Jan 7, 2026
In a social media post on Tuesday, President Donald Trump announced that he’s begun a “fraud investigation” in California, without providing a reason as to why or what it would entail (1).
Trump, who, in 2024, was found guilty of 34 counts of fraud in a New York criminal case for “concealing hush-money payments made as part of a scheme to manipulate the 2016 US presidential election” and who, as president, has pardoned convicted fraudsters, claimed in the same social media post that “California … is more corrupt than Minnesota” (2, 3).
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The latter reference pertains to fraud cases related to COVID-era Medicaid programs in Minnesota, which illegally raked in more than a billion dollars. Though some of the investigations began, and perpetrators were arrested, under the Biden administration, the scandal became a centerpiece of Trump’s ongoing immigration crackdown because some of the crimes involved members of the state’s Somali community.
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The scandal also cost Minnesota Governor Tim Walz, who served as the running mate to Trump’s 2024 election opponent, Kamala Harris, his 2026 gubernatorial re-election bid. In announcing that he wouldn’t run for a third term, he said that, “Donald Trump and his allies … want to make our state a colder, meaner place” while declaring that “They and their allies have no intention of helping us solve the [fraud] problem — and every intention of profiting off of it” (4).
Meanwhile California Governor Gavin Newsom is also a fierce and vocal Trump critic, not to mention a rumored front-runner for the 2028 Democratic presidential nomination, which comes amid ongoing political tensions between the president and California’s Democratic leadership.
In response to the president’s fraud investigation claims, Newsom’s press office rejected the president’s claims, calling them false and politically motivated, and pointed to the state’s recent anti-fraud enforcement actions (5). It added that Newsom has “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,” while sharing a list of fact-checking posts about fraud, drugs and job creation in California.
Here’s what Trump’s fraud allegations could entail, and how it fits into a broader view of government fraud.
What could California fraud allegations entail?
The Trump fraud allegations could be related to a report in the New York Post from a day earlier, in which two Republican political hopefuls who set up an anti-fraud website in California claim they “collected hundreds of whistleblower tips… painting a picture of systematic looting across major state programs.” The Post says the alleged fraud could total $250 billion but, again, provided no evidence for the claims (6).
Steve Hilton, one of the Republicans alleging fraud, is running against Newsom for the California governorship. His partner in the anti-fraud website, Herb Morgan, is running for state controller.
The post quoted Hilton as calling it, “corruption, fraud and abuse on an epic scale. Gavin Newsom and the corrupt Democrat machine have stolen our money and handed it out to corrupt cronies and political front groups” (7).
The Post story says that Hilton and Morgan wrote to Attorney General Pam Bondi and others, “demanding” an FBI investigation into fraud in the state, including digging into California’s Medicaid, housing and food and temporary assistance benefits programs (8).
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The Post also quotes Newsom’s spokesperson, Izzy Gardon, responding to Hilton’s fraud allegations, saying, “Who is Steve Hilton? We don’t respond to MAGA made-up numbers. In the actual world where adults govern, Governor Newsom has been cleaning house,” a reference to Newsom’s anti-fraud policies noted in the Newsom press office statement (9).
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Taking a broader view of government fraud
While California stands poised to defend itself against fraud accusations, the U.S. government’s own statistics paint a different picture of where government fraud occurs.
The latest available statistics from the United States Sentencing Commission show that, while “government benefits fraud offenses have increased 242% since fiscal year 2020,” California did not rank among the top districts in the country for such fraud.
Rather, the Commission’s list of top districts for government benefits fraud featured predominantly Republican-led states, including Florida, North Carolina, South Carolina and Texas. Only two Democrat-led states, New York and Virginia, made the list, both tying with Texas. Trump has not targeted Republican-led states for fraud.
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In addition, the Health Department also announced that it would “freeze $10 billion in funding for child care subsidies, social services and cash support for low-income families in five states controlled by Democrats:” California, Colorado, Illinois, Minnesota and New York.
The New York Times noted that the move comes amidst claims of fraud in those states (again, except for Minnesota, made without any supporting evidence) and that “the funding pause could jeopardize programs that serve hundreds of thousands of low-income households in the five states” (12).
Democrat New York Senator Kirsten Gillibrand told the Times called the funding pause “political retribution that punishes poor children in need of assistance” rather than addressing fraud, and called on Trump to “stop this brazen attack on our children” (13).
For now, what steps the administration will take to pursue fraud allegations against California remains to be seen.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Truth Social (1); Bloomberg (2); Politico (3); Office of Governor Tim Walz & Lt. Governor Peggy Flanagan (4); @GovPressOffice (5); New York Post (6, 7, 8, 9); United States Sentencing Commission (10); The New York Times (11, 12, 13)
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Mike Crisolago is a Sr. Staff Reporter at Moneywise with nearly 20 years of experience working as a journalist, editor, content strategist and podcast host. He specializes in personal finance writing related to the 50-plus demographic and retirement, as well as politics and lifestyle content.
