Show Notes
California’s massive “empire of fraud” is finally getting the attention of the national media and the federal government.
This week, acting Attorney General Todd Blanche promised a crackdown on fraud in state administration of federal assistance programs. He highlighted recent federal prosecutions that had resulted in guilty pleas — including a half-billion dollars in health care and COVID fraud. Those guilty pleas include a California man who submitted $270 million in fraudulent claims through California’s Medicaid program for costly prescription drugs.
After independent journalist Nick Shirley’s video investigation of huge amounts of welfare fraud in Minneapolis by Somali immigrants went viral, there was some skepticism in the mainstream press that it could be as bad and as blatant as that. But for investigative reporter Susan Crabtree, Minnesota’s fraud only put the scale of what would be found in California into sharper relief.
“We were into exposing California corruption and fraud before it was cool,” says Crabtree. “Now everybody’s getting in on the game. I welcome them, because this is where it’s at.”
In 2025, Crabtree and co-author Jedd McFatter of the Government Accountability Institute wrote the book on California political corruption, Fool’s Gold: The Radicals, Con Artists, and Traitors Who Killed the California Dream and Now Threaten Us All. The book told the stories that the state’s most ambitious politicians — Gov. Gavin Newsom, Sen. Adam Schiff, and gubernatorial hopeful Rep. Eric Swalwell — didn’t want voters to know.
“If you think Minnesota has any kind of serious problem with fraud, it’s chump change compared to what’s going on in California’s empire of fraud,” Crabtree tells co-host Eric Eggers of the Government Accountability Institute on the most recent episode of the On Background podcast. Her research into corruption and fraud in the Golden State led her to conclude that fraud in any state on such a massive scale can only happen with the tacit knowledge of that state’s political leaders.
“We wanted to focus on the corruption because everybody knew about California’s failed policies. They’re absurd, many of them, but it is the corruption that’s the real driving factor in why there’s a huge deficit, why the place is completely mismanaged, and why it’s becoming a dystopia,” she says.
Eggers adds, “I like the old saying, ‘Never mistake incompetence for conspiracy.’ But the great thing about California is that you have so much of both!”
After a short video clip of Blanche discussing the guilty pleas, Eggers says, “What I love about this is we hear so much about outrage fatigue. People see your reporting and say ‘That’s terrible, but when are people going to go to jail?’ Your reporting is actively leading now to charges being filed.”
Crabtree details a case from last month involving sham hospice care that billed the state’s health insurance agency, Medi-Cal, hundreds of millions of dollars to serve non-existent patients. “They called this ‘Operation Never Say Die,’ because it was Medicare hospice fraud,” she says. “And Newsom says that it’s not his fault because this is a federal program, but other states have overseen it in a more direct way and provided the enforcement mechanisms and accountability that we’re not seeing anywhere in California.”
She goes on to discuss yet more eye-popping fraud scams involving student loans for community college by people who were not even enrolled, and prison inmates successfully filing and receiving unemployment benefits from the state while they sat in San Quentin, the state’s largest penitentiary.
“I’m working on a team with Chris Rufo at the Manhattan Institute now,” she says. “They’ve estimated that the total fraud is $180 billion. I think it’s more than that.”
The fraud scams involve not just a lack of government oversight but nefarious actors from non-governmental organizations as well. This is particularly true, Crabtree believes, in the area of illegal immigration.
“I’m hoping to look at all the nonprofits that are in the ‘immigration-industrial complex,’” she adds. “In California, there’s more than a billion dollars being spent to protect illegal immigrants from deportations. And in some cases, those illegal immigrants are convicted felons. I think this is ripe for investigation and really needs to be exposed.
