SACRAMENTO — The yr opened with President Trump declaring that “the fraud investigation of California has begun,” a transfer that rapidly set off a barrage of allegations from his administration and Republican allies questioning the integrity of state packages and the management of Gov. Gavin Newsom.
The accusations, amplified throughout social media and conservative shops, have pushed California and its Democratic management to the middle of a broader nationwide political battle over waste, fraud and abuse.
Newsom has dismissed the claims as politically pushed, arguing that the administration is singling out Democratic-led states whereas ignoring related issues elsewhere. The governor additionally responded by highlighting fraud circumstances in Republican-led states and by criticizing Trump’s personal report and enterprise dealings.
In opposition to that backdrop, it has change into more and more tough to separate substantiated fraud from fabricated or recycled claims, to tell apart previous findings from newly raised allegations and to find out who can credibly declare credit score for uncovering wrongdoing — all amid a poisonous and deeply polarized political local weather.
Dan Schnur, who teaches political communications at USC and UC Berkeley, mentioned allegations of malfeasance in California is a very ripe goal for Republicans as a result of Democrats have managed the state Legislature and governor’s workplace for years.
Democrats maintain a supermajority in each the Meeting and the Senate, which means they maintain not less than two-thirds of seats in each homes, and never a single Republican has been elected to statewide workplace in California since 2006, when Gov. Arnold Schwarzenegger and Insurance coverage Commissioner Steve Poizner had been reelected.
“There isn’t a shared accountability right here for Republicans,” Schnur mentioned. “For those who had a state during which Republicans had been truly aggressive, they might bear some accountability for these issues.”
Audits and prosecutions present that California has skilled its share of fraud, significantly in advanced packages involving emergency support, healthcare and unemployment insurance coverage. The state paid out billions of {dollars} in fraudulent unemployment claims in the course of the COVID-19 pandemic, and the California State Auditor has issued repeated warnings about state companies which can be “at excessive threat for waste, fraud, abuse, or mismanagement.”
Together with recycling a barrage of years-old allegations of monetary malfeasance in California and different Democratic states, the Trump administration elevated claims of child-care fraud in Minnesota final month, prompting Gov. Tim Walz to drop his reelection plans to deal with the rising political disaster in his state.
Fraud allegations are more and more being deployed as a political weapon towards Newsom, a number one Trump critic and a possible 2028 Democratic presidential contender. Politicians have all the time railed towards authorities waste, fraud and abuse, however now these points are being “weaponized right into a partisan problem,” Schnur mentioned.
For the general public, it may be laborious to discern the reality. Here’s a have a look at three of the central fraud allegations — and what the proof exhibits.
Baby-care funding
President Trump used his social media platform, Fact Social, to accuse California of widespread fraud final month, drawing a hyperlink between his administration’s investigation into child-care spending in Minnesota and packages within the Golden State, and asserting a significant federal “fraud investigation” into the state’s actions.
“California, underneath Governor Gavin Newscum, is extra corrupt than Minnesota, if that’s doable???” wrote Trump, utilizing a disparaging nickname for the governor.
The Trump administration then moved to freeze $10 billion in federal funding for youngster care in 5 Democrat-led states — California, New York, Colorado, Illinois and Minnesota — over “critical considerations about widespread fraud and misuse of taxpayer {dollars}.”
In a trio of Jan. 6 letters addressed to Newsom, the U.S. Division of Well being and Human Companies mentioned it was involved there had been “potential for in depth and systemic fraud” in youngster care and different social companies packages that depend on federal funding, and had “purpose to imagine” that the state was “illicitly offering unlawful aliens” with advantages.
The letters didn’t element proof to assist the claims. The governor’s workplace dismissed the accusation as “deranged.”
A federal choose subsequently blocked the Trump administration quickly from freezing these funds. In that ruling, U.S. District Decide Vernon Broderick mentioned he didn’t perceive why the federal government was making it more durable for states to entry child-care cash earlier than any wrongdoing had been found.
“It simply looks like the cart earlier than the horse,” he mentioned.
Hospice funding
Days after Trump’s social media publish about alleged corruption underneath Newsom’s watch, Dr. Mehmet Oz, administrator for the Facilities for Medicare & Medicaid Companies, and Invoice Essayli, the highest federal prosecutor in Los Angeles, held a joint information convention on public advantages fraud, however supplied few particulars in regards to the scope of their investigation.
The officers accused “overseas actors” of draining billions from public healthcare packages in California, referencing bogus hospice suppliers first uncovered by The Instances in 2020 and later investigated by California Atty. Gen. Rob Bonta.
Essayli positioned the blame for unhealthy actors squarely on Newsom, calling him “the fraud king.”
Weeks later, Ozreleased a video of himself strolling within the Los Angeles neighborhood of Van Nuys as he questioned why dozens of alleged hospices had been working alongside 4 blocks. He blamed the “Russian Armenian Mafia” and made his remarks whereas pointing to an Armenian bakery, prompting accusations of racism from the Armenian neighborhood.
Newsom’s workplace final week hit again by highlighting state efforts to battle fraud, whereas pointing to a 2025 Axios story on the Trump administration’s choice to pause a federal program to crack down on unhealthy hospice operators.
Bonta’s workplace mentioned it has filed legal fees towards 109 people over hospice fraud-related offenses and launched dozens of civil investigations.
Newsom, talking at a Bloomberg occasion Thursday in San Francisco, mentioned the allegations have been recycled and misrepresented. Later that day, he filed a civil rights grievance towards “baseless and racist allegations towards Armenian People in California” made by Oz.
“Hospice, we’ve been after that for years and years earlier than Ozwas even on the scene,” Newsom mentioned. “In 2021, we did a moratorium on new hospice packages, 280 we shuttered.”
The Heart for Medicare & Medicaid Companies mentioned earlier this yr that — along with California — Arizona, Nevada, Texas, Ohio and Georgia are being monitored following allegations of fraud and waste.
EDD fraud
The state’s Employment Growth Division, often called EDD, reported in 2021 that roughly $20 billion was misplaced because of fraud, largely within the federal Pandemic Unemployment Help (PUA) program.
Whereas unemployment fraud was rampant throughout nation in the course of the pandemic as governments rushed to supply assist, California’s issues stood out.
The state itself admitted in 2021 that it did not take precautions that had been carried out in different states, together with utilizing software program to determine suspicious purposes and cross-checking profit claims towards private knowledge on state jail inmates.
Rep. Kevin Kiley (R-Rocklin) mentioned division mismanagement and fraud typically overlap and cited EDD as a main instance.
“When there’s a lack of inside controls, a scarcity of diligence of how funds are used, that makes it simpler for many who wish to benefit from the system to revenue,” Kiley mentioned.
EDD’s personal tracker mentioned the state has recovered greater than $6 billion in stolen funds and opened greater than 2,300 unemployment fraud investigations because the pandemic started, main to almost 1,000 arrests and greater than 670 convictions.
The division mentioned it has expanded fraud enforcement via partnerships with legislation enforcement, new identity-verification expertise and a devoted fraud process drive.
However, stories of mismanagement at EDD have continued. A latest audit additionally discovered EDD wasted $4.6 million by paying month-to-month service charges for greater than 6,200 cellphones that went unused for not less than 4 consecutive months between November 2020 and April 2025 — together with some units that had been inactive for greater than 4 years.
On the identical time, “EDD continues to have excessive charges of improper [unemployed insured] funds, together with fraudulent funds, and it wants to enhance the customer support it offers to UI claimants,” one other report discovered.
What’s subsequent?
Newsom mentioned there’s a purpose the Trump administration just isn’t pointing to fraud in Republican-led states.
“That is about polarization, politicalization, weaponization,” Newsom mentioned Thursday.
Requested what the Trump administration will uncover in probing California for fraud, Newsom mentioned investigators will discover a state “taking that problem very, very severely.”
“We completely are right here to be a accomplice, to go after waste, fraud and abuse,” Newsom mentioned.
State audits present vulnerabilities persist. The California State Auditor has repeatedly flagged Medi-Cal eligibility discrepancies which have uncovered the state to billions of {dollars} in questionable funds, whereas additionally warning that weaknesses in data safety throughout state companies stay a high-risk problem.
Curbing waste might be significantly vital in the course of the upcoming yr as California and its state-funded packages head right into a interval of unstable fiscal uncertainty, pushed largely by occasions in Washington and on Wall Avenue. Newsom’s personal optimistic funds proposal tasks a $3-billion state deficit for the subsequent fiscal yr regardless of no main new spending initiatives.
The nonpartisan Legislative Analyst’s Workplace warned in November that California faces a practically $18-billion funds shortfall.
It would even be a key problem in upcoming elections. A gaggle of Republicans operating for statewide workplaces, together with California gubernatorial candidate Steve Hilton, pegged that the state’s annual estimate of fraud, waste and abuse throughout state packages at $250 billion, an estimate that features unverified public suggestions submitted to a campaign-run web site.
The group cited the estimate as justification for creating their very own “California Division of Authorities Effectivity,” or CAL DOGE, a nod to a equally named federal initiative promoted by Elon Musk that generated headlines however has not produced documented financial savings or formal audit findings. CAL DOGE just isn’t at present a state division, regardless of its identify.
Who deserves credit score when fraud is prosecuted has additionally change into some extent of rivalry. After a person was arrested final month for fleecing L.A.’s homeless companies program for $23 million, critics of Newsom had been fast in charge the governor. Newsom responded by saying the case was uncovered by native investigators working with legislation enforcement, which he added is “precisely the sort of accountability and oversight the state has pushed for.” (The Los Angeles district lawyer’s workplace ran a parallel, unbiased investigation.)
Essayli responded on social media by saying nobody made an arrest till Trump and Atty. Gen. Pam Bondi “appointed me to research and cost fraud offenses in California.”
Kiley, the California Republican congressman, mentioned regardless of the partisan preventing over fraud, the difficulty ought to rally each events.
The “best” strategy to remedy the state’s funds issues and enhance authorities companies for taxpayers is to “decrease and finally eradicate fraud,” mentioned Kiley.
