Steve Hilton and Herb Morgan announce results of ‘CALIFRAUDIA’, their preliminary review of fraud, waste, and abuse across California welfare state and government:  Estimates exposure likely to reach $250 billion

FOR IMMEDIATE RELEASE

Steve Hilton and Herb Morgan announce results of ‘CALIFRAUDIA’, their preliminary review of fraud, waste, and abuse across California welfare state and government: 

Estimates exposure likely to reach $250 billion

SAN FRANCISCO, CA: Steve Hilton, candidate for Governor of California, and Herb Morgan, candidate for California State Controller, today announced the results of ‘CALIFRAUDIA’, their preliminary review of fraud, waste, and abuse of taxpayer money across California’s sprawling welfare state and bloated government programs.

The CALIFRAUDIA review is based on state program budgets, known error rates, prior fraud cases, and hundreds of public tips submitted through Califraud.com, the live intake platform that the Steve Hilton for Governor campaign launched a month ago to collect evidence from whistleblowers, citizens, contractors, and service providers. These submissions have highlighted recurring allegations of fraud, waste, and abuse across multiple areas of state government.

Based on this preliminary review, Hilton and Morgan estimate that California’s exposure to fraud, waste, and abuse across major state programs is likely to reach $250 billion. This estimate is new, reflects their independent analysis, and underscores the urgent need for formal investigation and audit, as a matter of basic fiscal responsibility.

Examples brought to their attention as part of the CALIFRAUD.com review include:

• K–12 staffing and pay abuse, including allegations of job reclassifications triggering automatic salary increases while classroom staffing is reduced
• Other education spending, including Community College financial aid scams and Higher Education contracting abuse, including alleged misuse of education funds, procurement violations, and improper contracting
• Housing and Homelessness programs, including grant-funded nonprofits and intermediary organizations receiving billions in public funds
• Health and Human Services, including Medi-Cal, CalFresh, and other welfare programs with known eligibility, verification, and payment control weaknesses
• Infrastructure and major contracting, including large capital projects and long-term vendor relationships
• Public pension and retirement systems, as a potential area of long-term fiscal risk and mismanagement, including public-sector pension abuse through practices like double-dipping and spiking to generate excess payments

They will argue that California’s exposure is driven by two main factors:

• The size and scope of California’s welfare state and bloated state government, which have contributed to California now having the nation’s highest unemployment and poverty rate and historically low labor force participation
• Sixteen years of one-party rule that have bred a culture of corruption, complacency, and tolerance for incompetence and mismanagement

“This is what you get from sixteen years of one-party rule,” Hilton will say. “Corruption, fraud, and abuse on an epic scale. Gavin Newsom and the corrupt Democrat machine have stolen our money and handed it out to corrupt cronies and political front groups. As usual, we see in California this terrible combination of corruption, ideological extremism, and incompetence. It’s the worst fraud in America, by far, and Newsom is now, on every possible measure, MUGA — the Most Useless Governor in America. We will kick them out this year and bring common sense and competence to California’s government.”

Hilton and Morgan will announce:

• Their plan to implement a top-to-bottom, independent audit of Medi-Cal, CalFresh, CalWORKs, housing, homelessness, and other major taxpayer-funded programs
• Formal requests to the U.S. Department of Justice to deploy FBI Public Corruption and Complex Fraud units to investigate misuse of public funds
• Once elected as Governor and State Controller, coordination with the Inspectors General at HHS, USDA, and the Department of Labor to review the flow of federal funds through California agencies
• The creation of a joint federal–state task force with asset-recovery authority

They will outline a reform framework centered on transparency, performance accountability, and real-time public access to state spending data, arguing that restoring trust and protecting taxpayers requires both rigorous financial controls and executive leadership willing to enforce them.

“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.Sunlight isn’t just a slogan; it’s a control system. We need every state payment published in real time so that anomalies can be flagged before the money leaves the building.”

Darren Stallcup, a candidate for Congress in San Francisco, will also address how fraud, waste, and mismanagement affect San Francisco specifically, and the real-world consequences of state and city failures for residents, businesses, and taxpayers.

NY Post Article: Click Here.

NOTES

The 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.

The State Auditor’s High Risk Report found systemic problems in areas including CalFresh administration, unemployment insurance payments, Medi Cal eligibility, financial reporting, management of federal funds, and information systems.

The press conference was held at the State of California Employment Development Department, 801 Turk Street, San Francisco, CA 94102 at 2:30PM PT on Monday 5th January.

 

Posted on 05 Jan 2026, 18:10 - Category: PRESS RELEASE