Califraudia: Hilton for Governor campaign
Gubernatorial and Controller Candidates Request Federal Investigation into California’s Widespread Fraud, Waste, and Mismanagement
Steve Hilton and Herb Morgan request DOJ deploy FBI Public Corruption and Complex Fraud units for $250B in fraud
By Katy Grimes, January 5, 2026 3:29 pm
California Gubernatorial Candidate Steve Hilton and Candidate for California State Controller Herb Morgan just sent a letter to United States Attorney General Pam Bondi, Inspector General U.S. Dept. of Health & Human Services Thomas March Bell, and Acting Inspector General U.S. Department of Agriculture Janet M. Sorensen, “to formally request an immediate and comprehensive federal investigation into the widespread fraud, waste, and systemic mismanagement of taxpayer funds within the State of California.”
Steve Hilton says “Democrats have FAILED us. Here we are, about to talk about the $250 BILLION they have wasted, and we see a syringe floating in the street. NO MORE!”
California’s fraud is more like $250 billion, according to Hilton and Morgan.
SAN FRANCISCO: Employment development department
Democrats have FAILED us. Here we are, about to talk about the $250 BILLION they have wasted, and we see a syringe floating in the street. NO MORE! pic.twitter.com/xw9kPOXYBh
— steve hilton (@SteveHiltonx) January 5, 2026
Hilton and Morgan lay out the specifics of particular concern to federal authorities:
- Imminent Federal Liability: Due to California’s persistent failure to lower its benefit payment error rates, and in light of recent federal legislative changes, California taxpayers face an estimated $2.5 billion annual penalty beginning in federal fiscal year 2028. This is not a cost of providing care; it is a penalty for administrative incompetence.
- Medi-Cal Oversight: With a total budget approaching $200 billion, Medi-Cal remains on the state’s high-risk list. Significant discrepancies in eligibility determinations suggest that billions in federal Medicaid matches are being distributed without proper verification or control.
- The “Unemployment Proof Point”: During the pandemic, California’s Employment Development Department (EDD) lost tens of billions of dollars to international criminal syndicates and identity-theft rings. This was not an isolated incident but a symptom of a structural lack of “transaction-level” controls—a failure that we believe persists across all major state agencies today.
- The Minnesota Precedent: In 2022, federal intervention was required to uncover the $250 million “Feeding Our Future” fraud in Minnesota. Given that California’s budget and welfare state footprint dwarf Minnesota’s, we believe the exposure here is orders of magnitude larger—potentially reaching $250 billion..
They explain that California’s one-party government has operated without the necessary checks and balances to protect both state and federal taxpayers. As the Globe first reported, The December 11, 2025, California State Auditor’s High-Risk Report (Report 2025-601) exposed that welfare fraud has reached a breaking point. “The Auditor has officially designated the California Department of Social Services (CDSS) as a “High-Risk” agency due to chronic failures in the administration of the CalFresh (SNAP) program.”
The Globe reported on the State Auditor’s report, exposing eight “high-risk” state agencies, including Newsom’s own California Department of Finance, which serves as the Governor’s chief fiscal policy advisor – Note: they only work for the Governor.
The auditor included:
- California State Controller’s Office
- California Department of Social Services
- Employment Development Department
- California Department of Finance
- California State Controller’s Office
- Department of Health Care Services
- California Department of Technology
- Department Of Water Resources
- California Governor’s Office of Emergency Services
The Auditor also warns that the State Water Project Delivery Capabilities Could Decrease by as Much as 23 Percent by 2043 – and the Number of Dams With Poor and Unsatisfactory Condition Ratings Has Increased by 73 Percent Since 2023.
49 Dams Throughout California Are Rated as Posing Extremely High Hazard to Life and Property and Are Below Satisfactory Condition
The report should have everyone living in California horrified.
The Auditor’s report finds Gavin Newsom while in his final year as governor, has upended the state’s financial structure, compromised public safety, and left the state’s infrastructure in far worse condition.
Hilton and Morgan “specifically request that the Department of Justice deploy FBI Public Corruption and Complex Fraud units to work alongside the HHS-OIG and USDA-OIG to audit the flow of federal funds within the State of California.
Furthermore, we advocate for a federal mandate requiring California to implement daily, transaction-level public reporting for all programs receiving federal subsidies.”
Both Hilton and Morgan said their announcement comes after major fraud scandals in other states and California’s own unresolved unemployment insurance failure, in which the state admitted losing more than $55 billion, including to fraudulent claims, with payments sent to criminal networks and ineligible recipients.
“Despite the scale of this failure, California has never conducted a comprehensive, independent, top-to-bottom audit of its broader social services system.”
“Audits in California tend to happen after the money is already gone. That is not accountability. That is a post mortem,” Morgan said. “Absent decisive executive leadership, professional financial stewardship, and comprehensive audits, these failures will continue. California spends more on social programs than any state in the nation, yet oversight remains weak, fragmented, and ineffective, a breakdown that implicates both fiscal governance and executive accountability.
A California native and Navy mom, Katy lives in Sacramento, CA.
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A new year’s message delivered from California AG Rob Bonta counts of a dozen “accomplishments” he and his colleagues proudly tackled to make us safer from crime and more affordable. Most notable is suing the Trump Administration 52 times:
” . . . including lawsuits that successfully ended the unlawful deployment of National Guard troops in LA, blocked sweeping voter restrictions, and protected more than $1 billion for CA schools.”
The best resolution for California to have a Happy New Year would be a disruption in corruption… restore water access, energy production, property protection, non government and non NGO jobs, as well as meaningful learning, public health and justice by eliminating DEI and Sanctuary City/State status.
Regarding “Bonta” and his performance as an AG….
James Comer and his House Committee and the DOJ is VERY interested in Walz’s AG, Keith Ellison, who, like Bonta, covers up fraud rather than reveals it. As an example, why didn’t Bonta investigate and prosecute Newsom’s chief aide who the Feds charged with fraud? Ellison in Minnesota covered upthe Somali fraud, just as Bonta covers for Newsom, and received political contributions to himself and his son- and the allegation is that much of the contributions were in crypto to hide it.
Prediction: they are coming for Bonta!
Very happy to see this effort from Gov candidate Steve Hilton and Controller candidate Herb Morgan and hope this ugly picture of CA waste and fraud and corruption thanks to our “Dear Leaders,” principally one Go Gavin Newsom, will trigger the needed Fed response and investigation. God knows it should happen; it’s actually way past time for it to happen. Isn’t it.
The High Speed Rail, Which I am ashamed to say that I voted for at the time because I thought it was a good idea. The train to NOWHERE alone should be enough, I believe, to get SOME federal agency in here to investigate. This mythical train has made someone extremely rich and it ain’t me. Billions? For those that don’t know what 1 Billion dollars looks like, Google it please. They wanted, what? 130 of those? Where did ALL the money go? Just think, IF we had a governor who REALLY wanted to help people, he really cared about the average Californian and this state…what he could accomplish with billions of dollars. Instead, we get nothing. As usual.
In all honesty, I will be very surprised if the $250 billion even starts to scratch the surface of the amount of money that has been stolen from CA taxpayers. I’m not going to be surprised if it is double that amount at the minimum and probably closer to a trillion by the time all is said and done. Gives me a wearm fuzzy feeling for the future…or…not.