The Labor Department has deployed a specialized "strike team" to California to investigate improper payments and alleged fraud within the state's unemployment insurance program, a system that borrowed $21 billion in federal funds just to stay afloat.

Labor Secretary Lori Chavez-DeRemer announced the move alongside DOL Inspector General Anthony D'Esposito, framing the intervention as a long-overdue reckoning with a program that hemorrhaged taxpayer money while Sacramento looked the other way.

"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."

According to Fox News, the strike team will include specialists drawn from both national and regional Labor Department offices. Their mission: trace the money, identify the fraud, and restore basic accountability to a system that lost it years ago.

The Scale of the Problem

The numbers alone tell a damning story. California received roughly $290 billion in COVID relief. The state moved quickly to push out expanded unemployment benefits. What it did not do, apparently, was check who was collecting them.

An 83-page California State Auditor report found "inadequate fraud prevention and claimant service" at the state's Employment Development Department, along with a high rate of overturned eligibility decisions. The EDD was approving claims it shouldn't have, failing to catch ones it needed to, and doing both at an industrial scale.

At least one California UI steward was convicted for filing nearly $860,000 in fraudulent claims. Civilians were convicted as well. And those are just the cases that made it to a courtroom.

Chavez-DeRemer wrote directly to the EDD, citing:

• Increasing improper payment rates
• Insufficient timeliness
• Data accuracy and quality concerns
• Questions about participants' eligibility
• Questions about the use of taxpayer funds

That is not a list of minor administrative hiccups. That is a catalog of systemic failure.

$720 Million Sitting on Debit Cards

Inspector General D'Esposito, a former NYPD officer and ex-congressman from Long Island, brought receipts. His office found nearly $1 billion in taxpayer funds "at risk" nationwide due to COVID-related UI fraud. An analysis of 6.5 million prepaid debit cards used for COVID unemployment benefits revealed that $720 million still sat loaded on those cards.

Think about that for a moment. Three-quarters of a billion dollars distributed through a government benefits program, parked on debit cards, unaccounted for.

"My office has warned that, absent swift action, U.S. taxpayers risk losing nearly a billion dollars in fraudulently obtained benefits."

D'Esposito did not mince words about what that money represents.

"This is taxpayer money, and it demands immediate attention."

Every dollar siphoned by fraud is a dollar that never reached a laid-off worker trying to keep the lights on. D'Esposito made the point explicitly: every misspent dollar is one that an actual needy family could have used. Fraud is not a victimless abstraction. It steals from the people the program was designed to protect.

California's Familiar Pattern

California's unemployment insurance trust fund has been found depleted, which is how the state ended up $21 billion in debt to the federal government in the first place. The state borrowed massively to keep the system running, then never bothered to ensure the system was running honestly.

This is a pattern that repeats across California governance. The state collects more revenue than almost any nation on earth. It receives enormous federal transfers. And yet its public systems consistently underperform, overspend, and resist accountability. Homelessness spending balloons with no measurable reduction in homelessness. High-speed rail budgets triple with no train in sight. And the unemployment insurance program borrows $21 billion while fraudsters walk away with debit cards full of cash.

The common thread is not a lack of resources. It is a governing philosophy that treats spending as its own justification and views oversight as an obstacle rather than a responsibility. Sacramento rushed to push money out the door during COVID, earned praise for its speed, and left the fraud prevention for someone else to handle later.

Later has arrived.

Accountability Begins

Fox News Digital reached out to Governor Newsom for comment. No response was included. The silence is its own kind of statement from a state government that presided over this disaster.

Chavez-DeRemer signaled that the strike team is just the beginning.

"Immediately, we are engaging a specialized strike team to uncover any potential fraud or abuse and quickly moving to protect the American worker and taxpayers. I look forward to restoring the California UI program's integrity and financial health."

D'Esposito connected the investigation to a broader economic reality that Washington too often ignores.

"When we root out fraud, we protect taxpayers and lower the real cost of living."

He is right. Government waste is not an abstraction that exists only on spreadsheets. It is money extracted from working families through taxes, borrowed against their children's futures, then set on fire by bureaucratic negligence. When the federal government finally walks into Sacramento and demands to see the books, it is not overreach. It is the bare minimum of stewardship.

California owes the federal government $21 billion. It owes its own taxpayers an explanation. The strike team is there to collect on both.