California may have hemorrhaged between $180 billion and $280 billion to fraud during Governor Gavin Newsom's tenure, journalist Chris Rufo claimed in a new investigative report, a sum he compared to the entire gross domestic product of New Zealand.
Rufo, writing for City Journal, appeared on Fox News's "Will Cain Country" on Tuesday to lay out findings from his exposé, titled "Gavin Newsom's Empire of Fraud." He attributed the staggering estimate to unnamed experts and officials at the U.S. Department of Health and Human Services.
Newsom's office fired back hard. A spokesperson told The New York Post the claims were "utter bulls*** from top to bottom" and insisted the state had been fighting fraud for years, including suspending more than 280 licenses and banning new ones since 2022.
But the sheer scale of the alleged losses, and the growing federal attention now aimed at Sacramento, raise a pointed question: How did a state that prides itself on progressive governance allow taxpayer money to vanish on this scale, and why did it take outside investigators and a new federal administration to force the issue?
Rufo told Will Cain that California's fraud problem flows from three main channels: Medi-Cal fraud, unemployment fraud, and general welfare fraud. Together, he said, they account for losses that dwarf what most Americans can conceptualize.
"And if you add these all together, under Gavin Newsom, experts and HHS officials estimate that California has lost somewhere between $180 and $280 billion. Now that's like the GDP of New Zealand. It's a lot of money."
A big area of focus in Rufo's reporting is California's in-home care program, which pays people to stay home and provide full-time care for a loved one. Rufo described a system that operates with almost no verification.
"We're paying approximately 800,000 people to stay home or to stay in the homes of the care recipients. And because it operates essentially on an honor system... it's all done in private."
That honor system, Rufo said, has generated thousands of whistleblower reports. Those reports led to hundreds of investigations. But fewer than 100 prosecutions resulted, a ratio that suggests either a lack of enforcement capacity or a lack of political will.
Newsom has faced mounting scrutiny on multiple fronts, but the fraud allegations carry a particular sting because they touch the state's most vulnerable residents and the programs meant to serve them.
Rufo framed the in-home care program alone as consuming roughly 10 percent of California's state budget, about $30 billion annually. He argued that California voters are beginning to notice the disconnect between enormous social spending and the declining conditions they experience daily.
"I think California voters are starting to look around and saying, wait a moment, this is now 10% of our state budget. It's $30 billion a year."
He pressed the point further, asking a question that many taxpayers across the state might share.
"What on earth are we doing? Why do we seem to be paying for everybody, for everything, including fraudsters, when the quality of life in California for middle class working people seems to get worse and worse?"
It is a fair question. California's cost of living, homelessness crisis, and infrastructure failures have been well documented. The notion that hundreds of billions may have been siphoned off by fraudsters while working families struggle to afford gas and groceries adds a bitter edge to the state's fiscal picture. The ongoing disputes over California gas prices and billions in extra costs only compound the frustration for residents watching their paychecks shrink.
The fraud allegations are not limited to Rufo's reporting. Vice President JD Vance has suggested that California could become the next major target for federal fraud investigations, pointing to fraud uncovered in the Minneapolis area that he claimed may total at least $19 billion.
A federal anti-fraud task force has already taken actions in California, prompting a reaction from Newsom's office. The governor's team told The New York Post it was "glad the federal government is finally stepping up to do their part," while insisting the state had already been suspending licenses and cracking down on bad actors.
That response attempted to thread a needle: acknowledge the fraud problem while deflecting blame toward Washington. Newsom's office even took a political shot, asking whether President Trump would "pardon any of them like he's done for so many fraudsters before."
The political jab aside, the numbers tell their own story. The Washington Examiner reported that the Centers for Medicare & Medicaid Services told Congress investigators have revoked billing privileges for roughly three-fifths of newly enrolled California hospice agencies. CMS chief Kimberly Brandt said approximately 35 percent of California hospice agencies have been flagged for corrective action, a staggering proportion that suggests the problem is systemic, not marginal.
Brandt framed the stakes in blunt terms: "If CMS was a country, it would have the 16th largest GDP in the world. With that responsibility comes a clear moral mandate to protect taxpayer dollars and protect the beneficiaries who rely on those programs."
The pressure is also building on Capitol Hill. House Oversight Committee Chair James Comer told Newsmax that his panel is investigating Newsom as part of a probe into alleged hospice fraud in California. Comer alleged $3.5 billion in hospice fraud, concentrated primarily in Los Angeles County.
The numbers Comer cited are striking. He said investigators found that 18 percent of the entire hospice budget was billed in Los Angeles County alone, and that there had been a 1,500 percent increase in registered hospice providers, the kind of explosive growth that typically signals opportunistic abuse rather than organic demand.
Newsom's political clashes with the federal government have been a recurring theme, but the fraud investigations represent a different kind of threat. Policy disagreements are one thing. Allegations that a governor presided over a system that allowed tens or hundreds of billions in taxpayer money to be stolen are another matter entirely.
Newsom's office has offered a two-pronged defense. First, the spokesperson's flat denial to The New York Post that Rufo's claims are "utter bulls*** from top to bottom." Second, a recitation of enforcement actions: 280-plus licenses suspended, new licenses banned since 2022, and years of stated commitment to fighting fraud.
But if the state has been fighting fraud for years, and the problem has still reached the scale that Rufo, CMS, and congressional investigators describe, the obvious follow-up is whether those efforts were adequate. Suspending 280 licenses sounds meaningful in isolation. Set against an alleged $180 to $280 billion in losses and a 1,500 percent spike in hospice providers, it looks like bailing out a sinking ship with a coffee mug.
Rufo himself acknowledged that the problem is not solely Sacramento's to own. He said the federal government under President Trump will need to "significantly scale up these efforts if they want to deter fraud in the future", a candid admission that Washington, too, has ground to make up.
Still, the governor of California bears primary responsibility for the programs his state administers. The in-home care program, the Medi-Cal system, the hospice sector, these are state-run or state-supervised operations. When fraud flourishes inside them for years, the question of who was minding the store is unavoidable.
Newsom's press operation has drawn criticism before for misdirection and political gamesmanship. Deflecting toward Trump pardons while billions allegedly walked out the door does not inspire confidence that the governor's office grasps the magnitude of what happened on its watch.
Several critical questions remain unanswered. Rufo attributed his $180 to $280 billion estimate to "experts and HHS officials," but which officials and what methodology produced that range has not been publicly detailed. The specific fraud cases, defendants, and court filings behind those figures have not been laid out in full.
The identity of the "California's in-home care program", whether it refers to the state's In-Home Supportive Services program or another entity, was not specified. And the federal anti-fraud task force's specific actions in California remain vaguely described.
These gaps matter. Extraordinary claims require extraordinary evidence, and while the direction of the evidence, CMS revocations, congressional probes, whistleblower reports, license suspensions, all points toward a serious fraud problem, the precise dollar figure deserves rigorous public documentation.
What is not in dispute is that California has a fraud problem large enough to attract simultaneous attention from HHS, CMS, the House Oversight Committee, and investigative journalists. That convergence does not happen when a system is working.
The fraud allegations land in a broader context of California fiscal mismanagement. The Washington Examiner noted that the state's 101 Freeway wildlife crossing ballooned from an initial $54 million budget to an estimated $92 million and fell behind schedule, one of several infrastructure projects that have run over budget and past deadline under Newsom's watch.
These are not unrelated problems. A state government that cannot build a freeway overpass on time and on budget is the same government that was supposed to be policing an honor-system care program paying 800,000 people. The pattern is consistent: ambitious programs, weak oversight, and taxpayers left holding the bill.
When the dust settles, the people who pay the price are not the officials in Sacramento or the fraudsters who exploited the system. They are the middle-class Californians Rufo described, the ones watching their quality of life decline while their tax dollars fund a bureaucracy that cannot account for where the money went.
A government that loses track of $180 billion, let alone $280 billion, has not earned the right to lecture anyone about fiscal responsibility. It has earned an audit.
