In halting childcare and welfare benefits to hundreds of thousands of low-income Californians, the Trump administration says it’s “concerned by the potential for extensive and systemic fraud.”
“These concerns have been heightened by recent federal prosecutions,” states the funding freeze letters to California from Trump-appointed officials at the U.S. Department of Health and Human Services (HHS).
When pressed for details about what specific prosecutions justify the freeze in California, administration officials have offered few specifics. Confirmed fraud concerning the targeted programs appears to be a tiny fraction of the total spending.
The letters don’t mention any prosecutions here in California, as the administration cites it as justification for cutting off billions of dollars in support for food, housing and childcare.
A spokesperson for the federal agency declined to comment when asked what prosecutions the letter refers to, and for the basis for the broader fraud concerns cited as the reason for cutting off funds.
Prosecutions that have been brought around child care benefits amount to a small fraction of 1% of the federal childcare funding California has received, according to a search of all case announcements on federal prosecutors’ websites covering the whole state. The U.S. Department of Justice, which oversees such prosecutions, has not responded to a request asking if additional cases exist.
At a news conference Friday, LAist asked Bill Essayli, the top federal prosecutor for the region, if he knew of any federal prosecutions of childcare benefit fraud besides a single 2023 case previously cited by federal officials. Essayli did not point to any other federal prosecutions. The region he oversees includes over half of California’s population, including the counties of L.A., Orange, Riverside and San Bernardino.
In a separate emailed response to questions from an NPR reporter, the White House pointed to an article about a separate case in San Francisco that did not indicate it involves the federal funds being frozen.
What’s not known is the scale of complaints federal authorities have received about California’s spending with these three programs, and to what extent cases will be brought in the future. It’s also unclear how problems with California’s spending on these programs compare with other states that are not being targeted with funding freezes.
Last year, a federal Government Accountability Office review found about three-quarters of states — 37 of 50 — had negative findings in audits about their oversight of the largest program the administration is freezing funding to in five blue states.
That federal program is called Temporary Assistance for Needy Families, or TANF.
Mississippi has an ongoing fraud scandal over misuse of $77 million in TANF and other welfare dollars — much of which was used to benefit wealthy athletes like former NFL quarterback Brett Favre.
Former pro wrestler Ted DiBiase Jr. is currently on trial in a federal case alleging he conspired to fraudulently get millions in TANF welfare dollars through sham contracts for services that were never provided, as part of Mississippi's fraud scandal.
Mississippi is not among the five states the Trump administration is freezing TANF funds to, all of which are run by Democrats.
One known federal case in California
In order to determine what federal prosecutions the administration is using to justify cutting California off from federal safety net programs, LAist ran searches through all announced cases over the past decade-plus by all four federal prosecutor offices in the state. It shows a total of one case mentioning childcare benefits fraud, brought in San Diego in 2023 over $3.7 million in alleged stolen funds.
The amount alleged to be stolen was equivalent to less than $1 out of every $10,000 California received from the funding the administration is freezing over the timeframe of the announcement search.
The federal agency that distributes the funds, HHS, has a nationwide watchdog office that investigates fraud in the programs being frozen. It’s known as the Office of Inspector General, or OIG.
The inspector general’s office has thousands of reports online about fraud and misspending across HHS’ vast programs nationwide.
But a search found no reports around problems with spending in California among the three programs impacted by the spending freeze.
“As your search confirms, there aren’t public OIG-released materials on fraud in these programs occurring in California,” said a spokesperson for the inspector general’s office.
That contrasts with Minnesota, where large-scale fraud cases have been brought in recent years over theft of federal dollars meant for food and other social services. An OIG report last year found Minnesota did not comply with requirements around documenting attendance and payment to childcare providers.
In an apparent error, one of the administration’s funding freeze letters to California asks for documents about Minnesota’s processes.
Criticism that Minnesota officials failed to prevent fraud in their state drove the state’s Democrat governor, Tim Walz — who ran for vice president against Donald Trump’s ticket in 2024 — to announce Monday he was dropping out of running for reelection.
That same day, the administration announced it was expanding the funding freeze to include California and three other Democrat-led states, in addition to Minnesota.
The following morning, President Trump alleged — without giving specifics — that corruption in California is worse than Minnesota.
“California, under Governor Gavin Newscum, is more corrupt than Minnesota, if that’s possible??? The Fraud Investigation of California has begun. Thank you for your attention to this matter! PRESIDENT DONALD J. TRUMP,” the president wrote on his social media platform Truth Social.
The White House has not responded to LAist requests for an interview with President Trump.
Governor Newsom has drawn criticism in recent years for vetoing a bill to more closely track spending and outcomes for tens of billions of state homelessness dollars, which had passed unanimously in the state Legislature.
CalWORKS
In response to NPR’s questions about the basis for the funding freeze, the White House’s Office of Management and Budget pointed to the San Diego case and a local prosecution by the San Francisco DA last year involving up to $400,000 in childcare funds.
It’s unclear if the San Francisco childcare case involved the same funding streams that are being frozen. The DA’s office and White House have not responded to a request for clarification.
The other, and by far largest, issue pointed to by the White House was described as $108 million lost from California’s welfare program, CalWORKS.
“CalWorks, a TANF recipient, had lost more than $108 million in cash benefits due to welfare fraud," the White House statement said with a link to a news release from the Orange County DA's Office.
LAist looked into it, and the situation is more complex. The DA’s news release says the losses are related to a scam called EBT card skimming.
That’s when scammers steal benefit card money from welfare recipients’ benefit cards. When that happens, the state covers the losses out of state funds, according to CalMatters.
The CalWORKS EBT cards are mostly funded by state and local dollars, according to state figures. About a third of the funding for those cards comes from TANF, the largest federal program being frozen.
The White House has not responded to follow-up questions.
EBT card skimming is an issue nationwide, not just the states where funds are being frozen, according to news reports.
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Legal challenge
Trump has pardoned or commuted the sentences of several people convicted of large-scale frauds, including commuting the 20-year prison sentence of a man convicted in a case alleging $1.3 billion in fraudulent health claims to the federal government. The Justice Department called it the largest health care fraud scheme ever prosecuted up to that point.
At a news conference Thursday, Vice President J.D. Vance said the Justice Department would be creating a new high-level position to oversee fraud prosecutions. That official will be directly overseen by Trump and Vance, according to the vice president.
Later in the day, California Attorney General Rob Bonta announced a lawsuit seeking to stop the funding freeze, filed by California and the other blue states targeted by the freeze.
The next day — Friday — a federal judge granted a temporary restraining order preventing the freeze for now. Further arguments and decisions in the case are expected in the coming weeks.
NPR correspondent Jennifer Ludden contributed reporting to this story.
