$180 Billion in Fraud? California Spending Scandal Comes Under Scrutiny

What Happened?

A recent report from City Journal claims that California may have lost up to $180 billion to fraud and abuse across major public programs during Gavin Newsom's tenure. The report draws on audits, criminal cases, and program data to argue that fraud has not been limited to isolated incidents but has occurred across multiple systems at scale.

One of the clearest examples comes from unemployment insurance during the pandemic. California’s Employment Development Department paid out between $20 billion and $32.6 billion in fraudulent claims, including payments sent to prison inmates and individuals using stolen identities. Those losses have been widely documented and remain one of the largest confirmed fraud cases tied to pandemic relief.

The report extends its claims further into ongoing programs. It points to Medi-Cal, California’s Medicaid system, which operates with a budget approaching $197 billion. Analysts cited in the report estimate fraud rates between 15% and 25%, though those figures depend heavily on how fraud is defined and measured.

Homelessness spending is also a major focal point, as California has spent roughly $24 billion over five years, but audits have found limited tracking of outcomes, leaving gaps in how effectiveness and misuse are measured.

The $180 billion total combines these areas into a single estimate, which has drawn pushback. A response from CalMatters argues the figure blends confirmed fraud with broader estimates and management failures, making it difficult to treat as a precise total.

Why It Matters

One of the biggest issues unveiled in the report is not just how much money was lost, but how it was tracked and controlled. Some losses, such as unemployment fraud during the pandemic, are well-established and measurable.

Others rely on assumptions about error rates, improper payments, or system vulnerabilities that are harder to quantify. The report also raises questions about oversight in large public programs.

A $2.1 Trillion Energy Breakthrough Years in the Making

John D. Rockefeller’s empire would be worth $435 billion in today’s dollars. But “oil money” is old news, and what’s next might surprise you: the $2.1T opportunity in “clean coal.” 

Patented tech from Frontieras is making this possible. It can reform coal into hydrogen and other valuable commodities (like Rockefeller did with oil) without burning it.

They’ve now officially purchased land for their $850m flagship facility in West Virginia, praised by the state’s governor for creating up to 2,000 potential new jobs. 

With a White House that favors domestic energy and the Nasdaq ticker FASF reserved, this could be investors’ last chance at the current valuation.

You have until April 9 to invest in Frontieras at $7.77/share.*

Systems like Medi-Cal and homelessness funding move large amounts of money quickly, often through layers of agencies and contractors. That structure can make it difficult to detect fraud early or measure whether funds are being used effectively. When oversight lags behind spending, losses can accumulate before they are identified.

Combining different types of issues into a single number can blur important differences. Fraud, administrative error, and ineffective spending are not the same, even if they all represent wasted resources. How those categories are defined and reported affects both public understanding and policy responses.

How It Affects You

When billions are lost or even just perceived to be lost, it changes how aggressively states tighten spending. For taxpayers, this can first show up in smaller ways, such as stricter income checks for Medi-Cal, fewer approved claims in unemployment systems, or delays in payments while applications are re-verified. For those relying on those programs, that can mean waiting weeks longer for benefits or getting denied over technical issues that didn’t exist before.

It also affects how much flexibility states have to fund new programs or expand existing ones. Money tied up in fraud investigations, recovery efforts, or system overhauls is money that doesn’t go toward building housing, expanding healthcare access, or increasing benefit levels. In places already dealing with shortages, such as affordable housing or public health services, that trade-off can slow down projects or limit how many people are helped.

Over time, these programs tend to get a lot harder to use. After losses like this, states tighten the rules. More documents, more verification, more chances for an application to get flagged or delayed. While it certainly can cut down on fraud, it also means people who actually qualify will more than likely wait longer, deal with more back-and-forth, or get denied over small issues that didn’t matter before.

*Disclaimer: This is a paid advertisement for Frontieras’s Regulation A offering. Please read the offering circular at https://invest.frontieras.com/

Reservation of the ticker symbol is not a guarantee that we will be listed on the NASDAQ. Listing on the NASDAQ is subject to approvals.

Under Regulation A+, a company has the ability to change its share price by up to 20%, without requalifying the offering with the SEC.