OAN Staff Cory Hawkins
6:26 PM – Friday, January 23, 2026
Vice President JD Vance called out California in a recent interview, citing pandemic-era fraud in the Golden State and contrasting it with ongoing scandals in Minnesota, claiming the Small Business Administration identified approximately $7 billion in fraudulent payments in California.
“I think we have a fraud problem that is much worse in California than it is in Minnesota,” Vance said during an interview with Newsmax.
The $7 billion figure stems from suspected fraud in the Small Business Administration (SBA) programs such as the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL). These programs were part of a federal COVID-19 relief effort. The Government Accountability Office (GAO) has estimated that fraud across unemployment insurance programs totaled between $100 billion and $135 billion, with some experts suggesting the true figure could reach as high as $400 billion when underreported cases are included.
California’s size and population has demanded more relief funds than any other state, marking it as a target for scammers in organized crime rings from Russia, China, and Nigeria.
Vance points to the recent Minnesota scandals as a “microcosm” of broader issues like immigration-related fraud and welfare abuse, blaming Democrat policies as the reason this issue persists. He claims the fraud has enabled “literal terrorist groups” and stealing from citizens.
California saw high levels of abuse in small business loans, with criminals submitting fake applications for non-existent companies or using shell entities. The SBA’s inspector general flagged billions in improper loans nationwide, with California’s share being around $7 billion, reflecting Vance’s claims.
The GAO noted that weak identity verification led to gangs filing bulk claims with stolen data, leading to losses in the tens of millions per scheme. Outdated IT systems, staffing shortages, and pressure to pay claims quickly amid lockdowns also exacerbated California’s massive fraud.
The state’s Employment Development Department (EDD) paid out an estimated $20-32 billion in fraudulent UI claims, which is around 11-18% of total benefits released. Scammers used stolen identities from data breaches, fake names, and even filed claims from prisons or overseas. A reported $810 million went to incarcerated individuals.
The state auditor criticized the EDD for delaying the implementation of fraud detection tools for months at the beginning of the pandemic, specifically not implementing key identity verification safeguards from April to August 2020, which led to an estimated $1 billion in unverified payments.
Recovery efforts have uncovered about $6 billion so far, but experts report that a full recovery is impossible due to the complexity of cross-border schemes.
Vance fired multiple shots at California’s Governor Gavin Newsom (D-Calif.), telling him to “look in the mirror” for the Golden State’s border chaos, claiming he is the root problem. He also mocked Newsom’s “logic” on law enforcement, calling his allies “stooges.”
Nationally, the SBA’s Office of Inspector General has estimated around $200 billion in potential fraud across PPP and EIDL programs, underscoring California’s vulnerability due to its high volume of relief funds. While the state has recovered approximately $1.9 billion in fraudulent unemployment claims as of 2023, ongoing DOJ investigations continue to pursue charges against perpetrators, emphasizing the long-term challenges in achieving full accountability for the scandal.
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