California’s $180 Billion Fraud Machine
California now operates in a curious contradiction. Over the last decade, the state’s population has barely increased as residents have fled high taxes and onerous liberal policies. At the same time, however, government spending has exploded, even as the visible crises of homelessness, addiction, mismanaged wildfires, and crumbling infrastructure have become more severe.
California’s own budget documents show that from 2015 to 2025, the state’s population grew by less than one percent. Over that same period, however, the total number of government jobs increased by 24.5 percent, and total spending nearly doubled, increasing about 48 percent even when accounting for inflation.
This dichotomy has now led to a growing chorus of voices asking the obvious question: Where did all the money go?
A recent City Journal investigation offers the clearest answer yet. The report found that California has lost at least $180 billion to fraud during Gov. Gavin Newsom’s tenure. That’s more than the GDP of 17 U.S. states.
The losses are spread across unemployment insurance, Medi-Cal, hospice care, and other major public programs. California specifically has been forced to acknowledge roughly $20 billion in fraudulent unemployment claims and about $55 billion in improper EDD payments (for unemployment, disability, or paid family leave) overall.
Some claims were filed in the names of prisoners, including death-row inmates. City Journal reported that at the height of the COVID-19 pandemic, when unemployment claims reached their peak, only two state employees were assigned to manually review claims for fraud. It’s almost as if California officials simply didn’t care about fraud – or wanted to make it as easy as possible.
The same pattern shows up in Medi-Cal, only on a larger and more permanent scale. Before Newsom took office, the program cost about $93.5 billion. In the current budget, that figure has ballooned to about $196.7 billion.
At the same time, California expanded full Medi-Cal coverage regardless of immigration status. State officials projected that roughly 764,000 people would enroll. Instead, enrollment reached about 1.6 million, contributing to a $6.2 billion program shortfall. California is failing to stop theft while making even larger spending commitments with diminishing capacity to manage them.
Meanwhile, California Attorney General Rob Bonta has called recent revelations of hospice fraud an “epidemic.” In Van Nuys, one of the main centers of the scandal, roughly 500 hospice agencies were reportedly operating within a three-mile radius – an impossibly large number that should have been setting off alarm bells long ago.
While California’s Democrat leaders are now scrambling to appear like they are on top of the problem, they only began to pay attention once it broke into the headlines thanks to an investigation from independent journalist Nick Shirley.
Shirley’s reporting found hospice offices in a converted motel and a strip mall. Some spaces were occupied by workers who reacted angrily when asked to answer questions. Others were empty.
Additional reporting from local news outlets also described disconnected phone lines, unopened mail, luxury vehicles in parking lots, and little visible evidence of patients or caregiving, even as public funds continued to flow to these fake hospice centers.
Hospice enrollment in California has risen more than 1,000 percent in recent years, resulting in $170 million in suspect billing. The question now should be how the problem became so bad before anyone in the California government bothered to do anything about it.
The Centers for Medicare & Medicaid Services sent a team to review the concentration of hospice claims in California. CMS Administrator Dr. Mehmet Oz said Los Angeles County alone accounted for a staggering 18 percent of the entire country’s home health billing.
Newsom has said his administration revoked 280 hospice licenses over the last two years. But more than 700 of roughly 1,800 hospices in Los Angeles County triggered multiple fraud alerts, and more than 40 percent were still operating despite those warning signs.
Not all of California’s spending problems take the form of outright fraud. Some appear in projects that grow more expensive while producing little progress. In these cases, government contractors – often with suspicious connections to the officials approving the expenditures – siphon money from taxpayers without delivering anything of value.
The most obvious example is California’s high-speed rail fiasco. Voters approved the project in 2008 as a $33 billion line connecting Los Angeles and San Francisco by 2020. It is now projected to cost more than $125 billion, with passenger service still years away. The state has already spent more than $15 billion – without laying even a single mile of track.
The incomplete wildlife bridge over the 101 freeway is another black eye for Newsom. At the groundbreaking in 2022, the project was presented as a roughly $92 million undertaking. It has now already cost $114 million, with state funds accounting for about $77 million – and it’s nowhere close to finished.
At the same time, Newsom is seeking $19 million for a “California Brand Campaign,” with roughly two-thirds of the money earmarked for advertising and media placements. The campaign is meant to counter what officials describe as “myths driven by misinformation and political rhetoric.”
In other words, instead of fixing the fraud and all his bad policies that are driving the state into a financial ditch, Newsom wants $19 million to create propaganda claiming the problems simply don’t exist. Meanwhile, California is facing a projected $3 billion deficit in the next fiscal year.
Not every government failure amounts to corruption. But taken together, these examples point to a broader pattern that cannot be ignored. Now, Californians should be asking themselves a few important questions: Is anyone in power actually going to be held accountable for allowing all the fraud? Will we ever know exactly how much was stolen from us? Will those who broke the law actually go to jail?
Those questions should apply not just to the street-level fraudsters and operators, but also to the officials who designed, expanded, and tolerated these broken systems. Newsom sits at the top of this one-party state where accountability has largely vanished.
Writing this off as “California being California” misses the depth of the failure. This is fraud and incompetence on a scale never before seen in American history, and it has the potential to negatively impact the entire country. It’s long past time someone in power paid for it.
