Allegation that Gavin Newsom presides over an ’empire of fraud’ doesn’t stick

Gavin Newsom’s management of California’s government has certainly been less than stellar.

During his seven-plus years as governor, he and a Legislature controlled by fellow Democrats have expanded programs, created new ones, guessed wrong on revenues to support them and overspent the real revenues, thus creating a chronic, multibillion-dollar budget deficit that could last indefinitely.

When Newsom embarks on an almost certain campaign for the presidency after leaving office next year, his managerial shortcomings will likely be cited by Democratic rivals and, were he to win his party’s nomination, by whomever Republicans choose as his opponent.

But does his record warrant the epithet of “Gavin Newsom’s empire of fraud?”

A newly published article in the City Journal, a magazine published by the conservative Manhattan Institute for Policy Research, levels that allegation.

It stitches together a series of fraud cases, instances of sloppy management, questionable assumptions and some mysterious mathematics to allege, “The best estimates suggest that, on the governor’s watch, fraudsters, scammers, and organized crime rings have stolen at least $180 billion from taxpayers.”

The centerpieces are two cases that have received copious coverage in California media — multibillion-dollar fraud in the Employment Development Department’s disbursement of federal unemployment benefits during the COVID-19 pandemic and the indictment of Newsom’s former chief of staff, Dana Williamson, for facilitating bogus payments from a campaign fund and falsifying documents to obtain pandemic relief funds for her own business.

The EDD scandal is — or should be — a black eye for Newsom. But three aspects should not be ignored: It also was happening in other states; it reflected pressure, during the Joe Biden administration, to speed claims processing, and the EDD had hired hundreds of new workers who were not fully trained.

In citing the Dana Williamson case, City Journal declared, “the culture of fraud in California is so pervasive that it has allegedly reached the governor’s own office.”

That passage presupposes that California has a “culture of fraud” and then suggests that Newsom is at fault.

There is fraud, of course. The specific cases cited by City Journal prove that when taxpayer money is being spent on services, it entices some bad actors to cheat. It was happening long before Newsom became governor; it will continue to happen after he leaves. And when it is discovered people, go to jail.

One situation cited by City Journal warrants special attention because it typifies its sloppy journalism — a 2024 report by the state auditor that the Newsom administration had spent $24 billion to alleviate homelessness but had not adequately tracked whether the money had been spent effectively.

City Journal implies that the $24 billion was lost to fraud, but it’s likely that it was spent on various programs, not stolen. Newsom should be held responsible for poor management, but that’s not fraud.

City Journal sets the stage for its “empire of fraud” assertion with a dystopian description of California:

“The roads are crumbling. Mismanaged wildfires have turned neighborhoods into ash. Drug addiction and homelessness have metastasized, turning parts of Los Angeles and San Francisco into no-go zones. And the cost-of-living crisis is pricing middle-class taxpayers out of basic necessities like groceries and gas, even as the state spends billions on welfare programs that never seem to lift anyone out of poverty.”

Accurate or not, that description has nothing to do with the “culture of fraud” it alleges, but it does reveal something about the article’s obvious intent, which is to smear Newsom in anticipation of his presidential campaign.

Newsom should be held responsible for what he did or did not do as governor, but this is just slinging mud to see if some of it sticks.