, 2026, alleging a massive $170 million fraud network within California’s taxpayer funded daycare system.
The investigation identifies a series of "ghost" centers registered to empty lots, boarded up storefronts, and unrelated businesses across San Diego and Los Angeles.
Shirley’s findings mirror recent claims made by CMS Administrator Dr. Mehmet Oz, who identified a $3.5 billion hospice fraud ring in Los Angeles where 42 providers were registered within a single four block radius.
Despite a stable population, California’s spending on these state funded programs has reportedly seen a 1,000% increase, fueling a heated clash between federal investigators and state officials.
In the video, Shirley and partner Amy Reichert visited several locations listed as active facilities.
At one San Diego plaza, state records showed 39 children enrolled at a facility that appeared abandoned. Another site, Hayder Sahra Family Child Care, was cited by inspectors for having 14 kids enrolled but zero present during visits.
When Shirley attempted to ask questions at one location, he was met with hostility from individuals yelling in Somali.
"We're not targeting a Somali population; we're just going after daycare, and it just so happens that all the daycares we're at are Somali so far," Shirley stated in response to allegations of bias.
The investigation also touched on the Van Nuys neighborhood, a known epicenter for hospice and home health fraud.
Shirley highlighted "Garden of Angels Hospice," which allegedly billed $4.8 million despite being located in a plaza housing 15 other registered hospice centers.
Some buildings appeared entirely empty with no furniture, yet records indicated they were charging upwards of $32,000 per beneficiary.
Governor Gavin Newsom has dismissed these "street investigations" as "political cosplay" and filed a civil rights complaint against Dr. Oz for racial profiling.
Newsom argued that the state has already taken steps to curb the issue, including a 2021 moratorium on new hospice licenses.
However, critics argue that the surge in Medi-Cal spending from $108 billion in 2022 to a proposed $222 billion in 2026 suggests that oversight remains insufficient.
While federal authorities have launched a task force to tackle the "fraud epidemic," it remains unclear if local law enforcement will open formal inquiries into the specific addresses highlighted by Shirley.
For now, the dual probes by Shirley and Oz have intensified the national spotlight on what they describe as systemic exploitation of California’s social service systems.