Gavin Newsom’s $30 Billion Fraud Magnet

California’s In-Home Supportive Services Program is ripe for scams, experts say.

California Governor Gavin Newsom is embroiled in a national fraud scandal. Thus far, much of the coverage has focused on alleged schemes related to unemployment insurance, hospice care, and food stamps. In this exclusive investigation, we shine a light on one of California’s largest initiatives: the In-Home Supportive Services Program, or IHSS, which pays family members and other individuals to provide home-based care for the elderly and disabled—at a cost of nearly $30 billion per year.

On the surface, IHSS presents itself as an instrument of compassion, directing billions to caregivers who help with cooking, personal care, laundry, and other daily needs inside recipients’ homes. But a growing number of experts and critics argue that the program is rife with fraud, losing roughly an estimated $6 billion to $12 billion yearly to scammers. Meantime, the state’s powerful home-care unions collect more than $149 million in membership dues, funneling money into the political network supporting Newsom and California Democrats.

This is the story of a government that has allowed compassion to become a mask for fraud, creating a self-reinforcing system that keeps the Democratic establishment in power.

In 1973, California created what became the IHSS program to provide in-home care to the elderly and disabled. The IHSS caseload exploded in the 1980s, prompting the state to impose hour caps on care providers. California offers the program through Medi-Cal, its version of Medicaid, and pays providers with a combination of federal, state, and county funds.

IHSS has long been considered a magnet for fraud. In 2009, then-Governor Arnold Schwarzenegger estimated that up to 25 percent of IHSS claims were fraudulent. A Sacramento grand jury report that year found that providers had “no meaningful oversight, no assessment of skills to meet client needs, no monitoring of the validity of service hours, and no background checks.”

After growth of the program’s rolls exploded in the early 2000s, Schwarzenegger signed legislation aimed at curbing abuse, requiring IHSS providers to undergo criminal background checks and introducing random claim reviews.

But soon after the law’s passage, a state workgroup, teaming with representatives from “labor organizations,” introduced a key loophole. Citing concerns about disruptions for “vulnerable members of the IHSS community,” the task force barred regulators from conducting fully randomized, unannounced home visits, leaving the program more exposed to scammers.

Since then, the program has expanded dramatically again. “IHSS provider” has become the largest low-wage occupation statewide, with more than 800,000 taxpayer-funded caregivers offering everything from grocery shopping to personal care.

Applying for IHSS care is straightforward. First, a prospective beneficiary files a California Department of Social Services application. Second, a county social worker visits his home to determine his need for care. Third, the county or public authority reviews the application and, if it approves, designates the applicant as a beneficiary, who can then use taxpayer funds to hire the caregiver of his choice—in more than 70 percent of cases, a direct family member.

The system operates largely on trust. Providers self-report their timecards and check-in records. In roughly 60 percent of cases, providers and beneficiaries live together, delivering care in private homes—typically without the threat of random, unannounced visits.

County-level fraud controls appear to be lacking. State regulations prevent IHSS staff from making unannounced visits unless a whistleblower files a “specific” complaint or regulators identify clear red flags. Even when complaints are lodged, investigations apparently can be slow, and prosecutions slower still. According to the state’s Department of Social Services, for one 12-month period between 2023 and 2024, counties received nearly 7,000 fraud complaints; 28 counties recorded 964 fraud investigations, resulting in just 39 cases prosecuted.

County-level regulators face additional problems. A 2021 Riverside County audit claimed that the local IHSS program did “not adhere to review and approval procedures for program integrity referrals.” In addition, more than 60 percent of county staff at the Department of Public Social Services, which, according to the auditor, handles program oversight, were IHSS providers themselves—meaning they had an interest in maintaining the status quo.

California, in other words, is sending billions of dollars per year to a program that is easy to exploit, difficult to administer, and almost impossible to supervise.

In 2024, the federal government began a series of enforcement actions. As part of a nationwide crackdown on health-care-related crimes, the United States Department of Justice announced prosecutions for alleged IHSS fraud in California.

In one case, the DOJ alleged that San Dimas resident Giacomo Lorenzo Garbarino billed the state for more than $170,000 in fraudulent IHSS and Medi-Cal services over a five-year period. The patient in his care was reportedly hospitalized or living in a facility at the time and thus ineligible for IHSS reimbursement. In another case, Joseph Depiazza allegedly billed the state for more than $50,000 in fraudulent IHSS services. According to prosecutors, he kept submitting claims after the patient entered the hospital—and even after she had died.

Last year, federal officials announced another round of IHSS fraud prosecutions. In one case, prosecutors alleged that Maryam Erambakhsh falsely claimed payments for caring for her parents while they were outside the United States. In another, Cindy Lynn Fromm allegedly billed the program for more than a year of services while the recipient was incarcerated.

These cases may be the tip of the iceberg. Haywood Talcove, CEO of LexisNexis Risk Solutions for Government and a nationally recognized fraud expert, estimates that annual IHSS fraud could amount to 20 percent to 40 percent of total program spending. Applied to projected IHSS outlays for fiscal year 2025–26, that suggests roughly $6 billion to $12 billion in losses. Multiple senior officials at the Department of Health and Human Services have described a similar pattern, estimating that about 25 percent of the Medi-Cal budget is lost to fraud. The share is likely higher for IHSS, given the program’s structure and its susceptibility to abuse.

Earlier this year, Mehmet Oz, head of the Centers for Medicare and Medicaid Services, set off a firestorm of controversy with the claim that criminal networks, including the “Russian Armenian mafia,” were running massive hospice and home care scams in Los Angeles. He suggested that Armenians in Los Angeles were disproportionately represented among the leaders of hospice fraud rings.

One red flag for social-services fraud, Talcove suggested, is high community usage rates, and Armenian speakers in Los Angeles do appear to be significantly overrepresented among the county’s IHSS providers and recipients. Armenian speakers represent 14.6 percent of IHSS recipients and 6.5 percent of IHSS caregivers, per state data. People who speak Armenian fluently and English less than “very well,” however, make up just 0.8 percent of L.A. County’s population, according to Census data. Assuming that these Armenian speakers are identical to self-reported Armenian speakers in IHSS data, Armenian speakers who speak English less than “very well” are 18 times more likely to be IHSS recipients and eight times likelier to be IHSS caregivers than their share of the county population would suggest.

These high utilization rates do not, on their own, prove fraud. But analysts such as Talcove argue that “organized criminal groups” are “taking advantage of the program at scale.” Using a conservative 25 percent fraud estimate—within Talcove’s range and consistent with HHS officials’ broader Medi-Cal assessments—scammers may have siphoned at least $35 billion from IHSS during Gavin Newsom’s administration. “There’s virtually no incentive for them to stop,” Talcove said. “California has limited to no controls in place.”

Perhaps the biggest beneficiaries of California’s IHSS program are labor unions, which have enrolled more than 600,000 IHSS providers. Two leading unions for the state’s in-home care workforce, SEIU Local 2015 and United Domestic Workers (UDW), collectively raked in more than $149 million in dues in 2024. Both have a direct stake in the program’s expansion, since every new IHSS worker is a potential dues-paying member.

These unions are some of the most powerful institutions in California politics and collectively send millions of dollars to the state’s Democratic establishment. SEIU Local 2015 contributed $2 million to Newsom’s anti-recall campaign; spent another $2 million in favor of Proposition 50, a measure to redraw the state’s congressional districts in favor of Democrats; and donated over $90,000 to Newsom across his two campaign years. UDW donated $20,000 to Newsom’s 2022 reelection campaign. Both unions have contributed heavily to Democrats.

SEIU Local 2015 and United Domestic Workers of America have also allegedly used coercive tactics to expand their membership. Nathan Vu, a caregiver in San Diego, says that UDW pressured him to join during his IHSS orientation in February 2024. Though he says he declined, the union allegedly began deducting dues from his paycheck anyway.

“I vividly remember not wanting to enroll in the union,” Vu said. “I specifically said no.” Vu says he told UDW to stop deducting dues and demanded that they provide a copy of his membership agreement and proof of authorization. UDW, he claims, provided neither, and kept deducting dues for a full year before terminating his membership.

UDW did not respond to our request for comment.

SEIU 2015, which claims to represent “thousands of long-term care workers,” has allegedly one-upped UDW. According to one former member, the group locked IHSS workers in a room and “coerced” at least one to become a member.

In a sworn statement, filed as part of a lawsuit against the union, Chaquan May alleges that, in September 2023, the union “coerced” her into signing up for a membership at an IHSS orientation. May claimed that union employees locked the doors and told her and the other new IHSS providers, “we’re waiting for everyone to sign . . . no one is leaving until everyone signs.”

May claimed to have signed under duress. On September 3, 2024, she alleged, the union began deducting dues. She claimed to have sent a certified-mail opt-out letter the following day, which the union allegedly ignored. SEIU Local 2015, which did not respond to our request for comment, allegedly continued deducting dues from her paycheck until at least April 2025.

Unfortunately for May and other allegedly mistreated IHSS workers, these disputes between public employees and their unions are handled by the California Public Employment Relations Board (PERB). Each of the board’s five members are appointed by the governor, and three of the current members have former union ties.

“The Public Employment Relations Board is run by former union officials,” said Shella Alcabes, a lawyer representing May and other plaintiffs. “You think I’m going to get a fair hearing there? Absolutely not.”

The system itself seems designed to prevent accountability. Governor Newsom is responsible for all the main components of the IHSS operation: he oversees the program, the enforcement, and, effectively, the Public Employment Relations Board. He has no incentive to crack down on a program that is enriching his most powerful allies, and, according to coauthor Schrupp’s reporting, is responsible for more than 40 percent of the net jobs created during his administration. And so, the system expands.

Despite making some initial noise about reforming the program last year, for this upcoming budget season, Governor Newsom has sought to increase IHSS funding by an additional $1.1 billion, to a total of $33.4 billion, boasting that his administration has invested billions of state taxpayer dollars into the program. (When we reached out to Newsom’s office for this story, a California Department of Social Services spokesman said that “[f]raud in the IHSS program is not widespread.”)

Given these political realities, the only plausible check on IHSS may come from Washington. The Trump administration could condition federal funding on rigorous audits and structural reforms. HHS Secretary Robert F. Kennedy Jr. could require California to mandate re-registration of all caregivers and recipients using third-party identity verification and expand random, unannounced visits.

Absent such intervention, the corruption in California is unlikely to abate. It will take a countervailing authority—willing to confront not only fraudsters but also the political system that sustains them—to force meaningful change.