Federal Prosecutor Accuses California Governor of Presiding Over Billions in Fraud

Bill Essayli, the First Assistant U.S. Attorney for the Central District of California, says Gavin Newsom has allowed hundreds of billions in losses under his watch.

Apr. 5, 2026 at 4:04am

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A dynamic, abstract painting with overlapping geometric shapes and lines in shades of blue, grey, and red, conceptually representing the chaotic and fractured nature of political and financial fraud.A federal prosecutor's scathing accusations of widespread fraud under California's governor shine a light on the state's ongoing struggle to effectively manage billions in taxpayer funds.Los Angeles Today

The top federal prosecutor in Los Angeles is accusing California Governor Gavin Newsom of presiding over what could amount to hundreds of billions of dollars in fraud. Bill Essayli, the First Assistant U.S. Attorney, says Newsom has 'reigned over billions and billions of dollars of fraud' and that the losses could reach into the 'hundreds of billions of dollars under his watch'. Essayli's comments come as federal officials recently arrested eight people during 'Operation Never Say Die' for allegedly scamming the nation's health care system out of more than $50 million through sham hospice facilities.

Why it matters

The core of Essayli's case against Newsom isn't just the scale of the fraud, but the governor's apparent refusal to do anything meaningful about it. California's state auditor advised stronger oversight of hospice agencies back in 2022, but the state was supposed to have passed regulations by January 1st of this year in response, and that deadline came and went. Essayli says Newsom is 'refusing to implement those regulations because he doesn't want to own the problem'.

The details

Essayli argues that the federal government funds the programs, but the states administer them, and California is responsible for issuing hospice licenses, regulating doctors and nurses, and vetting the people who access billions in federal health care dollars. However, Essayli says 'there is no vetting and there's no checking' in California, allowing fraudsters to collect federal money while patients who aren't dying get enrolled in hospice care on paper.

  • The state auditor advised stronger oversight of hospice agencies back in 2022.
  • California was supposed to have passed regulations by January 1st of this year in response to the auditor's recommendations, but that deadline came and went.

The players

Bill Essayli

The First Assistant U.S. Attorney for the Central District of California who has accused Governor Gavin Newsom of presiding over billions of dollars in fraud.

Gavin Newsom

The Governor of California who Essayli has labeled the 'fraud king' for allegedly allowing hundreds of billions of dollars in losses under his watch.

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What they’re saying

“I call him the fraud king for a reason. He has reigned over billions and billions of dollars of fraud...it's going to be into the hundreds of billions of dollars under his watch.”

— Bill Essayli, First Assistant U.S. Attorney for the Central District of California

“They're supposed to have passed regulations by January 1st of this year that were called by the auditor in California, said California does not have sufficient regulations to crack down on fraud.”

— Bill Essayli, First Assistant U.S. Attorney for the Central District of California

“He's refusing to implement those regulations because he doesn't want to own the problem!”

— Bill Essayli, First Assistant U.S. Attorney for the Central District of California

What’s next

A federal anti-fraud task force is now operating in California, and the Operation Never Say Die arrests signal that more prosecutions are coming. Essayli says 'We're going to do our job. You're going to see a lot more fraud. We're going to work hand in hand with this task force. And I think it's going to be in the hundreds of billions eventually.'

The takeaway

This hospice fraud scandal fits into a larger pattern in California governance where the state collects enormous sums of federal money, builds large bureaucracies to manage it, and then fails to prevent the money from being stolen. Federal prosecutors are now stepping in to do the work that state regulators would not, signaling a breakdown in the relationship between Sacramento and reality.