Fraud, Waste, and Abuse Hits Working People the Hardest

A sourced look at fraud, corruption and unmeasured spending in California’s public programs, who bears the cost, and what’s on the ballot Nov. 3.

California’s biggest losses hit the programs working people depend on: about $20 billion in stolen pandemic jobless benefits, $361 million skimmed from EBT cards and at least $4 billion in questionable Medi-Cal payments. And that’s just what got caught. San Francisco tripled its homeless-nonprofit spending while the count held near 8,000. Los Angeles couldn’t say where its money went. High-speed rail managed to spend about $15 billion without laying a single mile of track.

The largest documented fraud hit unemployment and EBT aid, money meant for people who had lost work or live on low incomes. When those systems fail, the people they serve wait longer, get less or get cut off. Every dollar lost to fraud, overruns or penalties is a dollar not spent on services, or one taxpayers have to replace.

There is no telling how much fraud, waste and abuse goes uncaught. The figures above are what investigators found. California’s own watchdogs estimate the rest runs into the billions:

No official or independent estimate exists for California’s budget as a whole.

San Francisco Human Rights Commission. A controller’s audit flagged $4.6 million in questionable spending under former director Sheryl Davis, including gala tickets and a $9,000 Martha’s Vineyard rental. She faces 17 felony counts, accused of steering $4.5 million to a nonprofit she was tied to. Her attorney says she denies all allegations, and she has pleaded not guilty.

Oakland city contracts. Former Mayor Sheng Thao’s federal bribery trial began Oct. 13. Prosecutors say her city’s recycling contractor paid for attack mailers and promised her partner a $300,000 “no-show job,” at least $95,000 of it paid. All four defendants have pleaded not guilty. Attorney General Rob Bonta spent $468,228 in campaign funds on lawyers while answering investigators’ questions. He hasn’t been charged, and the state ethics watchdog found the spending legal.

San Francisco Public Works. Former director Mohammed Nuru got seven years in federal prison over a bribery scheme. Garbage hauler Recology agreed to repay ratepayers $94.5 million for rates Nuru helped set; the company called it a mistake, one its staff had flagged to the city in 2018.

California allocated $24 billion for homelessness and housing over five years, according to the Legislative Analyst’s Office. The state auditor found the state “lacks current information on the ongoing costs and outcomes” of those programs.

No metrics. The city promised performance measures for every contractor by 2019 and kept missing the deadline. Contracts still count activity, like how many people attend an intake orientation, not whether anyone ends up housed. To the grand jury’s knowledge, the department “has never declined to renew or award a contract” over a controller’s corrective-action finding. In August its new director, Mike Levine, said contract reviews had focused on providers’ expenses rather than results. Mayor Daniel Lurie is rebidding every contract with performance terms: “We are not going to continue spending $1 billion of taxpayer money on a failing system.”

Missing money. A 2022 audit of the United Council of Human Services found improperly placed tenants, including its own employees, and $108,861 in unauthorized rent. The city referred it to the FBI and cut it off. The Providence Foundation billed $105,000 for work that never happened and settled for $1 million.

Mayor Karen Bass took office in December 2022 with emergency powers and made homelessness her top priority.

Some of the largest costs involve no crime. They come from delays and overruns.

High-speed rail. About $15.3 billion has been spent, and 18 years after voters approved it, no high-speed track has been laid. No trains run; the first service, in the Central Valley, is planned for 2033.

Housing. San Francisco takes 523 days to approve a housing project and 605 more to issue a building permit, the slowest in California. Its Planning Department reports costs near $1 million per affordable two-bedroom unit.

Much of this came to light through the system itself. Democratic Sen. Dave Cortese and Republican Assemblymember Josh Hoover jointly requested the 2024 homelessness audit. “The lack of transparency in our current approach to homelessness is pretty frightening,” Hoover said. San Francisco’s district attorney brought the Davis case, its controller audited the Human Rights Commission, and the state auditor produced the EDD, Medi-Cal and high-risk findings.

Karen Bass faces Councilmember Nithya Raman, with homelessness a central issue.

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