fraud

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.

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 “(c)orruption, 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 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 CEOs, 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 AI 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.

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.

Riverside County Sheriff Chad Bianco, one of the top Republican candidates running for California governor, met a woman sprawled on the sidewalk as he walked around Skid Row in downtown Los Angeles.

“I’m waiting for the sun to come out from the clouds. I’m sunbathing,” the woman said Tuesday morning, lying on her jacket on the cold concrete, denying that any drug use was taking place in the roughly 50-block swath of downtown Los Angeles. “This is what we do here in California.”

Bianco and Kate Monroe, chief executive of VetComm, talks with a woman on the sidewalk as they walk around of Skid Row.

(Jason Armond/Los Angeles Times)

Bianco shook his head, and as he walked away said there was zero chance the woman was not high on methamphetamines or something else. He said it was immoral for the state’s leaders to allow people to live in such conditions, and pledged to clean up Skid Row within four years if he is elected governor in November.

“Why on God’s green earth, why would we allow this to happen?” Bianco later said. “And why would you have something that you call Skid Row, that you just accept, instead of doing something to fix … these people’s lives.”

Bianco squarely blamed the problem on waste, fraud and mismanagement under Gov. Gavin Newsom, Los Angeles Mayor Karen Bass and prior elected leaders, who he argued failed to effectively tackle the issue. He is among the critics who points to a 2024 state audit that found the state had spent $24 billion to combat homelessness over the prior five years without tracking the results.

A spokesman for Newsom disputed such characterizations of the spending.

“There is no ‘lost’ $24 billion for homelessness. All the money is accounted for,” Newsom spokesman Izzy Gardon said. “What the report found was that not all state programs required locals to report, at the time, how those dollars improved homelessness outcomes. Gov. Newsom has since changed the law to fix this longstanding issue.”

Bianco also pledged to use existing laws against drug dealing, human trafficking, prostitution and other crimes to clean up these blocks, while offering addicts and the mentally ill who are breaking the law the option of going to jail or being placed in treatment programs.

Democrats shot back that Bianco was not offering realistic approaches to an intractable problem.

Bianco talks with Antonio Fuller, left, and John Shepar.

(Jason Armond/Los Angeles Times)

“Chad Bianco is the best example of an all-hat, no-cattle politician with tough talk and no solutions,” state Democratic Party Chair Rusty Hicks said. “That is not what California voters want in our next governor.”

Throughout his campaign, Bianco has leaned into his role as a law enforcement leader. On Tuesday, as his allies shot video after his visit to Skid Row, he pulled up the edge of his T-shirt to reveal his Riverside County sheriff badge.

Amid scenes of desperation, chaos and squalor, Bianco was surrounded by a gaggle of invited media.

Los Angeles Police Department patrol cars were frequently seen nearby as the group sidestepped feces, used condoms, sidewalk fires, open-air drug use and drug dealing, barely clothed women, and people screaming and cursing.

People make their way around Skid Row on Tuesday.

(Jason Armond/Los Angeles Times)

Monroe talks with Emilio Marroquin.

(Jason Armond/Los Angeles Times)

Bianco was accompanied by veteran and homeless advocate Kate Monroe, who handed the homeless envelopes containing $5 bills and cigarettes as encouragement to talk. Some did not take kindly to the offer.

“Get out of my face. Get out of my face. You’re offering me cigarettes,” the woman said. Monroe replied, ‘I’ll give you five bucks.” The woman repeated, “Get out of my face.”

But others were more receptive, including Emilio Marroquin.

The 42-year-old said he had started drinking as a teenager as he struggled with being gay in a Christian home. He didn’t come out until his father, a pastor, passed away. His drinking spiraled out of control, he said, leading friends and family to abandon him. After Marroquin ended up on the streets eight years ago, he said, he started using crystal meth and crack, and explained the splotchy wounds on his hand were the result of being beaten up for failing to pay drug debts.

After learning that Marroquin briefly lived in sober housing, Bianco asked him about the difficulties of transitioning from living on the streets to structured housing, and then spoke with a passing community service provider who identified herself as S.R.

“We need a new change. We need something other than what we’ve been hearing for the past, I don’t know, 20 years or longer,” she said, to which Bianco replied that she had “more courage, passion and commitment and a big heart than probably anyone to be able to come down here and do this over.”

Bianco greets a man who goes by Cigaretteman.

(Jason Armond/Los Angeles Times)

The Riverside County sheriff’s appearance on Skid Row comes as the 2026 governor’s race is finally starting to see some energy.

A crowded field of prominent though little-known Democrats is competing to finish in the top two spots in the June primary. If they all remain in the race, the Democrats could splinter the vote and allow one of the far smaller number of top Republican candidates to win one of the spots.

Bianco’s top GOP rival, former Fox News commentator and British political strategist Steve Hilton, held a rainy-day news conference on Monday in front of the California Employment Development Department in San Francisco to highlight alleged fraud in state government.

Saying that Newsom has turned the state into “Califraudia,” Hilton and GOP controller candidate Herb Morgan called on the U.S. Department of Justice and other federal officials to investigate waste and fraud in state spending.

“This gets to that question that every Californian is asking: How is it that we have the highest taxes in the country? They’ve doubled the budget of the state of California nearly in the last five years, and everything is worse,” Hilton said. “We have the worst outcomes in America. How is that possible, that they spend so much and we get so little? … We are going to get to the bottom of this when we are elected.”

WASHINGTON — President Trump’s administration announced late Tuesday that it’s freezing child care funds to Minnesota and demanding an audit of some day care centers after a series of fraud schemes involving government programs in recent years.

Deputy Secretary of Health and Human Services Jim O’Neill said on the social platform X that the move is in response to “blatant fraud that appears to be rampant in Minnesota and across the country.”

Minnesota Gov. Tim Walz pushed back on X, saying fraudsters are a serious issue that the state has spent years cracking down on but that this move is part of “Trump’s long game.”

“He’s politicizing the issue to defund programs that help Minnesotans,” Walz said.

O’Neill referenced a right-wing influencer who posted a video Friday claiming he found that day care centers operated by Somali residents in Minneapolis had committed up to $100 million in fraud. O’Neill said he has demanded Walz submit an audit of these centers that includes attendance records, licenses, complaints, investigations and inspections.

“We have turned off the money spigot and we are finding the fraud,” O’Neill said.

The announcement comes one day after U.S. Homeland Security officials were in Minneapolis conducting a fraud investigation by going to unidentified businesses and questioning workers.

There have been years of investigations that included a $300 million pandemic food fraud scheme revolving around the nonprofit Feeding Our Future, for which 57 defendants in Minnesota have been convicted. Prosecutors said the organization was at the center of the country’s largest COVID-19-related fraud scam, when defendants exploited a state-run, federally funded program meant to provide food for children.

A federal prosecutor alleged earlier this month that half or more of the roughly $18 billion in federal funds that supported 14 programs in Minnesota since 2018 may have been stolen. Most of the defendants in the child nutrition, housing services and autism program schemes are Somali Americans, according to the U.S. Attorney’s Office for Minnesota.

O’Neill, who is serving as acting director of the Centers for Disease Control and Prevention, also said in the social media post Tuesday that payments across the U.S. through the Administration for Children and Families, an agency within the U.S. Health and Human Services Department, will now require “justification and a receipt or photo evidence” before money is sent. They have also launched a fraud-reporting hotline and email address.

The Administration for Children and Families provides $185 million in child care funds annually to Minnesota, according to Assistant Secretary Alex Adams.

“That money should be helping 19,000 American children, including toddlers and infants,” he said in a video posted on X. “Any dollar stolen by fraudsters is stolen from those children.”

Adams said he spoke Monday with the director of Minnesota’s child care services office and she wasn’t able to say “with confidence whether those allegations of fraud are isolated or whether there’s fraud stretching statewide.”

Trump has criticized Walz’s administration over the fraud cases, capitalizing on them to target the Somalia diaspora in the state, which has the largest Somali population in the U.S.

Walz, the 2024 Democratic vice presidential nominee, has said an audit due by late January should give a better picture of the extent of the fraud. He said his administration is taking aggressive action to prevent additional fraud. He has long defended how his administration responded.

Minnesota’s most prominent Somali American, Democratic U.S. Rep. Ilhan Omar, has urged people not to blame an entire community for the actions of a relative few.

Golden writes for the Associated Press.

Dec. 30 (UPI) — U.S. Department of Health and Human Services officials have frozen federal child care funding to Minnesota amid accusations of fraud in that state and others.

HHS officials announced the action on Tuesday and credited a viral video that suggests rampant fraud is occurring at Minnesota child care centers that provide daycare services for few, if any, children.

“You have probably read the serious allegations that the state of Minnesota has funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade,” said Jim O’Neill, HHS deputy secretary, in a social media post on Tuesday.

In response to the “blatant fraud that appears to be rampant in Minnesota and across the country,” O’Neill said HHS officials have taken three actions.

One is to require justification and a receipt or photo evidence before sending federal Administration for Children and Family funds to a state.

HHS also launched a fraud-reporting hotline and email address, and identified individuals shown in a viral social media video at Minnesota daycare centers that appeared to have no children.

“I have demanded from [Minnesota] Gov. Tim Walz a comprehensive audit of these centers,” O’Neill said. “This includes attendance records, licenses, complaints, investigations and inspections.”

Conservative activist Nick Shirley recorded and posted the viral video, which, along with FBI evidence, spurred U.S. Department of Homeland Security Sec. Kristi Noem on Monday to launch what she called a “massive investigation on childcare and other rampant fraud,” according to CBS News.

Minnesota Department of Children, Youth and Families Commissioner Tikki Brown told CBS News the department questions “some of the methods used in the video” but takes the fraud concerns raised in Shirley’s video “very seriously.”

State officials visited some of the daycare centers featured in the video and said two of them were closed earlier this year, but officials at one said they intend to resume operations.

CBS News looked at the records for several of the daycares cited and said all but two have active licenses to operate in Minnesota.

State records show all of the active locations had been visited by state regulators over the past six months, with no evidence of fraud found, but citations were issued for staff training, safety, equipment, and cleanliness violations.

The alleged daycare fraud comes amid federal investigations of 14 Medicaid-funded programs in Minnesota, but none involved child care.

Among them is an investigation into the Feeding Our Future program that was intended to feed at-risk children during the COVID-19 pandemic but has triggered dozens of federal fraud convictions and has embroiled Rep. Ilhan Omar, D-Minn., who helped to promote it.

That alleged fraud cost an estimated $250 million and largely occurred within the Somali community in the greater Minneapolis-St. Paul area, which prompted President Donald Trump to halt Temporary Protected Status for Somalians in Minnesota.

MINNEAPOLIS — A surge of federal officers in Minnesota follows new allegations of fraud by day care centers run by Somali residents.

President Trump has previously linked his administration’s immigration crackdown against Minnesota’s large Somali community to a series of fraud cases involving government programs in which most of the defendants have roots in the east African country.

Surge in federal officers

Department of Homeland Security Secretary Kristi Noem and FBI Director Kash Patel both announced an increase in operations in Minnesota this week. The move comes after a right-wing influencer posted a video Friday claiming he had found that day care centers operated by Somali residents in Minneapolis had committed up to $100 million in fraud.

Tikki Brown, commissioner of the Minnesota Department of Children, Youth, and Families, said at a Monday news conference that state regulators took the influencer’s allegations seriously.

Noem posted on social media that officers were “conducting a massive investigation on childcare and other rampant fraud.” Patel said the intent was to “dismantle large-scale fraud schemes exploiting federal programs.”

Past fraud in Minnesota

Minnesota has been under the spotlight for years for Medicaid fraud, including a massive $300-million pandemic fraud case involving the nonprofit Feeding Our Future. Prosecutors said it was the country’s largest COVID-19-related fraud scam and that defendants exploited a state-run, federally funded program intended to provide food for children.
In 2022, during President Biden’s administration, 47 people were charged. The number of defendants has grown to 78 throughout the ongoing investigation.

So far, 57 people have been convicted, either because they pleaded guilty or lost at trial.

Most of the defendants are of Somali descent.

Numerous other fraud cases are being investigated, including new allegations focused on child care centers.

In news interviews and releases over the summer, prosecutor Joe Thompson estimated the loss from all fraud cases could exceed $1 billion. Earlier this month, a federal prosecutor alleged that half or more of the roughly $18 billion in federal funds that supported 14 programs in Minnesota since 2018 may have been stolen.

Crackdown targeting Somalis

Trump’s immigration enforcement in Minnesota has focused on the Somali community in the Minneapolis-St. Paul area, which is the largest in the country.

Trump labeled Minnesota Somalis as “garbage” and said he didn’t want them in the United States.

About 84,000 of the 260,000 Somalis in the U.S. live in the Minneapolis-St. Paul area. The overwhelming majority are U.S. citizens. Almost 58% were born in the U.S and 87% of the foreign-born are naturalized citizens.

Among those running schemes to get funds for child nutrition, housing services and autism programs, 82 of the 92 defendants are Somali Americans, according to the U.S. attorney’s office for Minnesota.

Republicans have tried to blame Walz

Minnesota Gov. Tim Walz, the 2024 Democratic vice presidential nominee, has said fraud will not be tolerated and his administration “will continue to work with federal partners to ensure fraud is stopped and fraudsters are caught.”

The fraud could be a major issue in the 2026 gubernatorial race as Walz seeks a third term.

Walz has said an audit due by late January should give a better picture of the extent of the fraud but allowed that the $1-billion estimate could be accurate. He said his administration is taking aggressive action to prevent additional fraud. He has long defended how his administration responded.

Minnesota’s most prominent Somali American, Democratic U.S. Rep. Ilhan Omar, has urged people not to blame an entire community for the actions of a relative few.

Ex-Gov. Jim Guy Tucker’s ex-business partner pleaded guilty to a Whitewater fraud charge that accused him and Tucker of arranging a sham bankruptcy that saved them $2 million in taxes. Boston businessman William J. Marks Sr. said Tucker and Tucker’s lawyer–who are scheduled for trial this winter–used falsified documents to understate the value of cable television systems Marks and the former governor owned in Texas and Florida. Marks told U.S. District Judge Stephen M. Reasoner in Little Rock, Ark., he had full knowledge of the plan. Tucker, then governor, was sentenced to 18 months’ home detention after being convicted in a separate Whitewater case last year.

Four years ago, California startup Theta Labs’ cryptocurrency was soaring, and its future appeared bright when it landed a partnership with pop star Katy Perry.

The Bay Area company had built a marketplace for digital collectibles known as nonfungible tokens, or NFTs, and had teamed up with Perry to launch NFTs tied to her Las Vegas concert residency. Its THETA token jumped by more than 500% in early 2021, reaching a peak of more than $15, making it one of the world’s most valuable cryptocurrencies. Later in the year, the spotlight shone on the company when it announced the Perry partnership.

“I can’t wait to dive in with the Theta team on all the exciting and memorable creative pieces, so my fans can own a special moment of my residency,” Perry said in a June 2021 news release.

Today, like many cryptocurrencies, THETA is 95% off its 2021 peak. It took a hit this week after former executives accused it of manipulating markets to dupe consumers into buying its products. On Tuesday, it was trading at less than 30 cents.

Two former executives from Theta Labs sued the startup, alleging in separate lawsuits that the company and its chief executive, Mitch Liu, engaged in fraud and manipulated the cryptocurrency market for his benefit. Liu retaliated against them after the employees refused to engage in deceptive business practices and raised concerns, the lawsuits say.

Some of the alleged misconduct involved placing fake bids on Perry’s NFTs, engaging in token “pump and dump” schemes and using celebrity endorsements and “misleading” partnerships with high-profile companies such as Google to deceive the public, according to the December lawsuits filed in Los Angeles Superior Court.

Perry is not accused of any wrongdoing in the suit, and Theta denies the charges.

The lawsuits against Theta Labs are the latest controversy to rattle an industry beset by scandals.

Cryptocurrency exchange FTX collapsed, and its founder, Samuel Bankman-Fried, was sentenced to 25 years in prison in 2024 after being found guilty of multiple fraud charges. Binance founder and former Chief Executive Changpeng Zhao also got prison time after he pleaded guilty to violating money laundering laws, but President Trump pardoned him this year.

The U.S. Securities and Exchange Commission previously charged celebrities such as Kim Kardashian, Lindsay Lohan, Jake Paul and Ne-Yo for promoting crypto without disclosing they were paid to do so.

Theta Labs created a network that rewarded people with cryptocurrency for contributing spare bandwidth and computing power to enhance video streaming and lower content delivery costs. The company describes Theta Network as a “blockchain-powered decentralized cloud for AI, media and entertainment.” The network has two tokens: THETA, used to secure the network, and TFUEL, used to pay users for services and power operations.

The whistleblowers suing Theta Labs are Jerry Kowal, its former head of content, and Andrea Berry, previously the company’s head of business development.

“Liu used Theta Labs as his personal trading vehicle, perpetrating fraud, self-dealing, and market manipulation,” said Mark Mermelstein, Kowal’s attorney, in a statement. “His calculated ‘pump-and-dump’ schemes repeatedly wiped out employee and investor value. This suit is about demanding accountability and proving no one is above the law.”

Theta, Liu and its parent company, Sliver VR Technologies, deny the allegations and “intend to prove with evidence the fallacy of the stories being told in the lawsuits,” according to Kronenberger Rosenfeld, the law firm representing the defendants. The lawsuits are an attempt to paint the company in a negative light in hopes of securing a settlement, a lawyer for the firm said.

Kowal has sued his former employers before. In 2014, he accused Netflix of spreading false claims that he stole confidential information and Amazon of wrongful termination.

The latest lawsuits allege that Liu profited from buying and selling THETA tokens using insider knowledge about partnerships with celebrities, studios and others in the entertainment industry.

“Liu’s true motive in pursuing such partnerships was not to develop a sustainable content business but to generate publicity that could be used to artificially inflate token prices for Liu’s personal gain,” Kowal’s lawsuit says.

Kowal worked for Theta from 2020 to 2025.

In 2020, Liu traded and sold tokens knowing that the company would close a content licensing deal with MGM Studios, according to the lawsuit. After the deal’s announcement, THETA token’s market capitalization increased by more than $50 million in just 24 hours, the lawsuit says.

When NFTs started to take off in 2021, Kowal closed deals with high-profile partners such as Perry, Fremantle Media and Resorts World Las Vegas for the startup’s NFT marketplace.

As part of the deal with Perry, the singer received $8.5 million and additional warrants for the right to license her image and likeness for the NFTs.

To inflate the price and demand for these digital collectibles, Liu allegedly made bids on NFTs and directed employees to do the same. This led to people overpaying for the Perry NFTs.

Representatives for Perry didn’t immediately respond to a request for comment.

Multiple examples of alleged manipulation are outlined in the lawsuits. In one instance from 2022, the startup launched a new token called TDROP that employees also received as part of a bonus.

Liu gained control of 43% of the supply of the cryptocurrency, according to Kowal’s lawsuit. When the TDROP token reached a high, he then sold the token, and its price collapsed by more than 90% within months.

Berry’s lawsuit also alleges that Theta Labs announced “misleading” or fake partnerships with high-profile companies such as Google and entities including NASA to pump up the value of the THETA token. Theta paid for Google Cloud products but claimed it was a partner when it was a Google customer, according to the lawsuit.