California: Gavin Newsom's $180 Billion Grift in Flip-Flops

Based on Christopher Rufo, Ryan Thorpe, Kenneth Schrupp, and Haley Strack's NY Post exposé.

Gavin Newsom spent seven years turning the world's fifth-largest economy into an ATM for every Romanian crime ring, Memphis rapper, and dead person with an EDD card. Congrats, king.

California collects more taxes than almost any state in America. Income, business, fuel, the works. Then it hands the money to criminals. Not metaphorically. Literally. To actual criminals. Including, at last count, 133 people on death row.

The state spends $300 billion a year. The roads look like Fallujah. Half of San Francisco has turned into an open-air drug market that visiting tech journalists describe as "challenging" before retreating to their Pac Heights condos. And somewhere around $180 billion has simply walked out the door into the pockets of fraudsters, organized crime syndicates, and at least one rapper from Memphis who made a music video about it.

The rapper is the funniest part of this story. He is also, somehow, the least surprising.

The EDD: A Cash Machine With No Security Camera

When COVID hit, Gavin Newsom did what Gavin Newsom does. He looked into a camera, deployed the cheekbones, and announced California would lead. What California led, it turns out, was the largest unemployment insurance fraud in American history.

The Employment Development Department processed billions in payments monthly. Fraud experts begged the state to pump the brakes. "I was begging them not to let the money go out like that," said Haywood Talcove, CEO of LexisNexis Risk Solutions for Government, a man whose entire job is telling governments "hey, maybe verify that the person collecting unemployment is a real person who is unemployed." California did not listen to Haywood Talcove.

What followed was a complete and total shitshow.

A Romanian crime ring stole $5 million and wired it to Bucharest. An assortment of international fraud operations figured out that California had basically taped an envelope of cash to its own front door. And Fontrell Antonio Baines, aka Nuke Bizzle, released a YouTube music video in which he held up stacks of EDD debit cards and rapped "You gotta sell cocaine, I just file a claim."

He got $700,000. He pleaded guilty. He produced better investigative content about California's fraud crisis than any newspaper did for two years.

The state's response was to assign two employees to manually review fraud reports. Two. For the fifth largest economy on earth. There are more people working the hostess stand at Nobu Malibu.

Nobody thought to cross-reference EDD payments against the prison inmate list either, which is how California ended up cutting checks to death row. When officials finally tallied the damage they admitted to $20 billion in fraudulent claims and $55 billion in improper payments. Talcove thinks those numbers are conservative. "At one point," he said, "you had more people applying for unemployment insurance benefits than you had people over the age of 18."

More applicants than adults. The governor called it the work of "bad actors" and moved on.

Medi-Cal: The Program That Doubled in Cost While the Population Shrank

California's Medi-Cal budget more than doubled under Newsom, from $93.5 billion to $196.7 billion. During that same period, California's population declined by 0.2%.

You don't need to be a CPA to find that interesting.

Newsom expanded Medi-Cal to cover illegal immigrants, sex-change surgeries, and "gender-affirming care services" for enrollees of "all ages." None of this is fraud, strictly speaking. It is a political choice to dramatically expand a program already leaking money like a Bel Air mansion after a wildfire.

The real action is in the sub-program called In-Home Supportive Services. IHSS pays nearly 800,000 people to provide care to elderly and disabled residents. In 70% of cases the caregiver is a family member of the recipient. Arnold Schwarzenegger flagged IHSS fraud at 25% back in 2009. That same year a Sacramento grand jury called it "rampant and out of control." Newsom's response was to dramatically increase funding for it.

The state does not do surprise home visits. That is actually in the protocols, prohibited. So oversight consists largely of vibes and timesheets.

What followed was predictable. Caregivers billing for services rendered while the recipient was in the hospital. Caregivers billing while the recipient was dead. Cindy Lynn Fromm allegedly billed for over a year of care while her client was in prison. The IHSS program reportedly accounts for 41% of all job gains under the Newsom administration, which says something about California's economy that probably deserves its own story.

Homeless Billions

Newsom oversaw roughly $24 billion in homelessness spending. He also roughly doubled food stamp benefits during the pandemic. California currently has more than 180,000 homeless people. You can do the math yourself.

Where did the money go? Into a "complicated web of nonprofits and other contractors," which is government-speak for nobody really knows. When the state auditor looked into three of the five programs she examined, she was "unable to fully assess" their performance because nobody had collected outcome data. Billions out, results unknown, reporting optional.

In 2020 Kevin Kiley, then in the Assembly, asked for an audit. Democrats killed it after Newsom intervened. He told City Journal they "didn't want taxpayers to get that window into how their money is being squandered." The audit came in 2024, years too late to matter.

In the meantime, Cody Holmes, chief financial officer of Shangri-La Industries, a Los Angeles-based affordable housing developer, was charged with embezzling $2.2 million for exotic cars and a 6,500-square-foot mansion. His company had received nearly $26 million from the state to house homeless people. He pleaded not guilty. To the mansion and the cars and the $26 million, presumably.

State Sen. Lola Smallwood-Cuevas, surveying all of this, introduced a bill to raise the felony welfare fraud threshold from $950 to $25,000. Republican Assemblyman Carl DeMaio says that if it passes it will effectively "legalize welfare fraud" in California. The senator appears unbothered.

Meanwhile Newsom's office, asked about the findings, called Kiley's claims "ridiculous," accused the Trump administration of "making up numbers," and stated that California had "no missing homelessness funds." No missing funds. Everything accounted for. The auditor who couldn't find the data was presumably unavailable for comment.

The Part Where His Own Chief of Staff Got Indicted

In November 2025, Dana Williamson, Newsom's chief of staff from 2022 through late 2024, was charged with fraud for allegedly siphoning campaign and COVID recovery funds into her own pocket. Two other aides struck plea deals that reportedly confirmed the whole thing.

Williamson pleaded not guilty.

When she left the governor's office the previous December, one month after Newsom was "made aware of an investigation" per his own office, his send-off message praised her "insight, tenacity, and big heart." No mention of the federal investigation. Standard operating procedure for a man who has perfected the warm, sincere, knowing-nothing shrug.

California Assemblyman David Tangipa says Sacramento is "pervaded by a culture of corruption" and that Newsom created an environment where it thrives. Politicians say things like this all the time and it usually means nothing.

In this case the receipts are $180 billion, one rapping fraudster, 133 death row inmates on the unemployment rolls, a chief of staff under indictment, and a state auditor who cannot figure out where the homelessness money went because no one wrote it down.

Federal prosecutors are at least starting to pay attention. Bill Essayli, first assistant U.S. attorney for the Central District of California, stood up a federal task force targeting homelessness fraud and has promised more charges are coming. Trump signed an executive order in March creating a broader fraud task force led by Vance. Whether any of it lands is another question.

It is worth remembering what happened in Minnesota. The fraud there was an open secret for years. Once it drew national attention, investigations snowballed and Tim Walz's political career went with them. Newsom is a better politician than Walz and California is a much bigger state. But the scale of fraud here makes Minnesota look like a rounding error.

Gavin Newsom would like to be president. He has great hair. He says things with tremendous conviction.

The California cash machine hums along.

Reported by Christopher Rufo, Ryan Thorpe, Kenneth Schrupp, and Haley Strack. Read the original at the New York Post.