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- California has lost billions to cheats in the last few years, leaving Newsom vulnerable to the same sort of attack that took down Walz.
- Republicans and Democrats alike will probably come at Newsom with critiques of the state’s handling of COVID-19 funds, unemployment insurance and community college financial aid.
Former vice presidential contender and current aw-shucks Minnesota Gov. Tim Walz announced this week that he won’t run for a third term, dogged by a scandal over child-care funds that may or may not be going to fraudsters.
It’s a politically driven mess that not coincidentally focuses on a Black immigrant community, tying the real problem of scammers stealing government funds to the growing MAGA frenzy around an imaginary version of America that thrives on whiteness and Christianity.
Despite the ugliness of current racial politics in America, the fraud remains real, and not just in Minnesota. California has lost billions to cheats in the last few years, leaving our own governor, who also harbors D.C. dreams, vulnerable to the same sort of attack that has taken down Walz.
As we edge closer to the 2028 presidential election, Republicans and Democrats alike will probably come at Gavin Newsom with critiques of the state’s handling of COVID-19 funds, unemployment insurance and community college financial aid to name a few of the honeypots that have been successfully swiped by thieves during his tenure.
In fact, President Trump said as much on his social media barf-fest this week.
“California, under Governor Gavin Newscum, is more corrupt than Minnesota, if that’s possible??? The Fraud Investigation of California has begun,” he wrote.
More than a third of California’s 77 county fairs have been plagued by an array of problems in the last decade.
Right-wing commentator Benny Johnson also said he’s conducting his own “investigation.” And Republican gubernatorial candidate Steve Hilton is claiming his fraud tip line has turned up “corruption, fraud and abuse on an epic scale.”
Just to bring home that this vulnerability is serious and bipartisan, Rep. Ro Khanna, the Silicon Valley congressman rumored to have his own interest in the Oval Office, is also circling the fraud feast like a vulture eyeing his next meal.
“I want to hear from residents in my district and across the state about waste, mismanagement, inefficiencies, or fraud that we must tackle,” Khanna wrote on social media.
Newsom’s spokesman Izzy Gardon questioned the validity of many fraud claims.
“In the actual world where adults govern,” Gardon said, “Gavin Newsom has been cleaning house. Since taking office, he’s blocked over $125 BILLION in fraud, arrested criminal parasites leaching off of taxpayers, and protected taxpayers from the exact kind of scam artists Trump celebrates, excuses, and pardons.”
What exactly are we talking about here? Well, it’s a pick-your-scandal type of thing. Even before the federal government dumped billions in aid into the states during the COVID-19 pandemic, California’s unemployment system was plagued by inefficiencies, and yes, scammers. But when the world shut down and folks needed that government cash to survive, malfeasance skyrocketed.
Every thief with a half-baked plan — including chief executives, prisoners behind bars and overseas organized crime rackets — came for California’s cash, and seemingly got it. The sad part is these weren’t criminal geniuses. More often than not, they were low-level swindlers looking at a system full of holes because it was trying to do too much too fast.
In a matter of months, billions had been siphoned away. A state audit in 2021 found that at least $10 billion had been paid out on suspicious unemployment claims — never mind small business loans or other types of aid. An investigation by CalMatters in 2023 suggested the final figure may be up to triple that amount for unemployment. In truth, no one knows exactly how much was stolen — in California, or across the country.
It hasn’t entirely stopped. California is still paying out fraudulent unemployment claims at too high a rate, totaling up to $1.5 billion over the last few years — more than $500 million in 2024 alone, according to the state auditor.
But that’s not all. Enterprising thieves looked elsewhere when COVID-19 money largely dried up. Recently, that has been our community colleges, where millions in federal student aid has been lost to grifters who use bots to sign up for classes, receive government money to help with school, then disappear. Another CalMatters investigation using data obtained from a public records request found that up to 34% of community college applications in 2024 may have been false — though that number represents fraudulent admissions that were flagged and blocked, Gardon points out.
Still, community college fraud will probably be a bigger issue for Newsom because it’s fresher, and can be tied (albeit disingenuously) to immigrants and progressive policies.
California allows undocumented residents to enroll in community colleges, and it made those classes free — two terrific policies that have been exploited by the unscrupulous. For a while, community colleges didn’t do enough to ensure that students were real people, because they didn’t require enough proof of identity. This was in part to accommodate vulnerable students such as foster kids, homeless people and undocumented folks who lacked papers.
With no up-front costs for attempting to enroll, phonies threw thousands of identities at the system’s 116 schools, which were technologically unprepared for the assaults. These “ghost” students were often accepted and given grants and loans.
My former colleague Kaitlyn Huamani reported that in 2024, scammers stole roughly $8.4 million in federal financial aid and more than $2.7 million in state aid from our community colleges. That‘s a pittance compared with the tens of billions that was handed out in state and federal financial aid, but more than enough for a political fiasco.
As Walz would probably explain if nuanced policy conversations were still a thing, it’s both a fair and unfair criticism to blame these robberies on a governor alone — state government should be careful of its cash and aggressive in protecting it, and the buck stops with the governor, but crises and technology have collided to create opportunities for swindlers that frankly few governmental leaders, from the feds on down, have handled with any skill or luck.
The crooks have simply been smarter and faster than the rest of us to capitalize first on the pandemic, then on evolving technology, including artificial intelligence, that makes scamming easier and scalable to levels our institutions were unprepared to handle.
Since being so roundly fleeced during the pandemic, multiple state and federal agencies have taken steps in combating fraud — including community colleges using their own AI tools to stop fake students before they get in.
And the state is holding thieves accountable. Newsom hired a former Trump-appointed federal prosecutor, McGregor Scott, to go after scam artists on unemployment. And other county, state and federal prosecutors have also dedicated resources to clawing back some of the lost money.
A Times investigation examines how Downtown LA Law Group, a firm at the center of L.A. County’s historic settlement over sex abuse in government facilities, rapidly amassed thousands of clients and became a subject of a district attorney’s probe into alleged misconduct.
With the slow pace of our courts (burdened by their own aging technology), many of those cases are still ongoing or just winding up. For example, 24 L.A. County employees were charged in recent months with allegedly stealing more than $740,000 in unemployment benefits, which really is chump change in this whole mess.
Another California man recently pleaded guilty to allegedly cheating his way into $15.9 million in federal loans through the Paycheck Protection Program and Economic Injury Disaster Loan programs.
And in one of the most colorful schemes, four Californians with nicknames including “Red boy” and “Scooby” allegedly ran a scam that boosted nearly $250 million in federal tax refunds before three of them attempted to murder the fourth to keep him from ratting them out to the feds.
There are literally hundreds of cases across the country of pandemic fraud. And these schemes are just the tip of the cash-berg. Fraudsters are also targeting fire relief funds, food benefits — really, any pot of public money is fair game to them. And the truth is, the majority of that stolen money is gone for good.
So it’s hard to hear the numbers and not be shocked and angry, especially as the Golden State is faced with a budget shortfall that may be as much as $18 billion.
Whether you blame Newsom personally or not for all this fraud, it’s hard to be forgiving of so much public money being handed to scoundrels when our schools are in need, our healthcare in jeopardy and our bills on an upward trajectory.
The failure is going to stick to somebody, and it doesn’t take a criminal mastermind to figure out who it’s going to be.
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Ideas expressed in the piece
The fraud plaguing Minnesota under Governor Walz’s administration is real but has become entwined with politically motivated attacks targeting the state’s Black immigrant community, particularly Somali residents, as part of broader MAGA politics focused on race and whiteness.
California faces similar vulnerabilities to partisan fraud accusations, with billions lost to scams involving unemployment insurance, COVID relief funds, and community college financial aid programs during the pandemic and beyond.
While fraud schemes were enabled by systemic failures and technology gaps that outpaced government institutions during the pandemic crisis, fraudsters—from overseas organized crime to low-level swindlers—exploited poorly designed systems trying to distribute aid too quickly.
Blaming governors alone for fraud is both fair and unfair; while the buck stops with the governor, multiple state and federal agencies have since implemented stronger protections including AI tools to detect fraud, and prosecutors have dedicated resources to holding criminals accountable.
California’s policies allowing undocumented residents to enroll in free community colleges are progressive accomplishments that have been disingenuously weaponized as the source of fraud, when the actual problem stems from inadequate identity verification systems designed to protect vulnerable populations.
Governor Newsom has taken substantive action by blocking over $125 billion in fraud, hiring a former Trump-appointed prosecutor to investigate unemployment fraud, and holding accountable numerous individuals across multiple cases, yet remains vulnerable to the same political attacks that forced Walz from the gubernatorial race.
Different views on the topic
Massive fraud of taxpayer dollars occurred under Walz’s watch, and he is either complicit in this theft or grossly incompetent in preventing it, making him unable to escape accountability regardless of his withdrawal from reelection.[1]
The Walz administration had years of warning signs about insufficient internal controls that were repeatedly flagged, yet the state failed to act on these warnings until federal authorities intervened, representing a serious breakdown in governance and management systems.[1]
The administration appeared defensive and dismissive when indictments and convictions mounted, resisting stronger legislative oversight and even clashing with courts, which allowed what could have been contained early to become a rolling scandal of proven fraud.[5]
One-party Democratic control of Minnesota government bred complacency that weakened accountability and treated internal dissent as disloyalty, creating a culture where oversight became optional and critics were dismissed.[5]
State employees claimed they attempted to blow the whistle on fraud but faced retaliation from the Walz Administration, indicating intentional suppression of fraud warnings rather than mere systemic failure.[4]
The fraud is not merely a pandemic-era anomaly but reflects fundamental failures of stewardship in core government programs, with at least $250 million stolen through one major scheme alone and estimates suggesting fraud totaled as much as $9 billion in some accounts.[2][3]
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