Good morning! Glad you’re here. Today is Saturday, Jan. 3, 2026. So by midday tomorrow, your hangover should be relatively under control.
Today in history:
1496: Leonardo da Vinci tested his flying machine. It didn’t.
1521: Martin Luther is excommunicated.
1777: Washington’s forces defeat the British at Princeton, New Jersey.
1925: Benito Mussolini declares himself dictator of Italy.
1977: Apple Computer officially formed.
2004: At age 72, DJ Casey Kasem hangs up his headphones after 30 years of doing the show.
Birthdays today include: British pol Clement Attlee, author J. R. R. Tolkien, actor Ray Milland, pianist and comedian Victor Borge, Betty Furness from NBC's Today Show, producer George Martin, Led Zeppelin’s bassist John Paul Jones, and Mel Gibson.
* * *
I said yesterday that the fraud we are all witness to in Minnesota is not the only fraud issue we’re going to be dealing with in the near future. That Tim Walz's Minnesota is the tip of the iceberg, and that others would be a larger problem. I suggested California is one of these. Turns out that I underestimated Gavin Newsom.
Gavin Newsom now has 8 separate agencies officially designated as “high risk for waste, fraud, abuse, or mismanagement” in California
— Wall Street Apes (@WallStreetApes) January 2, 2026
Roughly $76 billion in fraud, improper payments and mismanagement was discovered by the auditor
Let me repeat that, $76 BILLION
“Representative… pic.twitter.com/2DC1tCGnqc
Zachary Faria over at the Washington Examiner says:
Newsom is on the defensive after the blooming Minnesota fraud scandal has turned eyes toward California. Even Rep. Ro Khanna (D-CA) is now pushing for a “full independent audit of California’s budget,” getting himself into a back-and-forth feud with Newsom’s obnoxious social media team on X in the process. The talking point from Newsom’s team is that there is no scandal behind the curtain; “The Governor takes fraud seriously,” Newsom’s team says.
Faria indicates that Newsom's budget started in Jan. 2025 with a projected $363 million surplus. Of course, it didn't work that way. That had turned into a $12 BILLION dollar deficit, a mere five months later.
Hmm. Ya know, it sounds as if there might be a bit of an issue, here.
I suggest, dear reader, that kind of discrepancy didn't just happen all by itself. California's bureaucracy knows very well there's a problem, though I think it underestimates the issues it faces. Press releases from the federal Department of Health and Human Services (HHS), such as this one from mid-2023, suggest that this has long been known as a hotbed of fraud. There's something familiar about this press release, too:
SAN DIEGO – Four San Diego residents were charged in federal court today with participating in a childcare-benefits fraud scheme that bilked a California welfare and benefits program of millions of dollars.
Mohamed Muriidi Mohamed, Amina Abdirazak Omar, Osob Abdirazak Omar and Omar Omar were arraigned this afternoon before U.S. Magistrate Judge Barbara L. Major
....
The indictment alleges that the defendants fraudulently caused CDA and YMCA to pay out millions in childcare benefit program funds by falsely verifying that parents were working at or attending school at the UMI Learning Center, a vocational and language school located on University Avenue, although the parents were not actually participating in classes or employment during the days, and for the hours, claimed. In turn, childcare providers submitted false daily childcare attendance forms claiming that childcare was provided for days and hours when the parents were supposedly at UMI Learning Center for work or school, although no childcare was actually provided. In exchange for these false verification forms, parents were expected to pay $200 to UMI Learning Center, and the childcare providers were expected to split the childcare benefit program funds they received, 50/50, with the parents. The indictment alleges that the defendants’ scheme caused CDA and YMCA to pay out over $3.7 million dollars in childcare benefit program funds.
Another example, from March of this year, from the San Francisco district attorney's office:
San Francisco, CA – Today, San Francisco District Attorney Brooke Jenkins announced that Maggie Pasigan, 49, and Daisy Avalos, 47, both of San Francisco, were charged for defrauding various public benefits providers of over $500,000. They were both arraigned on March 13, 2025, and each pleaded not guilty. Ms. Pasigan and Ms. Avalos are each charged with grand theft, welfare fraud, money laundering, and conspiracy.
These are just two examples of many. As Glenn Reynolds likes to say, if I were about listing every such example, I'd need a lot bigger webpage.
In light of the degree of fraud evident here, freezing childcare benefits, as the New York Post reports the president has done, seems a minimal response.
WASHINGTON — The US Department of Health and Human Services is freezing all future child care funding to states beyond Minnesota, with President Trump predicting his administration will find massive fraud in California.
The review of government funding started in Minnesota but will be expanded nationwide until feds can determine that no taxpayer dollars are being spent fraudulently.
“HHS has a clear duty to verify the proper use of taxpayer funds,” spokesman Andrew Nixon said in a statement. “The documentation process exists to rule out fraud and confirm that funds are supporting legitimate child care providers.
Republican Congressman Kevin Keiley, from California's third congressional distinct (northern California), says on his website:
On Friday I rose on the House Floor to share an undeniable truth: California is the Fraud Capital of America. The latest testament comes from the State Auditor, whose scathing new report identifies 8 separate state agencies as “high-risk.” That number has doubled under Newsom.
“High-risk” means the agencies are rife with “waste, fraud, abuse, or mismanagement," costing taxpayers billions. We already knew, of course, that Newsom allowed $32 billion in EDD fraud, lost $24 billion in homeless funds, and wasted $650 million on a scrapped 911 system.
On top of all that, I noted that California is now the only state in the country that failed to repay its COVID loan, In other words, our governor is literally a deadbeat. Because Newsom defaulted on the loan, our small businesses now have to repay $20 billion through automatic tax increases.
So all this fraud is going on in California, and at the same time, they have the highest poverty rate in the nation, the highest gas taxes, the highest overall gas prices, the highest state income tax, and they’re dealing with record homelessness.
And Newsom wants to be POTUS?
Just a thought; consider how much less we’d be paying in taxes absent all this fraud.
I'll tell you this: I'd be VERY interested in seeing a federal investigation, tracing, among other things, how much of all that money ended up in some pol's pocket.
Thought of the Day: YOU are worthy of the love you give everyone else.
I'll see you here tomorrow.
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