fraud

SACRAMENTO — The year opened with President Trump declaring that “the fraud investigation of California has begun,” a move that quickly set off a barrage of allegations from his administration and Republican allies questioning the integrity of state programs and the leadership of Gov. Gavin Newsom.

The accusations, amplified across social media and conservative outlets, have pushed California and its Democratic leadership to the center of a broader national political fight over waste, fraud and abuse.

Newsom has dismissed the claims as politically driven, arguing that the administration is singling out Democratic-led states while ignoring similar problems elsewhere. The governor also responded by highlighting fraud cases in Republican-led states and by criticizing Trump’s own record and business dealings.

Against that backdrop, it has become increasingly difficult to separate substantiated fraud from fabricated or recycled claims, to distinguish old findings from newly raised allegations and to determine who can credibly claim credit for uncovering wrongdoing — all amid a toxic and deeply polarized political climate.

Dan Schnur, who teaches political communications at USC and UC Berkeley, said allegations of malfeasance in California is a particularly ripe target for Republicans because Democrats have controlled the state Legislature and governor’s office for years.

Democrats hold a supermajority in both the Assembly and the Senate, meaning they hold at least two-thirds of seats in both houses, and not a single Republican has been elected to statewide office in California since 2006, when Gov. Arnold Schwarzenegger and Insurance Commissioner Steve Poizner were reelected.

“There is no shared responsibility here for Republicans,” Schnur said. “If you had a state in which Republicans were actually competitive, they would bear some responsibility for these problems.”

Audits and prosecutions show that California has experienced its share of fraud, particularly in complex programs involving emergency aid, healthcare and unemployment insurance. The state paid out billions of dollars in fraudulent unemployment claims during the COVID-19 pandemic, and the California State Auditor has issued repeated warnings about state agencies that are “at high risk for waste, fraud, abuse, or mismanagement.”

Along with recycling a barrage of years-old allegations of financial malfeasance in California and other Democratic states, the Trump administration elevated claims of child-care fraud in Minnesota last month, prompting Gov. Tim Walz to drop his reelection plans to focus on the growing political crisis in his state.

Fraud allegations are increasingly being deployed as a political weapon against Newsom, a leading Trump critic and a potential 2028 Democratic presidential contender. Politicians have always railed against government waste, fraud and abuse, but now those issues are being “weaponized into a partisan issue,” Schnur said.

For the public, it can be hard to discern the truth. Here is a look at three of the central fraud allegations — and what the evidence shows.

Child-care funding

President Trump used his social media platform, Truth Social, to accuse California of widespread fraud last month, drawing a link between his administration’s investigation into child-care spending in Minnesota and programs in the Golden State, and announcing a major federal “fraud investigation” into the state’s actions.

“California, under Governor Gavin Newscum, is more corrupt than Minnesota, if that’s possible???” wrote Trump, using a disparaging nickname for the governor.

The Trump administration then moved to freeze $10 billion in federal funding for child care in five Democrat-led states — California, New York, Colorado, Illinois and Minnesota — over “serious concerns about widespread fraud and misuse of taxpayer dollars.”

In a trio of Jan. 6 letters addressed to Newsom, the U.S. Department of Health and Human Services said it was concerned there had been “potential for extensive and systemic fraud” in child care and other social services programs that rely on federal funding, and had “reason to believe” that the state was “illicitly providing illegal aliens” with benefits.

The letters did not detail evidence to support the claims. The governor’s office dismissed the accusation as “deranged.”

A federal judge subsequently blocked the Trump administration temporarily from freezing those funds. In that ruling, U.S. District Judge Vernon Broderick said he didn’t understand why the government was making it harder for states to access child-care money before any wrongdoing had been discovered.

“It just seems like the cart before the horse,” he said.

Hospice funding

Days after Trump’s social media post about alleged corruption under Newsom’s watch, Dr. Mehmet Oz, administrator for the Centers for Medicare & Medicaid Services, and Bill Essayli, the top federal prosecutor in Los Angeles, held a joint news conference on public benefits fraud, but offered few details about the scope of their investigation.

The officials accused “foreign actors” of draining billions from public healthcare programs in California, referencing bogus hospice providers first exposed by The Times in 2020 and later investigated by California Atty. Gen. Rob Bonta.

Essayli placed the blame for bad actors squarely on Newsom, calling him “the fraud king.”

Weeks later, Oz released a video of himself walking in the Los Angeles neighborhood of Van Nuys as he questioned why dozens of alleged hospices were operating along four blocks. He blamed the “Russian Armenian Mafia” and made his remarks while pointing to an Armenian bakery, prompting accusations of racism from the Armenian community.

Newsom’s office last week hit back by highlighting state efforts to fight fraud, while pointing to a 2025 Axios story on the Trump administration’s decision to pause a federal program to crack down on bad hospice operators.

Bonta’s office said it has filed criminal charges against 109 individuals over hospice fraud-related offenses and launched dozens of civil investigations.

Newsom, speaking at a Bloomberg event Thursday in San Francisco, said the allegations have been recycled and misrepresented. Later that day, he filed a civil rights complaint against “baseless and racist allegations against Armenian Americans in California” made by Oz.

“Hospice, we’ve been after that for years and years before Oz was even on the scene,” Newsom said. “In 2021, we did a moratorium on new hospice programs, 280 we shuttered.”

The Center for Medicare & Medicaid Services said earlier this year that — in addition to California — Arizona, Nevada, Texas, Ohio and Georgia are being monitored following allegations of fraud and waste.

EDD fraud

The state’s Employment Development Department, known as EDD, reported in 2021 that approximately $20 billion was lost due to fraud, largely in the federal Pandemic Unemployment Assistance (PUA) program.

While unemployment fraud was rampant across country during the pandemic as governments rushed to provide support, California’s problems stood out.

The state itself admitted in 2021 that it failed to take precautions that had been implemented in other states, including using software to identify suspicious applications and cross-checking benefit claims against personal data on state prison inmates.

Rep. Kevin Kiley (R-Rocklin) said department mismanagement and fraud often overlap and cited EDD as a prime example.

“When there is a lack of internal controls, a lack of diligence of how funds are used, that makes it easier for those who want to take advantage of the system to profit,” Kiley said.

EDD’s own tracker said the state has recovered more than $6 billion in stolen funds and opened more than 2,300 unemployment fraud investigations since the pandemic began, leading to nearly 1,000 arrests and more than 670 convictions.

The department said it has expanded fraud enforcement through partnerships with law enforcement, new identity-verification technology and a dedicated fraud task force.

But, reports of mismanagement at EDD have continued. A recent audit also found EDD wasted $4.6 million by paying monthly service fees for more than 6,200 cellphones that went unused for at least four consecutive months between November 2020 and April 2025 — including some devices that were inactive for more than four years.

At the same time, “EDD continues to have high rates of improper [unemployed insured] payments, including fraudulent payments, and it needs to improve the customer service it provides to UI claimants,” another report found.

What’s next?

Newsom said there is a reason the Trump administration is not pointing to fraud in Republican-led states.

“This is about polarization, politicalization, weaponization,” Newsom said Thursday.

Asked what the Trump administration will discover in probing California for fraud, Newsom said investigators will find a state “taking that issue very, very seriously.”

“We absolutely are here to be a partner, to go after waste, fraud and abuse,” Newsom said.

State audits show vulnerabilities persist. The California State Auditor has repeatedly flagged Medi-Cal eligibility discrepancies that have exposed the state to billions of dollars in questionable payments, while also warning that weaknesses in information security across state agencies remain a high-risk issue.

Curtailing waste could be particularly important during the upcoming year as California and its state-funded programs head into a period of volatile fiscal uncertainty, driven largely by events in Washington and on Wall Street. Newsom’s own optimistic budget proposal projects a $3-billion state deficit for the next fiscal year despite no major new spending initiatives.

The nonpartisan Legislative Analyst’s Office warned in November that California faces a nearly $18-billion budget shortfall.

It will also be a key issue in upcoming elections. A group of Republicans running for statewide offices, including California gubernatorial candidate Steve Hilton, pegged that the state’s annual estimate of fraud, waste and abuse across state programs at $250 billion, an estimate that includes unverified public tips submitted to a campaign-run website.

The group cited the estimate as justification for creating their own “California Department of Government Efficiency,” or CAL DOGE, a nod to a similarly named federal initiative promoted by Elon Musk that generated headlines but has not produced documented savings or formal audit findings. CAL DOGE is not currently a state department, despite its name.

Who deserves credit when fraud is prosecuted has also become a point of contention. After a man was arrested last month for fleecing L.A.’s homeless services program for $23 million, critics of Newsom were quick to blame the governor. Newsom responded by saying the case was uncovered by local investigators working with law enforcement, which he added is “exactly the kind of accountability and oversight the state has pushed for.” (The Los Angeles district attorney’s office ran a parallel, independent investigation.)

Essayli responded on social media by saying no one made an arrest until Trump and Atty. Gen. Pam Bondi “appointed me to investigate and charge fraud offenses in California.”

Kiley, the California Republican congressman, said despite the partisan fighting over fraud, the issue should rally both parties.

The “easiest” way to solve the state’s budget problems and improve government services for taxpayers is to “minimize and eventually eliminate fraud,” said Kiley.

It all began after a viral video alleging fraud in Somali-run child-care centers in Minneapolis: strangers peering through windows, right-wing journalists showing up outside homes, influencers hurling false accusations.

In San Diego, child-care provider Samsam Khalif was shuttling kids to her home-based center when she was spooked by two men with a camera waiting in a car parked outside, prompting her to circle the block several times before unloading the children.

“I’m scared. I don’t know what their intention is,” said Khalif, who decided to install additional security cameras outside her home.

Somali-run child-care centers across the United States have become targets since the video caught the attention of the White House amid the administration’s immigration crackdown. Child-care providers worry about how they can maintain the safe learning environments they have worked to create for young children who may be spending their first days away from their parents.

In the Minneapolis area, child-care providers, many of them immigrants, say they’re being antagonized, exacerbating the stress they face from immigration enforcement activity that has engulfed the city.

One child-care provider said she watched someone emerge from a car that had been circling the building and defecate near the center’s entrance. The same day, a motorist driving by yelled that the center was a “fake day care.” She’s had to create new lockdown procedures, is budgeting for security and now keeps the blinds closed to shield children from unwanted visitors and from witnessing immigration enforcement actions.

“I can’t have peace of mind about whether the center will be safe today,” said the provider, who spoke on condition of anonymity for fear of being targeted. “That’s a hard pill to swallow.”

Video’s claims disproved

The day after Christmas, right-wing influencer Nick Shirley posted a lengthy video with allegations that members of Minneapolis’ large Somali community were running fake child-care centers so they could collect federal child-care subsidies.

The U.S. occasionally has seen fraud cases related to child-care subsidies. But the Minneapolis video’s central claims — that business owners were billing the government for children they were not caring for — were disproved by inspectors. Nonetheless, the Trump administration attempted to freeze child-care funding for Minnesota and five other Democratic-led states until a court ordered the funding to be released.

President Trump has repeatedly targeted Somali immigrants with dehumanizing rhetoric, calling them “garbage” and “low IQ” and suggesting that Rep. Ilhan Omar, a Minnesota Democrat who was born in Somalia, should be deported: “Throw her the hell out!” In Minnesota, 87% of foreign-born Somalis are naturalized U.S. citizens.

Trump has zeroed in on a years-old case in which a sprawling network of fraudsters — many of them Somali Americans — bilked Minnesota of an estimated $300 million that was supposed to help feed children and families. His rhetoric intensified after Shirley’s video was posted.

Activists take it upon themselves to investigate

In Federal Way, Wash., and Columbus, Ohio, both home to large Somali communities, right-wing journalists and influencers began showing up unannounced at addresses for child-care operations they pulled from state websites.

In one video, a man arrives at a bungalow-style building in Columbus. He films through the glass front door, showing a foyer with cheerful posters that read “When we learn, we grow” and “Make today happy.”

“It does not look like a child-care center at all,” the man says.

Ohio dispatched an inspector to the address and found that it was, in fact, a legitimate child-care center. The center’s voicemail was hacked, so parents calling heard a slur-laden message calling Somalis “sand rats” and saying they “worship a false religion of baby-raping terrorists,” according to WOSU-FM.

In Washington state, child-care workers called police on the right-wing journalists who kept appearing outside their homes.

Journalists with the right-leaning Washington outlet Center Square filmed themselves pressing a woman for proof that she ran a child-care center for which she was collecting federal subsidies. She refused to answer questions.

“Are you aware of the Somali day-care fraud? We’re just trying to check out if this is a real day care,” one of the journalists said. “Where are the children?”

Local officials speak out

Seattle Mayor Katie Wilson posted a statement on X saying she would not tolerate anyone trying to “intimidate, harass or film Somali child care providers.” Then, Harmeet Dhillon, who heads the Justice Department’s Civil Rights Division, issued her own warning: “Asking questions/citizen journalism are NOT HATE CRIMES in America — they are protected speech, and if Seattle tries to chill that speech, @CivilRights will step in to protect it and set them straight!”

In Ohio, Republican Gov. Mike DeWine held a news conference to debunk a right-wing influencer’s fraud claims about a Columbus child-care center and assured people the state diligently monitored centers that receive public money. He said a child-care provider refusing to let in a stranger should not be read as a sign of fraud.

“It shouldn’t be a shock when someone sees something on social media, and someone is going, ‘I can’t get into this place, no one will let me in,’” DeWine said in a news conference in January. “Well, hell, no! No one should let them in.”

Even after DeWine refuted the claims, Republicans in the Statehouse introduced legislation to more closely monitor child-care centers, including one measure that would require those that take public money to provide live video feeds of their classrooms to state officials.

Advocates say fraud claims are a distraction

Child-care advocates say the fraud allegations are detracting from more pressing crises.

Child-care subsidy programs in many states have lengthy waiting lists, making it difficult for parents to return to work. The programs that subsidize child care for families that struggle to afford it are also facing funding threats, including from the Trump administration.

Ruth Friedman, who headed the Office of Child Care under President Biden, accused Trump and Republicans of manufacturing a crisis for political gain.

“They are using it to try to discredit the movement toward investing in child care,” said Friedman, who is now a senior fellow at the left-leaning think tank Century Foundation.

Health and Human Services spokesperson Andrew Nixon said in a statement that the department “rejects the claim that concerns about child care program integrity are manufactured.” He urged people to report suspected fraud to the government.

Balingit and Kramon write for the Associated Press.

A year ago, Colorado firefighters Rick Balentine and Tim Cottrell were driving trucks carrying donations from Aspen to Los Angeles for victims of the Eaton and Palisades fires.

As they headed west, they planned to stop in Las Vegas and, while there, made a spontaneous decision to see the Eagles’ residency at the Sphere. Balentine and Cottrell bought resale tickets on StubHub for around $400 each. Cottrell used his credit card and received a confirmation email. But once they arrived to the venue, they weren’t allowed in. The seller failed to send the tickets.

All Cottrell could find was an email that said his tickets had been canceled, moments before the concert was to start. Other than getting their money back, there was no further explanation.

“We knew they were aftermarket tickets,” Balentine said, “but never in a million years did I think that tickets could get canceled.”

“I was very disappointed. There needs to be more protection out there, both for consumers and for artists, so people aren’t getting ripped off all the time.”

The rising demand for tickets has spurred a growing marketplace for all kinds of high-profile live events, including music tours and sports series like the upcoming World Cup. Whenever fans are unable to secure tickets on the primary market, through sellers like Ticketmaster or AXS, many will turn to the secondary market for resale tickets. Those tickets are typically sold through platforms like StubHub, SeatGeek and Vivid Seats. Customers who bought their passes directly from Ticketmaster can also resell them on that platform.

The majority of secondary-market transactions can be easy, leaving both the reseller and the customer satisfied. But with the rise of speculative or fake tickets, like the ones Balentine and Cottrell bought, securing valid tickets from the resale market has become more challenging.

What are speculative tickets?

Speculative tickets are offered by resellers who list concert passes they don’t yet have in their possession, with the intention that they will ultimately acquire the tickets and deliver them to the buyer. According to 2025 data from Live Nation, one in three Americans has fallen victim to a ticketing scam. But under California’s bill, AB 1349, selling speculative tickets could be banned on all resale platforms in the state. On Monday, the bill passed in an assembly vote and is headed to the state Senate for review.

Thousands of fans enjoy Shakira’s performance at SoFi Stadium in August.

(Jason Armond/Los Angeles Times)

Speculative tickets usually pop up as soon as a major artist announces a tour. Most recently, K-pop boy band BTS announced a world tour that includes four stops at SoFi Stadium. Before the general sale began Jan. 24, some sellers on Vivid Seats had already started listing tickets for over $6,000. Listings like these usually create a greater sense of scarcity, which can drive up ticket prices even more.

If enacted, the proposed legislation in California would require sellers to have event tickets in their possession before offering them for sale. The listing must include the location of the seat and specific refund rights. It prohibits a person from using software that automatically purchases more tickets than the specified limit, and it would raise the maximum civil penalty for each violation from $2,500 to $10,000.

The live music industry is a vital part of the state’s economy, contributing over $51 billion to California’s GDP and supporting over 460,000 jobs, according to the database 50 States of Music.

Ticketing fraud tends to affect more than just the consumer. Whenever an unknowing fan shows up to a venue with a fake ticket, it often falls on the venue and its staff to deal with the situation. Stephen Parker, the executive director of the National Independent Venue Association, said that if speculative tickets are banned in California, venues could save up to $50,000 in staffing expenses.

Los Angeles’ SoFi Stadium, where many concerts and ticketed live events are held.

(Icon Sportswire/Icon Sportswire via Getty Images)

“They have to deal with fans who are crying, who are angry, who are upset because they thought they were going to go see their favorite artists that night, and they paid [over the] ticket’s face value only to not get a ticket that works or to not get a ticket at all,” said Parker.

Fighting ticket fraud and reining in a ticketing giant

There are currently dozens of legislative bills throughout the U.S. focused on event ticketing issues. Some states like Maryland, Minnesota and Maine have already passed restrictions on speculative tickets.

The action comes after both the Department of Justice and the Federal Trade Commission sued Ticketmaster and its parent company, Live Nation Entertainment, in 2024 and 2025. The DOJ’s lawsuit suggests breaking up the company, which it accuses of engaging in monopolistic practices. The complaint also alleges the company forces venues into exclusive ticketing contracts and influences artists to use only its services.

Founded in 1976, Ticketmaster has been the industry’s largest ticket distributor since 1995, with around 80% of live concerts sold through the site. The company merged with Live Nation in 2010.

Ticketmaster has also acquired a growing share of the resale market, under the platform Ticketmaster Resale. The site allows consumers to list, sell or find tickets to live events. The business functions similarly to other resale sites, but Ticketmaster does not allow speculative ticket sales on its platform.

The Federal Trade Commission is currently suing the company on accusations that it engaged in illegal ticket vendor practices for its resale business, like misleading artists and consumers with so-called “bait-and-switch pricing,” where advertised prices are lower than the actual total. Following the FTC’s complaint, the ticket seller made changes to its policies.

Additionally, Ticketmaster is no longer allowing users to have multiple accounts, which made it easier to purchase more tickets than the specified limit, and it is shutting down Trade Desk, the controversial software that helps resellers track and price tickets across several marketplaces.

Hundreds enjoy a performance by Banda Los Lagos during Jalisco Fest at the 2025 Santa Fe Springs Swap Meet.

(Genaro Molina/Los Angeles Times)

“The FTC case against us is very frustrating because we think they’re sort of blaming the victim here. We’re the ones that are dealing with millions and millions of bots attacking us every day,” said Dan Wall, Live Nation’s vice president of corporate and regulatory affairs. “We’re trying to convince the federal government and state governments to get on the same page of recognizing where the problem is, which is overwhelmingly in the resale industry, and trying to do something about it.”

“We’re a much more artist and consumer-focused company, and so we don’t engage in the different kinds of business practices that are sketchy and unfair to the fans. We try to be a much more honest, legitimate outlet for getting resale tickets,” said Wall.

Critics find that the surge of anti-speculative ticketing bills around the country is a way for Ticketmaster to divert attention from its own legal troubles and shift attention onto the resale market. Live Nation is a key supporter of the California bill. Diana Moss, the director of competition policy at the Progressive Policy Institute, called AB 1349 “overkill” when it comes to the provisions and restrictions it places on the secondary market.

Fans cheer Sexyy Red at the Rolling Loud concert at Hollywood Park in March.

(Michael Owen Baker/For The Times)

“A lot of these bills in the states are a vehicle to disable the resale markets and hinder how they operate. Resale markets are important to consumers,” said Moss. “If you disable the resale market, then fans have no place to go — but back to Ticketmaster. That’s the whole game, disable the resale markets with legislation and regulation, and then everybody has to go back and deal with Ticketmaster and pay their monopoly ticket fees.”

Provisions in AB 1349 deem a ticket a license. The question of whether a ticket is a right or a license is an ongoing controversy in the ticketing world. Opponents of the bill are fearful that this change would give more power to Live Nation, as they could impose restrictions on how the ticket can be used, such as whether you’re allowed to sell your ticket on other platforms or if you can transfer it at all. Meghan Callahan, from the Empower Fans Coalition, a group that opposes the bill, equates this licensing change to taking a lease out on the ticket.

“Ticketmaster’s goal is to create less competition. This bill imposes restrictions on everybody else but themselves,” said Callahan. “They are trying to use consumer-friendly concepts and sneak in these other provisions to embolden their monopoly.”

Wall at Ticketmaster said that nothing on the consumers’ end would change if this bill were to pass, adding that tickets are already licenses “from the venue for you to come on the property during the time of the show and sit in that seat.”

“Honesty doesn’t favor one person or another. That’s what this [bill] is about,” said Wall.