California has a fraud problem so massive that even the federal prosecutor tasked with cleaning it up can’t tell where the incompetence ends and the corruption begins.
Gavin Newsom has been running the Golden State for years while billions in taxpayer money allegedly walked out the door.
And now the top federal prosecutor in Southern California just put every California official on notice with a warning they won’t be able to ignore.
A “Fraudster’s Paradise” With a Target on Its Back
First Assistant U.S. Attorney for the Central District of California Bill Essayli told Fox News that the state has transformed into a “fraudster’s paradise,” accusing state leaders of allowing millions of dollars in fraud — and making clear that federal investigators “will not hesitate” to prosecute officials found to be enabling it.
“California is truly the fraudster’s paradise,” Essayli said, later adding, “It’s very hard to tell sometimes if it truly is just massive incompetence or corruption, and that’s a very fine line sometimes.”
That’s a prosecutor talking. Not a campaign ad. Not a think tank report. A sitting federal official saying out loud that California’s leadership may be criminally complicit in the looting of taxpayer money.
“If we ever develop evidence that there are people inside the government who are benefiting from the fraud or who are enabling the fraud, we will not hesitate to charge them,” he said.
Essayli also had a message for potential fraudsters, telling them to “be on alert.” “You could be next,” he said. “And you probably will be next because we’re not putting up with it here anymore.”
The $45 Million Botox Doctor and What She Tells Us About California
Essayli said new leadership at the Justice Department is “laser-focused” on going after those committing fraud and saving the American people money, and he pointed to cases in his district, including what the FBI in Los Angeles called the “largest Botox fraud scheme in the United States.”
A California doctor was convicted by a federal jury of submitting more than $45 million in false and fraudulent Medicare claims for Botox injections — in an effort to fund a lavish lifestyle that included luxury vacations and the purchase of a $12,000 17th-century crossbow. Violetta Mailyan, 45, of Glendale, was convicted of nine counts of wire fraud and three counts of obstruction of a criminal investigation of a healthcare offense.
An analysis showed that she had been paid more by Medicare for Botox injections than any other doctor in the United States, making her an extreme outlier among medical providers, prosecutors said.
And California’s licensing system let her operate for years.
“The Botox scheme was a conviction right here in Los Angeles, and we’re going after those assets. We’re [going to] get probably $20 million of her assets returned to the taxpayers after that conviction,” Essayli said.
Essayli argued that the way California hands out medical licenses is helping to fuel fraud, questioning whether it’s “incompetence or corruption” behind it and adding that state politicians “really don’t care” because it’s federal money being used. “A lot of this is just like reckless, massive incompetence and negligence to hand out this many licenses without vetting or checking that these are legitimate medical providers,” he said.
There it is. The state collects some of the highest taxes in the country, hands out licenses like party favors, and then shrugs when the federal government comes in to clean up the mess — because the money being stolen isn’t California’s. It belongs to American taxpayers everywhere.
JD Vance Brought the Hammer Down
In March, President Donald Trump chose Vice President JD Vance to lead the Task Force to Eliminate Fraud. Since then, the White House says it has identified several major fraud rings involving hospice care and childcare facilities.
In May, Vance, alongside Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz, announced the administration would defer $1.3 billion in federal Medicaid funding to California due to oversight concerns. At the time, Vance told Fox News host Kayleigh McEnany the administration’s anti-fraud task force was looking into whether government officials enabled the alleged scams.
That last part is the one Sacramento ought to be losing sleep over.
Dr. Oz said that California’s Medicaid records “have generated major red flags for us,” noting the administration needs California to clarify $630 million in billing, $500 million in home health services and $200 million in “questionable expenditures” linked to coverage for undocumented immigrants.
“It’s the largest deferral we’ve ever made,” Oz said about the decision to suspend $1.3 billion in Medicaid payments.
Newsom’s Record Keeps Getting Harder to Defend
Essayli hasn’t been shy about naming names. “California has spent $24 billion in the last five years on homelessness, and no one can account for where that money has really gone,” Essayli said on *Fox & Friends*.
Essayli launched a task force to investigate corruption in California, with a focus on homeless services. The task force has already resulted in federal charges against two men accused of using real estate projects to exploit the state’s homelessness system for personal profit.
But Newsom’s office has been slow to engage. Essayli blasted Newsom over a $23 million homeless services fraud scheme, writing that the state handed out taxpayer dollars with “zero vetting and zero oversight.” His response came after Newsom defended himself from criticism, denying any wrongdoing in the state and insisting California enforces accountability.
“I said ‘prevent.’ Having my office prosecute fraudsters to whom California blindly handed out millions does not count as ‘fighting fraud.’ It’s the federal government cleaning up after you and the Governor’s incompetence,” Essayli wrote on X.
That’s not a subtle jab. That’s a federal prosecutor telling a sitting governor his administration is a national embarrassment on the taxpayer’s dime.
“Maybe you should spend more time prosecuting your own fraudsters and filling up your prisons, and less time cooking up political lawsuits against the Trump Administration,” Essayli added.
The Bigger Pattern Nobody in Sacramento Wants to Talk About
California isn’t the only Democrat-run state in the crosshairs. Vance’s task force has been working with the Centers for Medicare & Medicaid Services, run by Dr. Mehmet Oz, and CMS identified and suspended 70 hospice and home health providers in Los Angeles after they were flagged as high-risk fraudulent providers — all within a single week of being identified.
Seventy providers. One week. One city.
And Essayli has made clear that number is going to grow. The fraud rings his office has already busted, he’s said publicly, are only the tip of the iceberg. More charges are coming, and the administration’s new data-driven tools mean fraudsters who once counted on bureaucratic inertia to stay hidden are running out of places to hide.
Vice President JD Vance has also criticized California’s welfare policies, accusing the state of providing benefits regardless of immigration status. Speaking to Fox News’ Jesse Watters, Vance said California openly advertises using taxpayer funds to provide Medicaid to illegal aliens. “California, more than almost any other state, has been so glaring and obvious about the fact that they’re giving welfare benefits to illegal aliens,” Vance said.
“They’re getting rich off of the generosity of the American taxpayer. The political corruption that enables it has got to stop,” he added.
California’s Attorney General Rob Bonta has pushed back on Essayli publicly, but the federal prosecutor isn’t backing down. “Do fraudsters get any serious prison time under California’s soft-on-crime laws? Asking for taxpayers,” Essayli wrote on X.
That’s the real question Newsom and Sacramento can’t answer. Because under their watch, the state became a place where the scammers are bolder than the prosecutors — at least until the federal government showed up.
But now they’re here. And they’re not leaving.
Sources: Fox News, Fox News Digital, Department of Justice, ABC7 Los Angeles, The Blaze, City Journal, AOL/NY Post