From Fox News: The Labor Department deployed a “strike team” to California to address federal findings of improper payments and alleged fraud within the state’s unemployment insurance (UI) program.
California has been found to have a depleted UI trust fund, along with $21 billion in borrowed federal funds to keep the system running — which federal officials say has led state employers to pay higher UI taxes to repay the debt.
In a statement, the department cited an 83-page California State Auditor report that determined the state’s UI system is high-risk, in part due to “inadequate fraud prevention and claimant service [in its employment development department (EDD)], as well as a high rate of overturned eligibility decisions in its Unemployment Insurance Program.”
“Financial issues and potential fraud in California’s unemployment insurance program will be fully examined. The previous administration turned a blind eye toward failing Labor programs: This ends now,” Labor Secretary Lori Chavez-DeRemer said.
The report explains that California received about $290 billion in COVID relief funds from the federal government – and some of that was linked to fraudulent claims.
DOL Inspector General Anthony D’Esposito, a former NYPD officer and ex-congressman from Long Island, stated that an analysis of 6.5 million prepaid debit cards used for COVID UI benefits still had $720 million loaded on them, allegedly obtained through fraud-related claims. He said one account still had nearly $80,000 on it.
WATCH BELOW:
D’Esposito elaborated on the discovery during interviews with Fox News this week, and vowed the money will be clawed back.
.@DOLOIG found nearly $1 BILLION sitting on prepaid debit cards from pandemic-era unemployment insurance.
That’s not a rounding error. It’s failed oversight.
Joined @FoxNews @GowdyAmerica to break it down.
Under @POTUS, accountability is back. 🇺🇸 pic.twitter.com/ccl0R28rQ7
— Inspector General Anthony D’Esposito (@USLaborIG) February 17, 2026
Joined @BottomLineFBN @FoxBusiness to break down the awesome work of @DOLOIG, identifying nearly $1 billion on pre-paid debit cards from COVID19 UI.
Under @POTUS, accountability isn’t optional.
Fraud is a tax on Americans. We’re doing our part to make life more affordable. 🇺🇸 pic.twitter.com/kwFeQE4NsC
— Inspector General Anthony D’Esposito (@USLaborIG) February 20, 2026
.@USLaborIG uncovers nearly $1B in unused Covid-era benefits: “When you take down guardrails and when you have no accountability… it opens the doors to fraud.” |@LydiaHuNews @BrianBrenberg pic.twitter.com/eAy1c8hjCJ
— The Bottom Line (@BottomLineFBN) February 18, 2026
“The Trump Administration is doubling down on our mission to end waste, fraud, and abuse in taxpayer-funded unemployment insurance programs. At my direction, @USDOL will deploy a strike team to California to investigate what could amount to billions of dollars in fraud and improper payments. We will continue moving quickly to protect American Workers and Taxpayers!” Chavez-DeRemer announced.
The Trump Administration is doubling down on our mission to end waste, fraud, and abuse in taxpayer-funded unemployment insurance programs.
At my direction, @USDOL will deploy a strike team to California to investigate what could amount to billions of dollars in fraud and… pic.twitter.com/X1spHf9SQn
— Secretary Lori Chavez-DeRemer (@SecretaryLCD) February 18, 2026
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