California is fraud central

The rampant fraud uncovered in the state of Minnesota has shocked America and ended the political career of Gov. Tim Walz. 

Yet as I told Attorney General Pam Bondi at a recent House Judiciary Committee hearing, the fraud in Minnesota pales in comparison to what taxpayers have suffered in California. 

California is undoubtedly the Fraud Capital of America. 

Here’s what we already know. 

The state allowed an estimated $32 billion in unemployment fraud during the COVID years, far more than any state, after ignoring “repeated warnings.” Perhaps more stunningly, the state auditor recently found unemployment fraud is still costing the state billions.

Incidentally, in part because of this staggering fraud, California was forced to take out a $20 billion loan from the federal government to shore up its unemployment benefits. The state then defaulted on the loan – the only state to do so – triggering an automatic tax increase on employers. 

In addition to unemployment fraud, a recent state audit reported billions more in SNAP, Medicaid, and Medicare improper payments. 

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The scathing report found the number of “high-risk” agencies, which exhibit serious “waste, fraud, abuse, or mismanagement,” has doubled during Gov. Gavin Newsom’s tenure, from four to eight. 

We also know about millions in financial aid fraud tied to 1.2 million fake community college applications, and $52.7 million improperly sought and received in federal reimbursement requests for illegal immigrant health care (uncovered by the Biden administration). 

In addition, Dr. Mehmet Oz, President Donald Trump’s administrator of the Centers for Medicare & Medicaid Services, is investigating billions of dollars in highly suspicious reimbursement claims in the hospice industry. Small Business Administrator Kelly Loeffler has also identified billions more in fraud involving California SBA loans.

But what is truly alarming is the likely fraud we don’t know about. 

Consider, for example, homelessness spending. 

A state audit that I initially requested as a state legislator found that $24 billion was spent over five years in California to combat homelessness – yet the homeless population exploded. The state could not account for where those funds went or point to any benchmarks to measure outcomes of the spending. 

Or consider the high-speed rail mess. The state has spent $17 billion over 17 years without laying any track. 

That’s why I introduced legislation to cut off all further funding, and President Trump recently signed a bill to do just that. I have also asked the FBI to investigate where all the money went. 

Curiously, amidst this new scrutiny, Newsom is pushing legislation to keep documents relating to the project secret through an exemption from the Public Records Act.

Or consider that Californians have been charged extra fees on their phone bills for the last six years to fund a “Next Generation 911 System.” Yet after spending $450 million, the state just scrapped the whole project because the technology didn’t work. 

Newsom has shown very little interest in reining in all this fraud; to the contrary, he has repeatedly vetoed accountability measures. 

So we are bringing accountability from Washington. 

On top of cutting off high-speed rail funding, we have already stamped out most of the community college fraud. My colleague Young Kim and I requested that Secretary of Education Linda McMahon institute new identity verification requirements. 

We have also seen several federal indictments come down in connection with homelessness funding fraud, and have every reason to believe this is just the tip of the iceberg. 

Following investigations by the House Oversight Committee, the Trump administration has announced that a “strike team” will be on the ground in Sacramento to root out insurance fraud. 

The 911 fiasco is now facing a federal investigation from the FCC, and calls for an audit from state lawmakers. 

And the Department of Justice has also named a new “fraud czar,” with the president designating Vice President JD Vance to oversee fraud prevention nationwide — with a particular focus on California.

These efforts could spell the end of Gavin Newsom’s presidential ambitions – and a new beginning for the people of California. 

Since Newsom took office, the budget has grown from $202 billion to $352 billion. Yet there is nothing to show for it. 

Indeed, everything has gotten worse, with the state leading the nation in poverty, unemployment, homelessness, and illiteracy. 

And now, the state is considering a new “wealth” tax to simply seize the assets of high-net-worth individuals, on the theory that the state needs even more money.

Needless to say, the state does not have a revenue problem. It has a spending problem – where taxpayer dollars are too often given away to criminals who have found our government to be the easiest and most lucrative of targets. 

Kevin Kiley represents California’s 3rd congressional district in the U.S. House of Representatives.