California faced a wave of fraud allegations this week, attracting attention from national political leaders and federal law enforcement. Claims of widespread waste and misuse in the state’s government programs are causing uncertainty about what will happen next after the massive expose in Minnesota.
Steve Hilton, a Republican running for governor and former Fox News host, released a report he described as a preliminary analysis. He argued that fraud, waste, and abuse of taxpayer funds in California could exceed $250 billion. This assessment is based on tips submitted through a whistleblower website called Califraud.com.
It suggests ongoing allegations of wrongdoing within various state agencies, including public pension systems and programs related to education and housing. Hilton noted that the alleged misconduct spans about five years, roughly aligning with pandemic-era spending.
“That’s been a month now,” Hilton told reporters, referring to the time since Califraud.com started receiving hundreds of tips. He acknowledged that not all reports were credible but claimed there were enough credible reports to start “painting a picture of the scale” of the alleged misconduct. The review pointed out issues such as inflated contracts, pay abuses in the K-12 education system, and potential failures to properly oversee grant funding.
Gavin Newsom and the CORRUPT Democrat machine have turned California into CALIFRAUDIA.
We reviewed the budget. We set up a tip line. We estimate $250 BILLION OF FRAUD. Our money, flushed down the toilet. pic.twitter.com/7ZiFE5taNw
— steve hilton (@SteveHiltonx) January 6, 2026
Hilton and his running mate, Herb Morgan, who is running for controller, formally urged Attorney General Pam Bondi to conduct a complete federal investigation into these allegations. In a letter dated January 4, they requested that the FBI send teams specializing in public corruption and complex fraud to track how federal funds move through California’s systems. They argued that decades of one-party control have weakened protections and left taxpayers at risk.
Central to the controversy are claims that billions in federal funds meant for programs like unemployment insurance, social services, and homelessness aid may have been mishandled or misappropriated. Hilton specifically mentioned California’s unemployment insurance losses, which he stated exceeded $55 billion, and nonprofit organizations that receive federal grants for housing and homeless services.
The Republican allegations received a swift response from Governor Gavin Newsom’s office. A spokeswoman dismissed the figures as politically driven “MAGA made-up numbers” and stated that the administration has actively fought fraud since taking office. Newsom’s statement highlighted more than $125 billion in fraud that state authorities claim to have prevented, along with arrests of individuals accused of abusing public programs.
Newsom also took aim at national figures who amplified the fraud claims, accusing them of misrepresenting the extent and nature of the wrongdoing in California. His office held that, while fraud and misuse of public funds are serious issues, the numbers cited by Hilton are exaggerated and lack independent audit support.
President Donald Trump wasted no time joining the chorus by describing California as “more corrupt than Minnesota.” He claimed a fraud investigation is underway in the state and criticized Newsom’s leadership, though he did not provide specific details about the investigation or who is conducting it.
That comment referred to Minnesota’s ongoing fraud scandal, where defendants are accused of misusing Medicaid and other public assistance funds, leading to the downfall of Tim Walz, who stepped out of the race for governor. Some federal prosecutors have warned that arrests related to alleged fraud in California’s homeless services could happen soon. They have stated they “followed the money” and that recent indictments are just a part of expected actions.
