California’s $435 Billion Fraud Epidemic: The Feds Are Acting—Why Isn’t the State Controller?

California is once again making national headlines for all the wrong reasons.

Just this week, federal authorities in Los Angeles executed “Operation Never Say Die,” arresting eight people—including hospice owners, nurses, and medical professionals—in a brazen scheme that allegedly bilked Medicare out of more than $50 million. Sham hospice facilities enrolled non-terminal patients, submitted phantom claims, and siphoned desperately needed resources from one of California’s most important programs of compassion.

The U.S. Attorney’s Office, led by First Assistant Bill Essayli, called California the “kingdom of fraud.” Vice President JD Vance’s Task Force to Eliminate Fraud deserves enormous credit for driving these arrests. The federal government is showing zero tolerance for the systematic looting of taxpayer dollars, while the California State Controller’s office seems unaware of its own responsibility in this arena.

This is just the latest chapter in a much larger story.

Last January, I released my estimate of what California had lost  to waste, fraud and mismanagement. My initial conservative estimate of fraud, waste, and abuse across state programs—Medi-Cal, unemployment insurance, housing, infrastructure, and more—stood at $250 billion. New data and additional tips have now pushed that figure to $425 billion. That’s not a rounding error. It’s enough money to fund every school, hospital, and road repair project California claims it can’t afford.

Yet while the feds are moving swiftly, California’s own law enforcement apparatus has been largely missing in action. State agencies have looked the other way as fraudsters operate with impunity. The pattern is clear: federal prosecutors and investigators are the only ones treating this crisis with the seriousness it demands.

Here’s the part that needs to be said more clearly: it’s time to stop reflexively blaming Governor Gavin Newsom for every dollar stolen. Yes, he is the state’s chief executive. But under California’s Constitution and statutes, the governor does not have the direct authority or mandate to conduct independent audits, pre-approve every claim against the state treasury, or serve as the chief fiscal watchdog. Those powers were deliberately placed elsewhere—to create checks and balances, not concentration of power.

That responsibility belongs squarely to the State Controller—an independently elected constitutional officer whose job is precisely to superintend the state’s fiscal affairs. Article V of the California Constitution and Government Code sections establish the Controller as the independent auditor of every dollar collected and spent. The Controller 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.

Right now, that office is occupied by Malia Cohen. She is not accused of being a fraudster herself. But her record raises serious questions about whether she has the qualifications—or the focus—to do the job the Constitution demands.

Cohen’s business, Power Forward, had its license suspended by the Franchise Tax Board in 2021 for failure to file returns and pay taxes. More than a decade ago, her San Francisco condo went into foreclosure. These are not disqualifying personal setbacks in isolation, but they matter when the Controller is supposed to be the state’s toughest cop on financial integrity. More troubling is her professional background: eight years on the San Francisco Board of Supervisors and time on the Board of Equalization. Those are political and tax-administration roles, but they provided no hands-on experience in large-scale governmental auditing, fraud detection, or forensic accounting—the core technical skills the Controller’s Office requires.

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.

That is exactly why I am running for State Controller. This is not just another political office. It is the one constitutional position with the tools, independence, and statutory duty to stop the bleeding. A real Controller would immediately launch comprehensive audits of high-risk programs, partner aggressively with federal investigators, and treat every whistleblower tip like the emergency it is. No more excuses. No more looking the other way.

The federal government and leaders like JD Vance and Bill Essayli have shown what decisive action looks like. California voters now have a chance to install that same level of accountability where it belongs—at the State Controller’s Office. The fiscal ineptness has already cost us $435 billion. The question is whether we will finally use the constitutional office designed to prevent it.