In January, President Donald Trump took to Truth Social to alert California Gov. Gavin Newsom that the federal government's initiative to root out fraud was headed his way like high-speed rail.
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
Later that month, the Centers for Medicare & Medicaid Services (CMS) Administrator, Dr. Mehmet Oz, called California's Medicare hospice fraud, "The Varsity Team," and signaled plans to address it. In early February, Small Business Administration Administrator Kelly Loeffler announced the SBA had suspended 111,620 California applicants because of $8.6 billion in suspected SBA fraud.
ICYMI: 'The Varsity Team': California Medicare Fraud Puts Minnesota to Shame
SBA's Loeffler Suspends 111,620 California Businesses in $8.6 Billion Fraud Scam
Next up at bat: the U.S. Department of Labor. On Wednesday, the U.S. DOL launched an official probe into the unemployment fraud that happened on California's watch during the COVID pandemic.
Feds launch probe into California’s ‘blind eye’ on unemployment fraud https://t.co/cV7Ioz6NXE
— Rapid Response 47 (@RapidResponse47) February 18, 2026
California officials who turned a blind eye to unemployment scams — potentially worth tens of billions of dollars during the pandemic — will now be put directly under the microscope of the federal government.
The US Department of Labor is set to send a letter to the state’s Employment Development Department announcing a “strike team” will soon be touching down in the Golden State to root out theft and abuse, The California Post has learned. The investigation will be similar to efforts currently underway in Minnesota.
The California Post (linked above) is wrong in this: There was no "blind eye;" it was deliberate complicity by former California Employment Development Department Director and President Joe Biden's Acting Secretary of Labor Julie Su, Former House Speaker, Rep. Nancy Pelosi (D-CA-11), and Hair Gel himself, Gavin Newsom. So, this investigation is way past due.
But it's right on time to expose even more of Newsom's abject failure to lead a state, let alone a nation. We need as many stones as possible to sink his 2028 presidential ambitions, and this one is massive.
RedState did quite a bit of coverage on the EDD fraud, starting in November of 2020 when our Managing Editor Jennifer Van Laar wrote:
California’s unemployment insurance agency, the Employment Development Department (EDD), has been a bastion of incompetence for years, if not decades, and its performance during the coronavirus pandemic has been beyond horrible. By mid-October, there were hundreds of thousands of claims that had been backlogged for months, and some claimants hadn’t received a single benefit payment since the beginning of the pandemic. The agency was forced to stop accepting new claims for two weeks while they attempted to get a handle on things, but even with that they don’t expect to get caught up until January.
EPIC FAIL: CA EDD Sends out 38 Million Pieces of Mail with Citizens' Social Security Numbers
To give a rundown of the failure theater that was the EDD during the COVID pandemic:
- In 2020, the EDD was backlogged for months in fulfilling legitimate UI claims. These claims totaled in the hundreds of thousands. Because of these delays, some people lost their homes.
- California Death Row inmates received UI benefits. More than $400 million worth of unemployment checks were sent to over 21,000 inmates. Some of the money went to the prisoners, the rest was used by the national and international fraud networks, who used the prisoners' identities without their knowledge.
- 38 million pieces of mail with EDD applicants and recipients Social Security numbers listed were sent out into the wild, without any way to track where these letters ended up. Because of this, more fraudsters were able to bilk millions from the government through fraudulent claims.
U.S. DOL Secretary Lori Chavez-DeRemer told the California Post in a statement:
“Financial issues and potential fraud in California’s unemployment insurance program will be fully examined.
“The previous administration turned a blind eye toward failing Labor programs: This ends now.”
The dig is legitimate. What the publication failed to report is that acting U.S. Department of Labor Secretary Julie Su was also the person who was in charge of California's Employment Development Department when all this fraud went down. Biden tried to get Su confirmed to full secretary status, but even with a Democrat majority in the Senate, sanity somehow prevailed, and she could not get enough backing to be confirmed.
That's more than can be said for the State of California, which continued to double down on insanity in allowing UI fraud to run rampant, even after Su's departure to D.C..
Read More: Would the Last Sane Person at the California EDD Turn Off the Lights... Oh, Wait...
Stand Against Julie Su Part 2: 36 Billion in Fraud Should Get a Jail Sentence, Not a Promotion
A 2021 auditor report on the UI fraud called out the EDD (under Su's leadership) for failing to bolster its fraud protection, even after it was revealed that they were sending money to fraudulent or non-existent individuals:
EDD did not take action to bolster its fraud detection efforts until months into the pandemic. As a result, its data show that it paid about $10.4 billion in claims that it has since determined may be fraudulent. Even as late as December 2020, EDD was allowing claimants to continue to collect benefits using suspicious addresses because it did not establish payment blocks for their claims. Further, $1 billion of the $10.4 billion paid for suspicious claims was the result of EDD’s decision to remove a key safeguard against payment to claimants whose identities it had not confirmed. EDD staff misunderstood the importance of that particular safeguard and, from April to August 2020, made payments to claimants despite concerns about the legitimacy of their identities.
Beyond the CA EDD directors refusing to address their own malfeasance, they also allowed employees to get in on the game. In March of 2025, former EDD employee Regina Brice was sentenced to 66 months in prison for her role in the COVID UI fraud. Between 2020 and 2021, Brice filed $858,339 in fraudulent UI claims.
[I]n exchange for kickbacks, diverting vital taxpayer resources away from unemployed American workers who lost their jobs due to the COVID-19 pandemic,” said Quentin Heiden, Special Agent-in-Charge, Western Region, U.S. Department of Labor, Office of Inspector General (DOL-OIG). “Brice violated the public trust afforded to her as an EDD employee to enrich herself and others. We will continue to work with our law enforcement partners to safeguard the integrity of the UI program for those who need it. This sentencing demonstrates DOL-OIG’s commitment to root out waste, fraud, and abuse in DOL programs.”
While the news cycle has been fixated on the Minnesota Somali fraud, California has been saying, "hold my beer."
The breadth of fraud in California, however, could leave Minnesota’s thievery looking like chump change.
The feds provided California nearly $290 billion in relief funds during the pandemic, and EDD was among the largest recipients as it was tasked with rapidly implementing expanded unemployment benefits.
CA EDD leadership has changed hands TWICE since 2021. Nancy Farias, the current director, is blaming President Donald Trump for the fraud, while Newsom is whining that California's 18 billion budget deficit prevents him from addressing it. So, he is just refusing to pay the bill. Instead, he has passed this burden onto the small businesses in the state — at least the ones that haven't left.
California lawmakers still haven’t paid off a $20 billion federal loan for unemployment insurance claims during the pandemic — and struggling businesses are now being forced to pick up the ballooning tab.
Employers are on the hook for roughly $42 in payroll taxes per employee to pay down the massive debt — and that tab will rise every year until the debt is cleared.
Thanks to the Trump administration, California may try to run, but they can no longer hide. They also cannot keep receiving federal dollars on Treasury Secretary Scott Bessent's watch. After decades of waste on boondoggle projects, DEI, and anti-family social programs, and illegal aliens, the gravy train has come to a screeching halt. Newsom and the state may finally be getting their comeuppance.
Editor’s Note: The 2026 Midterms will determine the fate of President Trump’s America First agenda. Republicans must maintain control of both chambers of Congress.
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