Trump Launches National Fraud Enforcement Division as Newsom’s California Drowns in Billions of Waste and Mismanagement

President Donald J. Trump took decisive action on Thursday announcing the creation of a new Department of Justice (DOJ) division dedicated to combating fraud nationwide. This National Fraud Enforcement Division, led by a dedicated Assistant Attorney General, will spearhead investigations, prosecutions, and reforms to dismantle sophisticated fraud schemes targeting federal programs, businesses, and citizens.

The White House fact sheet emphasizes the division’s broad mandate: enforcing federal laws against fraud in government programs, overseeing multi-agency efforts, setting enforcement priorities, and proposing fixes to systemic vulnerabilities. While highlighting aggressive actions in Minnesota—where 98 defendants (mostly Somali descent) have been charged in massive Medicaid and child nutrition scams, yielding 64 convictions and resource surges from agencies like FBI, DHS, and HHS—the initiative signals a nationwide crackdown. Federal efforts have already frozen billions and led to over 1,000 arrests of illegal aliens in the state.

If Minnesota’s fraud epidemic warrants such firepower, California’s under Governor Gavin Newsom should be ground zero. Republican Congressman Kevin Kiley referred to the once-Golden State as the “Fraud Capital of America.” President Trump announced earlier this week that “an investigation” has begun in California.

This federal investigation is long overdue.

Newsom’s administration has presided over staggering spending and related losses: tens of billions in unemployment fraud, $37 billion squandered on homelessness with exploding encampments, and a high-speed rail boondoggle ballooning to over $130 billion with little to show but empty promises.

The nonpartisan auditor recently branded eight state agencies as “high-risk” for waste, fraud, abuse, and mismanagement, warning of upended finances, compromised public safety, and crumbling infrastructure. This designation stems from conditions like inadequate oversight, leaving taxpayers vulnerable to billions in losses and sticking businesses with the tab through increased taxes to cover the Democratic supermajority’s malfeasance.

At the heart of the scandal is the Employment Development Department (EDD), which Newsom’s team allowed to hemorrhage $30-40 billion in pandemic unemployment benefits to fraudsters—including prisoners and international theft rings—due to stripped anti-fraud measures and outdated systems.

EDD alone has admitted to losing an astonishing $55 billion in pandemic-era unemployment benefits to fraud and overpayments, dwarfing national averages.  Estimates from audits and investigations peg fraudulent claims at $32.6 billion, with some reports pushing the total rip-off closer to $50 billion. This includes funds siphoned through the federal pandemic add-on program, some of which may have even funded foreign threats like North Korea’s nuclear program, according to exclusive California Globe reporting.

The EDD’s vulnerabilities—stemming from outdated systems and lax fraud prevention—led to congressional hammerings and the forgiveness of $32.6 billion in debt by former Acting Labor Secretary Julie Su, who oversaw the CA labor department during the crisis. After Su’s disastrous “oversight” in California when she was the state’s labor secretary–before the Biden administration appointed her to forgive her own mess.

Su was just appointed as the Deputy Mayor of New York City for Economic Justice by New York City Mayor Zohran Mamdani. What could go wrong?

Recently, the state auditor slammed EDD for ongoing improper payments and poor service, noting Newsom’s inaction exacerbated the crisis. California remains the only state defaulting on its $20+ billion federal unemployment loan, forcing businesses to foot the bill through higher taxes while Newsom spent recklessly elsewhere.

Homelessness under Newsom is another glaring failure: $37 billion spent since 2019, yet the crisis worsened, with vetoes of effective recovery housing to protect the “Housing First” grift that enriches nonprofits without results. A recent HUD report exposed California’s prominent role in $5.8 billion nationwide rental assistance fraud, including payments to deceased or ineligible recipients.

Then there’s the infamous high-speed rail: originally pitched at $33 billion, costs have exploded to $135+ billion, with no viable path forward–literally–not even a single track laid, endless delays, and accusations of corruption. President Trump has called it the “worst managed project” he’s seen, slashing federal funds and launching investigations into the overrun. Newsom’s stubborn defense—pouring more billions into politically aligned black holes, despite voter rejection of similar waste—epitomizes his priorities: vanity projects over public needs.

With the new DOJ division empowered to tackle high-impact fraud and advise on reforms, California’s trail of fiscal disasters under Newsom has invited federal scrutiny. As one auditor report put it, the state risks billions more without urgent accountability. Taxpayers deserve better than Newsom’s era of excuses, deflection, and endless spending on failed schemes. This federal muscle could finally deliver the oversight Sacramento has dodged for years.