Bangladesh, Jan. 1 -- The US Department of Health and Human Services (HHS) has moved to freeze federal child care funding to all 50 states, escalating a growing national scandal that began with allegations of widespread fraud in Minnesotas daycare system. The decision, confirmed by an agency official to ABC News, marks one of the most sweeping federal interventions into child care funding in recent years and signals heightened scrutiny of how billions of taxpayer dollars are distributed and monitored.

According to the unnamed HHS official, federal child care funds will only be released once states demonstrate that the money is being spent legitimately and in compliance with federal guidelines. While the department has not publicly detail...