California At Risk For $65.7 Billion Federal Fraud

AENN

Chriss Street

Jun 10, 2026

With Vice President JD Vance criminally referring Minnesota Gov. Tim Walz and Attorney General Keith Ellison to the DOJ for $9 billion of healthcare and social services fraud prosecutions, the clock is ticking in federal fraud prosecutions of California politicians for about $65.7 billion.

California gets 7.3 times the federal funding versus Minnesota [below]:

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Acting Attorney General Todd Blanche following whistleblower reports of massive fraud in Minnesota and California, announced on April 7, 2026 the creation of a DOJ National Fraud Enforcement Division (NFED).

Vice President Vance as strike force director promised that NFED “run out of the White House” under his and President Trump’s supervision, would have “nationwide jurisdiction over the issue of fraud.” Vance stated that initial targets would include: “Federal government programs, Federally funded benefits, businesses, nonprofits, and private citizens nationwide.”

Under 42 CFR § 430.48, the U.S. government has the legal right for the U.S. Centers for Medicare & Medicaid Services to issue “Disallowance and Deferral of Federal Matching Funds” for up to 5 years or longer from states where expenditures were later found to be improper or fraudulent.

CMS has already “deferred” $350 million in federal Medicaid funds for Minnesota and $1.3 billion for California regarding concerns about fraud oversight, personal care services, and program integrity weaknesses.

The June 8^th criminal referral followed a 205-page report from the U.S. House Oversight Committee [above], alleging that Minnesota Gov. Walz and Attorney General Keith Ellison failed to take action to halt fraud despite repeated warnings. The report details how 30 state Health & Human Services staff turned whistleblowers, were told not to dig into potential fraud and were retaliated against if they reported civil or criminal fraud.

The report reveals that the U.S. Attorney’s Office for the District of Minnesota has recently brought fraud charges against at least 113 individuals—the vast majority being from Minnesota’s Somali community—with at least 64 having already pled guilty or been convicted at trial. Due to the evidence collected, the NFED task force has designated 14 Minnesota administered Medicaid programs as “high-risk” due to significant fraud.

According to claims data since 2018 from the Centers for Medicare & Medicaid Services (CMS), these 14 “high-risk” Minnesota programs cost U.S. taxpayers more than $18 billion, including $3.5 billion in 2024 alone.

The U.S. Attorney’s office stated that these fraud schemes occurred in different programs, but they are interconnected, “form[ing] a web that has stolen billions of dollars in taxpayer money. Each case we bring exposes another strand of this network.”

The report argues that Minnesota’s federally subsidized Child Care Assistance Program (CCAP) to eligible low-income families, “has been fraught with fraud since early 2013.” Total federal child nutrition funds losses were estimated $300 million, plus potential Medicaid-related funds to be lost or placed at serious risk are estimated at $9 billion.

Minnesota’s DHS claimed they lacked authority to address provider kickbacks, despite statutory and regulatory authority to do so. Therefore, Inspector General investigations of provider kickbacks were dismissed.

Temporary DHS Commissioner Shireen Gandhi acknowledged that the U.S. government covered nearly 60% of the $100 billion of Minnesota Medicaid expenditures since FY 2019. Despite known blatant fraud cases, Minnesota recovered only $50 million from fraudsters in the past 5 years.

Vice President JD Vance during the White House anti-fraud initiative press conference that included differing $1.3 billion of Medicaid reimburse-ments to California — the largest deferral in CMS history — stated: “The simple reason” CMS was taking this action “is because the state of California has not taken fraud very seriously.”

The Mountain Top Times believes that the NFED strike team has found that federal funding fraud is widespread in California. We believe referrals for civil and criminal prosecution of California politicians are imminent.

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