O’Keefe Undercover Exposé: California Controller Official Admits Audits ‘Not Getting Done,’ Confirms Fraud Is Rampant

Independent journalist James O’Keefe and his O’Keefe Media Group (OMG) have released explosive undercover footage exposing deep dysfunction in California’s top fiscal watchdog. Bismarck Obando, Acting Deputy Controller of Public Affairs and Press Secretary for State Controller Malia Cohen, admitted on hidden camera that the office “just can’t conduct the audits” due to repeated staffing cuts, while acknowledging “100 percent” fraud exists across state agencies.”

Obando conceded that required audits are falling by the wayside because “instead of funding us they cut us… they keep cutting our auditing teams.” He added that agencies “none of them want us to go in there.” When pressed on the Controller’s Office’s ability to perform its core oversight function, Obando stated plainly: “We just can’t conduct the audits.”

WATCH:

BREAKING: California Controller’s Top Communications Official Admits Audits “Are Not Getting Done” & Acknowledges “100 Percent” Fraud Exists in the State

“We [CA Controller’s Office] just can’t conduct the audits”

“There is no statewide plan on homelessness”

“They [CA… pic.twitter.com/Zi5m3yNvf4

— James O'Keefe (@JamesOKeefeIII) April 7, 2026

The revelations come as counties and cities seek another $1 billion this year for homelessness programs. Obando confirmed there is “no statewide plan” to address the crisis, telling the undercover journalist: “There is no statewide plan on homelessness.” He added that local governments “are asking for $1 billion this year.”

O’Keefe’s team, “in honor of Nick Shirley” also visited two major South Los Angeles non-profits receiving tens of millions in taxpayer dollars

Abundant Blessings Incorporated, awarded $23 million and later hit with fraud charges against its executive director Alexander Soofer, was found completely vacant. Urban Alchemy, which has secured over $60 million in contracts including more than $12 million through LAHSA, similarly showed little to no active services, with homeless individuals reporting chronic shortages of basic supplies like blankets and socks.

This latest investigation follows OMG’s prior undercover work exposing cash-for-ballots election fraud schemes targeting Los Angeles’ Skid Row homeless population. 

The California Controller’s Office is tasked with independently auditing state spending, yet its own spokesman has now admitted on camera that audits aren’t happening and fraud is widespread. 

These admissions surface amid growing scrutiny of the office under Malia Cohen, who has missed the federal Single Audit and Annual Comprehensive Financial Report deadlines every year since taking office in 2023 — raising concerns that billions in federal funding for housing, healthcare, and homelessness programs could be delayed or jeopardized. 

Her office has also faced criticism for insufficiently aggressive action on exploding hospice fraud, where hundreds of providers have been flagged for over $105 million in overbilling, including ghost offices and sham operations that have drawn federal investigations and arrests.

California’s exposure to fraud, waste, and improper payments totals roughly $435 billion over recent years. That’s nearly identical to the entire GDP of Colombia (approximately $438 billion in 2025), larger than the entire GDP of 130 countries, and equivalent to about 1.42% of the entire U.S. economy — enough money to run an entire mid-sized country for a year.

While federal prosecutors under Bill Essayli aggressively pursue fraud rings in hospice, homelessness funds, and beyond, Sacramento’s alleged fiscal watchdogs are out to lunch, including a lunch date that has now exposed Controller Malia Cohen, who “has the sole power to audit state agencies and local governments receiving state funds, investigate waste and fraud, and ensure proper disbursement before a single warrant is issued. No other office is uniquely endowed with this combination of independence, auditing authority, and day-to-day fiscal oversight.”

As reported by the California Globe, Cohen’s business in 2021, Power Forward, had its license suspended by the Franchise Tax Board for failure to file returns and pay taxes. More than a decade ago, her San Francisco condo went into foreclosure,” as revealed by Herb Morgan, who is running to replace her. Morgan writes, “The results speak for themselves. Under the current leadership, California’s massive fraud problem has been allowed to flourish. Billions have vanished while the Controller’s Office has not delivered the aggressive, proactive audits taxpayers deserve. Ineptness at the top has created an environment where fraudsters feel emboldened.”

The Globe will continue to follow the money in California, “the fraud capital of America.”