Globe Exclusive: Interview with Lanhee Chen, Candidate for State Controller

Why should California voters care about the California State Controller? While it’s another state agency most California voters think they know nothing about, the office and agency impacts everyone in the state one way or another.

“The Controller is California’s independent fiscal watchdog,” Controller candidate Lanhee Chen said in a Globe interview. “The person who makes sure that taxpayer money—OUR money—is spent as we’re told it will be. But that’s not happening now. In fact, the Controller can’t even tell us where she sent over $300 billion in payments in 2018 alone.”

Lanhee Chen promises as Controller he will do a thorough audit of Covid spending during the state lockdowns. He promises an audit of Fi$Cal, the state’s accounting system.

“After over a billion dollars and years of missed deadlines, Fi$Cal, CA’s financial accounting system, still isn’t done. We deserve better,” Chen said.

After over a billion dollars and years of missed deadlines, Fi$Cal, CA's financial accounting system, still isn't done.

We deserve better.

As Controller, I will finally bring full transparency to how our tax dollars are spent. pic.twitter.com/VxgxN8f5Vu

— Lanhee J. Chen (@lanheechen) July 25, 2022

Chen also promises one audit a day, as well as one press conference a day. “As Controller, I will finally bring full transparency to how our tax dollars are spent.”

Chen, the son of immigrants from Taiwan, earned four degrees from Harvard University, including a law degree and doctorate in political science. Chen has served in senior roles in both Republican and Democratic presidential administrations. Describing why he is running for State Controller, Chen says no one is watching out for the California taxpayer.

“We need new leadership that isn’t afraid to take on as much as $30 billion of fraud in our state unemployment insurance system,” Chen says. “Russian mobsters and convicted murderers like Scott Peterson shouldn’t be getting government payments, while single moms in need go without.”

The Globe asked Chen about the billions in unemployment fraud during the Covid lockdowns. We now know that upwards of $31 billion dollars in unemployment claims was sent to prison inmates in California’s county jails, and state and federal prisons, out of state, and even out of the country, while legitimate claimants were stiffed, or received late payments. Chen said it’s likely that even thought the EDD is investigating and may recover some of the funds, the rest is probably gone.

We asked what could be done in the future to prevent such extraordinary fraud from taking place.

“We need to take the state auditor’s recommendations for the EDD and implement them,” Chen said. Chen said the EDD technology and computer systems are from the 1970’s and desperately need to be updated. “No one wants to do this, but needs to be done,” he said. The Globe asked about going directly to Silicon Valley technology sources rather than using the state IT agency for this. “We’ve talked to many business people from the private sector who offered to come and help us,” Chen said, “for no charge.”

Chen said of the 1,400 employees in the State Controller’s Office, 900 are auditors – many are not allowed to do audits. He said if these auditors were unleashed and allowed to do their jobs, California state government would likely be in much better shape and transparent.

This is most likely a political decision by a politicized Controller and the party in power which doesn’t want audits of state agencies done.

In August, the Globe shared a new report by Open the Books, which sued, and then had to file 442 California Public Record Act requests – one with each state agency – in order to obtain California’s line-by-line spending by state agencies. California’s current Controller, Betty Yee, rejected their sunshine request for state spending, claiming she “couldn’t locate” any of the nearly 50 million bills she paid in 2019.

This state checkbook should be opened to every Californian, Chen said. “It’s the taxpayers’ money.”

Chen said when he is elected Controller, his first audit will be of the state’s gas taxes. “Why not?” he asked. “Where does this money go? We’d all like to know.”

Chen also said one of the most important issues is producing the Annual Comprehensive Financial Report (ACFR – formerly known as a Comprehensive Annual Financial Report, CAFR). “Our [state] ACFR is still late, and this effects the state’s credit rating, which is extremely serious,” Chen said. California’s annual audited financials are chronically late, and often the only state with late financials in the entire country.

So what does the Controller do?

The Controller manages the state’s checkbook and is responsible for:

• accountability and disbursement of the state’s financial resources
• independently audits government agencies that spend state funds
• administers the payroll system for state government employees and California State University employees
• serves on 70 boards and commissions with authority ranging from state public land management to crime victim compensation
• is a member of numerous financing authorities, and fiscal and financial oversight entities including the Franchise Tax Board and Board of Equalization
• also serves on the boards of the nation’s two largest public pension funds

Malia Cohen is the Democrat running for California State Controller. Cohen traveled to Venezuela in 2006 to learn about Hugo Chavez’s socialist revolution, the Globe reported recently. Cohen, who currently is a member of the California State Board of Equalization and former San Francisco Supervisor, made the 10-day trip to Venezuela for $1,250.

Why does this matter?

“The last thing we need as California’s fiscal watchdog is someone who extolled the virtues of socialism,” Chen said. “The many Californians who fled socialist countries deserve to know why Malia took this trip and whether she still believes in ‘the revolutionary thought and mindset’ of Hugo Chavez’s brutal regime.”

Venezuela was once among the richest countries in the world, and maintained a robust constitutional democracy until Hugo Chavez’s brutal dictatorship dismantled all democratic institutions and destroyed the economy, forcing the Venezuelan people into extreme poverty.

Fox News reported:

Cohen’s trip to the country was documented in a CNN story about the group’s tour, with Cohen claiming that “revolutionary thought” is “generational” as it showed an image of her gazing at a mural featuring a quote from Venezuelan leader Simon Bolivar that roughly translates to: “The health of a Republic depends on the morality acquired by education of citizens in childhood.…”

“The revolutionary thought and mindset is generational,” Cohen told the outlet at the time. “What we see in the United States, and you really don’t see grandparents and parents and even young as active politically.”

Chen said Cohen has a new political ad running, not about accounting for the state’s financial resources or the importance of producing the Annual Comprehensive Financial Report. Malia “Cohen’s ad is about abortion,” Chen said.

Cohen’s ad claims “abortion is on the ballot this November,” and “Republicans like Lanhee Chen put abortion at risk, even in California.”

Here is the commercial:

Abortion is on the ballot this year and my opponent's record on choice is concerning. I'm proud to have the endorsement of @PPActionCA, @ProChoiceCA, and @emilyslist #thecontrollercounts pic.twitter.com/du4i553PHI

— Malia Cohen 郭嫻 (@MaliaCohen) October 4, 2022

While Lanhee Chen is discussing state spending and legislative oversight, Cohen’s ad says “the Controller oversees funding for reproductive health organizations like Planned Parenthood.”

Chen says that is rich given that she has issues with her own personal finances, including a foreclosure.

SFFist reported on this in 2011:

“Another nugget from Matier & Ross this a.m.: Newly seated District 10 Supervisor Malia Cohen is one of the many in the country who was the victim of predatory lending, and her $581,000 condo has been lost to foreclosure.”

“As they report, she bought the two-bedroom condo at 501 Crescent Way with no money down in 2006, and she moved out on January 4, just before being sworn in, despite saying before the election that the foreclosure had been ‘rescinded.'”

“‘It was underwater, so I let it go,’ Cohen says…”

There were many comments on the article which echoed this one: “The only sad part is that she’s now a supervisor. I’d prefer to have someone who makes sound (and obvious) financial decisions rather than taking on unnecessary debt. Especially when we’re already having budget problems.”

Chen said Cohen won’t debate him – a tactic voters are seeing across California, and the rest of the country – even with the many issues California is facing. “”She’s expecting a coronation without having to debate issues,” Chen said.

Chen said rather than challenge Chen on issues particular to the Controller’s office, Cohen and her campaign claim he has no elected experience, and therefore no record. “They denigrate people with real world experience,” Chen said. “She has a record – the CNN footage of her in Venezuela and her soda tax – she is proud of her soda tax.”

Chen added, “There is such a disconnection with reality.”