Tim Walz lost his governorship because fraudsters plundered $9 billion from Minnesota's welfare programs.
California just made Minnesota look like a convenience store robbery.
A new Manhattan Institute investigation just dropped a number on Gavin Newsom's fraud problem that is larger than the entire economy of most countries – and he can't explain a single dollar of it.
California EDD Fraud Handed Chinese State Hackers Billions in Taxpayer Money
Before the COVID-19 pandemic, fraud specialist Haywood Talcove – CEO of LexisNexis Risk Solutions for Government – was begging federal officials to harden California's unemployment system.
"I was begging [federal officials] not to let the money go out like that," Talcove said, "because it was going to be the biggest fraud in the history of our country."
Nobody listened.
Gavin Newsom's labor secretary, Julie Su, spent years blocking stronger identity-verification requirements at the Employment Development Department (EDD) – arguing tougher standards would disproportionately hurt minority applicants.
When pandemic cash flooded in, her agency had exactly two bureaucrats assigned to manually review fraud reports.
Chinese state-sponsored hackers from "Wicked Panda" – officially known as Advanced Persistent Threat 41 – moved in alongside Romanian crime rings, American street gangs, and California's own prison population.
Fraudsters filed unemployment claims in the names of death row inmates – at least 133 of them.
A Romanian-led ring orchestrated a $5 million scheme, recruiting applicants through Facebook and meeting them at parks across Southern California.
A Memphis rapper named Nuke Bizzle made a music video bragging about looting the EDD system – holding up stolen debit card envelopes on camera.
He stole more than $700,000 before federal charges caught up with him.
California lost an estimated $32.6 billion in fraudulent unemployment claims.
The EDD's fraud rate, as of 2024, still runs nearly 8 percent annually – more than $1 billion stolen every year since the pandemic ended.
Julie Su oversaw the single largest state-level fraud loss in American history – and Joe Biden nominated her to run the entire federal Department of Labor.
Gavin Newsom Doubled Medi-Cal Spending and Created the Biggest Medicaid Fraud Crisis in the Country
Medi-Cal is the catastrophe underneath the unemployment scandal.
Newsom more than doubled Medi-Cal spending since taking office – from $93.5 billion annually to $196.7 billion – while extending coverage to illegal aliens and covering sex-change surgeries for enrollees of all ages.
High-ranking sources at the U.S. Department of Health and Human Services, currently probing California, told City Journal their initial fraud rate estimate for Medi-Cal since 2019 runs at 25 percent.
Talcove calls 20 percent "very conservative."
In one case, three defendants allegedly ran a fraudulent pharmacy called Monte Vista that looted more than $178 million from Medi-Cal.
In another, a defendant was charged with accepting more than $2.3 million in kickbacks funneling patients into addiction-treatment facilities.
The state's In-Home Supportive Services program – a Medi-Cal sub-program Newsom expanded by 170 percent – runs almost entirely on the honor system.
State protocols explicitly prohibit random unannounced home visits.
Caregivers have billed the state for services delivered to recipients who were hospitalized, in nursing facilities, or dead.
A 2021 Riverside County audit found that 41 of the 68 county staff assigned to oversee the program were themselves IHSS providers – with a direct financial stake in keeping it exactly as porous as it is.
Applying a conservative 15 percent fraud rate to Medi-Cal spending since 2019, California taxpayers lost approximately $146 billion through the program alone.
The Manhattan Institute puts Medi-Cal fraud losses at $50 billion in a single recent period – a number larger than the entire annual budget of 29 states.
California Homelessness Fraud Swallowed 24 Billion Dollars and Newsom Blocked the Audit
California spent $24 billion on homelessness programs since 2019.
The state still has more than 180,000 homeless people.
Federal prosecutor Bill Essayli – First Assistant U.S. Attorney for the Central District of California – launched a dedicated task force in 2025 to find out where the money went.
"California has spent $24 billion in the last five years on homelessness, and no one can account for where that money has really gone," Essayli said in January.
He called Newsom "the king of fraud."
A 2024 HUD Inspector General report concluded California's housing agency was not "adequately prepared to prevent, detect, and respond to fraud."
One Los Angeles affordable-housing developer received nearly $26 million in state homelessness funds – then allegedly embezzled $2.2 million to pay for exotic cars and a 6,500-square-foot mansion.
The CEO of a separate publicly funded Los Angeles homeless charity allegedly pocketed at least $10 million to bankroll lavish vacations and designer clothes.
Kevin Kiley tried to get an audit of California's homelessness spending in 2020.
Newsom's people showed up and killed it.
One vote kept the truth buried – and Kiley says that was the point.
They "likely knew what the audit would show," he told City Journal.
President Trump signed an executive order in March creating the Task Force to Eliminate Fraud, led by Vice President JD Vance.
The White House fact sheet named California specifically as a state where "insufficient safeguards and weak oversight increase the risk of large-scale fraud."
Newsom's office called the fraud allegations "MAGA made-up numbers."
California's own nonpartisan auditor calls EDD's ongoing problems "a substantial risk of serious detriment to the State and its residents."
Those are not Trump's words.
California Assemblyman David Tangipa has watched Sacramento up close for years.
His verdict: "Sacramento is pervaded by a culture of corruption."
Minnesota's fraud scandal ended Tim Walz's political career when the numbers came into focus.
California's numbers are 20 times larger – and when voters get a look at what Gavin Newsom actually built in Sacramento, his presidential campaign is going to collapse before it ever leaves the ground.
Sources:
- Christopher F. Rufo, Ryan Thorpe, Kenneth Schrupp, Haley Strack, "Gavin Newsom's Empire of Fraud," City Journal, April 1, 2026.
- "Federal prosecutor calls Newsom 'king of fraud' as Trump launches California corruption probe," Fox News, January 8, 2026.
- "Trump anti-fraud task force targeting California and more states to be led by JD Vance," CBS News, February 4, 2026.
- "Fact Sheet: President Donald J. Trump Establishes the Task Force to Eliminate Fraud," White House, March 2026.
- "Newsom Has His Own Massive State Fraud Problem," California Policy Center, January 23, 2026.