Federal officials on Friday vowed to root out what they described as widespread misuse of federal funds in California as the Trump administration continued to target Democratic-led states over suspected fraud and tried to withhold billions of dollars.
Bill Essayli, the first assistant U.S. attorney for the Central District of California, appeared with Dr. Mehmet Oz, the administrator of the Centers for Medicare and Medicaid Services, to decry examples of stolen funds during a news conference in Los Angeles.
For the most part, the two officials did not reveal specific new fraud cases or prosecutions in California, pointing instead to convictions that occurred in 2024 and stating that they could not share details of ongoing investigations.
Dr. Oz said he believed foreign-based gangs were perpetrating fraud in hospice and home health care programs, but he did not provide detailed examples.
“We’re really here to put California fraudsters on notice,” Mr. Essayli said. “As the president said, the investigations have begun.”
After a sprawling social services fraud scandal rocked Minnesota politics in recent weeks, President Trump and his appointees have begun accusing other Democratic-led states of allowing fraud to occur there as well. On that basis, the Trump administration this week froze $10 billion in child care subsidies and other social services in five states, including California. A federal judge in New York on Friday blocked that move and temporarily restored the funds.
“You’ve all been following the story in Minnesota, which I do think is the tip of the iceberg,” Dr. Oz said.
California officials have acknowledged past instances of fraud, particularly in the state’s unemployment insurance program during the Covid-19 pandemic. The state’s unemployment agency in 2021 said that about $20 billion in benefits were likely fraudulent.
But California leaders have also said that Mr. Trump and his administration were vastly inflating the problem in the state.
A post on Gov. Gavin Newsom’s press office account on X said that the California governor had blocked over $125 billion in fraud — in reference to preventing further unemployment theft — and called Mr. Trump a “deranged, habitual liar whose relationship with reality ended years ago.”
Dr. Oz on Friday said that California had illegally spent $1.3 billion of federal money on health care for undocumented immigrants and that the state was paying that money back. The Centers for Medicare and Medicaid Services directed further questions to an October 2025 post by Dr. Oz on X, in which he said a C.M.S. audit of six states found that they were using federal money instead of state money to pay for health care for undocumented immigrants. According to the agency, when improper payments are identified, C.M.S. works directly with states on repayment plans.
California has steadily expanded its health care coverage for low-income undocumented immigrants, but state officials have long said that the program was funded only by state taxpayers, not federal Medicaid dollars.
They disputed Dr. Oz’s claims on Friday.
“Claims that California improperly used federal Medicaid dollars to provide health care to undocumented immigrants are flatly false and misrepresent both federal law and standard administrative practice,” said the California Department of Health Care Services, which runs the state’s Medicaid program, in a statement.
Based on California’s relative size as one of the world’s largest economies and past instances of fraud in the disbursement of public aid, particularly during the pandemic, Mr. Essayli suggested that “what’s happening in Minnesota pales in comparison to the level of fraud we believe is occurring in California.”
When asked about specific instances of fraud that his office is looking into, he cited two past health care fraud cases that were prosecuted during the Biden administration.
Mr. Essayli, a Trump loyalist who was acting as the U.S. attorney in Los Angeles until a judge disqualified him from using that title in October — blamed Mr. Newsom for allowing tens of billions of dollars in unemployment aid to be fraudulently paid out. He also criticized Mr. Newsom for cost overruns in the state’s beleaguered high-speed rail project, which has long been a regular Republican target because of its ballooning price tag and the absence of train service years after it was supposed to begin.
Mr. Newsom told MSNow earlier this week that he “can’t stand fraud” and was willing to work with Trump officials to stop it if they identified it.
Laurel Rosenhall contributed reporting from Sacramento.
Jill Cowan is a Times reporter based in Los Angeles, covering the forces shaping life in Southern California and throughout the state.
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