The Honorable Pam Bondi
Attorney General of the United States
U.S. Department of Justice
950 Pennsylvania Avenue, NW Washington, DC 20530
Mr. Thomas March Bell
Inspector General U.S. Dept. of Health & Human Services
330 Independence Avenue, SW Washington, DC 20201
Ms. Janet M. Sorensen
Acting Inspector General
U.S. Department of Agriculture
1400 Independence Avenue, SW Washington, DC 2025.
RE: FORMAL REQUEST FOR FEDERAL INVESTIGATION INTO SYSTEMIC FRAUD AND FIDUCIARY NEGLIGENCE IN CALIFORNIA STATE PROGRAMS
Dear Attorney General Bondi and Inspectors General Bell and Sorensen:
We are writing to you today in our capacities as candidates for Governor and State Controller of California to formally request an immediate and comprehensive federal investigation into the widespread fraud, waste, and systemic mismanagement of taxpayer funds within the State of California.
For too long, California’s one-party government has operated without the necessary checks and balances to protect both state and federal taxpayers. The December 11, 2025, California State Auditor’s High-Risk Report (Report 2025-601) confirms that the situation has reached a breaking point. The Auditor has officially designated the California Department of Social Services (CDSS) as a “High-Risk” agency due to chronic failures in the administration of the CalFresh (SNAP) program.
Of particular concern to federal authorities should be the following:
- Imminent Federal Liability: Due to California’s persistent failure to lower its benefit payment error rates, and in light of recent federal legislative changes, California taxpayers face an estimated $2.5 billion annual penalty beginning in federal fiscal year 2028. This is not a cost of providing care; it is a penalty for administrative incompetence.
- Medi-Cal Oversight: With a total budget approaching $200 billion, Medi-Cal remains on the state’s high-risk list. Significant discrepancies in eligibility determinations suggest that billions in federal Medicaid matches are being distributed without proper verification or control.
- The “Unemployment Proof Point”: During the pandemic, California’s Employment Development Department (EDD) lost tens of billions of dollars to international criminal syndicates and identity-theft rings. This was not an isolated incident but a symptom of a structural lack of “transaction-level” controls—a failure that we believe persists across all major state agencies today.
- The Minnesota Precedent: In 2022, federal intervention was required to uncover the $250 million “Feeding Our Future” fraud in Minnesota. Given that California’s budget and welfare state footprint dwarf Minnesota’s, we believe the exposure here is orders of magnitude larger—potentially reaching $250 billion..
We specifically request that the Department of Justice deploy FBI Public Corruption and Complex Fraud units to work alongside the HHS-OIG and USDA-OIG to audit the flow of federal funds within the State of California.
Furthermore, we advocate for a federal mandate requiring California to implement daily, transaction-level public reporting for all programs receiving federal subsidies. As a candidate for State Controller, Herb Morgan has identified this as the only viable mechanism to prevent fraud before it metastasizes.
Sacramento has proven itself either unwilling or unable to police its own house. When state-level audits serve only as a “floor” for identifying loss, it is the duty of federal authorities to step in and protect the integrity of the U.S. Treasury.
We look forward to your prompt response regarding this urgent matter of national fiscal security.
Sincerely,
Steve Hilton
2026 Candidate for Governor of California
Herb Morgan
2026 Candidate for California State Controller