Fraud Woes in California Expose Taxpayer Damage
The significant fraud revealed in Minnesota sent shockwaves across the nation and effectively ended Governor Tim Walz’s political career.
However, as I discussed with Attorney General Pam Bondi during a recent House Judiciary Committee hearing, the extent of fraud in California far surpasses that in Minnesota. It’s hard to ignore that California appears to be the capital of fraud in the United States.
To put things into perspective:
The state has publicly acknowledged around $32 billion in unemployment fraud—this figure dwarfs any other state’s losses, despite warnings that were largely disregarded throughout the COVID-19 pandemic. Perhaps what’s more eye-opening is that a state auditor recently found further evidence of unemployment fraud that could cost taxpayers even more.
As a consequence of this rampant fraud, California ended up borrowing $20 billion from federal reserves to bolster unemployment benefits. Notably, California is the only state that has failed to repay its loans, resulting in automatic tax hikes for employers.
Furthermore, a recent audit also unveiled billions in erroneous SNAP, Medicaid, and Medicare payments.
In an equally scathing report, officials found that the number of “high-risk” institutions with serious issues of “waste, fraud, abuse, or mismanagement” doubled from four to eight since Governor Gavin Newsom took office.
Additionally, they found millions in financial aid fraud tied to 1.2 million fraudulent community college applications and $52.7 million in federal claims for medical expenses related to undocumented immigrants who were improperly solicited.
Dr. Mehmet Oz, who led the Trump administration’s Medicare and Medicaid Services, is currently probing billions of questionable claims in the hospice sector. Similarly, Small Business Administrator Kelly Loeffler has flagged billions more in fraud linked to SBA loans within California.
But, honestly, it’s the potential for more fraud that raises even more eyebrows. Just to illustrate, take the state’s spending on homelessness.
The first state audit I initiated when I was a state representative revealed California had pumped $24 billion into tackling homelessness over five years—yet the problem seems to be growing. They couldn’t even clarify where that money went or provide metrics to evaluate its effectiveness.
Then there’s the high-speed rail project, which has consumed $17 billion over 17 years without producing a single operational line.
This situation pushed me to introduce legislation aimed at halting any further funding, and fortunately, President Trump has signed that into law. I also called on the FBI to investigate the disappearance of those funds.
Strangely, amid this scrutiny, Newsom is now advocating for legislation that would keep documents regarding the high-speed rail project under wraps, exempting them from public records laws.
Another example? Californians have been paying a surcharge on their phone bills for six years to fund a so-called “next generation 911 system.” Yet, after squandering $450 million, the project was abandoned because the technology failed to deliver results.
Interestingly, Newsom doesn’t seem keen on tackling this kind of fraud; he has consistently vetoed measures aimed at increasing accountability.
We’re trying to bring accountability back to Washington, though. Cutting off funding for high-speed rail was just the beginning; we’ve nearly eliminated a lot of fraud in community colleges, thanks in part to the new identification rules we urged then-Education Secretary Linda McMahon to adopt.
Several federal indictments have also surfaced concerning fraudulent homelessness funding, with many believing this is only scratching the surface. Following an investigation by the House Oversight Committee, the Trump administration announced a special team would be dispatched to Sacramento to combat insurance fraud.
The failed 911 project is currently under federal probe by the FCC, which has requested audits from the state legislature. The Justice Department recently appointed a “fraud czar,” with Vice President J.D. Vance taking charge of nationwide fraud prevention, focusing particularly on California.
These ongoing investigations could hinder Gavin Newsom’s presidential ambitions and signal a fresh start for Californians.
Since Newsom entered office, the state’s budget has surged from $202 billion to $352 billion, but tangible benefits seem non-existent. The situation appears to be deteriorating, as the state remains at the forefront of poverty, unemployment, homelessness, and illiteracy.
Interestingly, states are contemplating a new “wealth” tax aimed at seizing assets from the affluent, based on the belief that they require additional funding.
It’s important to note: California doesn’t struggle with revenue; it struggles with spending. Often, taxpayer money ends up in the hands of criminals whom the government finds the easiest targets.
