Connect with us

Politics

An Illustrated Guide to Trump’s Conflict of Interest Risks

Published

on

An Illustrated Guide to Trump’s Conflict of Interest Risks

During his first administration, President-elect Donald J. Trump’s global business empire created an unprecedented number of conflicts of interest for a sitting president. Ethics experts worried that opportunists could try to curry favor by booking stays at Mr. Trump’s network of hotels, golf clubs and other properties.

Their predictions bore out: Foreign governments and lobbyists spent lavishly at his Washington hotel, which has since been sold, as well as at his Mar-a-Lago resort and other properties. The federal government itself also became an awkward customer by renting millions of dollars’ worth of rooms at his hotels and clubs.

Those concerns now seem almost quaint in light of some of Mr. Trump’s more recent business ventures. They include a publicly traded company, a cryptocurrency venture, new overseas real estate deals involving state-affiliated entities and numerous branding and licensing deals.

The new additions to Mr. Trump’s portfolio could provide more direct avenues for those wishing to influence a sitting president or even to try to extort him, according to some outside ethics lawyers.

Some of the new international real estate deals are among the most potentially worrisome.

Advertisement

Several of Mr. Trump’s recent real estate projects have connections to foreign governments in the Middle East, raising concerns that Mr. Trump’s financial interests could influence foreign policy.

Many of the contracts that the Trump family has negotiated overseas since Mr. Trump left office are so-called branding deals. The Trump family sells its name to international developers that build residential and resort complexes and sell luxury units at a premium, they hope, based on Mr. Trump’s perceived star power.

One of the developments, a luxury hotel and golf course complex in the Middle Eastern nation of Oman, is being built on land owned by the country’s government. That project and three others are proceeding in partnership with a subsidiary of a Saudi-based real estate company, Dar Al Arkan, which has close ties with the Saudi government. Saudi Arabia has a long list of pressing matters before the United States, including requests to buy F-35 fighter jets and gain access to nuclear power technology.

Oman also plays an important role in the Middle East, often serving as a middleman between the United States and Iran.

It is extremely unusual, historians say, for any U.S. president to be involved in family business deals with a foreign government nexus at the same time as he is managing foreign policy matters that affect that same nation.

A new cryptocurrency business introduces an entirely different set of ethics concerns.

Advertisement

Last fall, the Trump family helped launch World Liberty Financial, a platform for investors to borrow and lend using cryptocurrencies. The Trump family members are not owners or officers in the company, but they have an agreement to be paid for helping promote it.

After getting off to a rocky start, the company got a boost in the form of a $30 million token purchase by Justin Sun, a cryptocurrency executive who has been targeted by the Securities and Exchange Commission on fraud claims unrelated to World Liberty Financial. Mr. Sun has moved to dismiss the case.

As of November, World Liberty claimed to have at least 20,000 token holders who have bought a stake in what the company calls a “platform inspired by Donald J. Trump.” These purchases were made even though the tokens — at least for now — cannot be resold, meaning they have no immediate value to the buyers.

But the purchases, made by individuals whose names are not public, should generate tens of millions of dollars in payments to the Trump family, according to company filings.

Mr. Trump has already seen the effect he can have on the cryptocurrency market. When he announced his pick for S.E.C. chairman, the crypto advocate and lawyer Paul Atkins, Bitcoin value surged above $100,000 for the first time in its history. Mr. Trump immediately moved to claim credit for the milestone. “CONGRATULATIONS BITCOINERS!!! $100,000!!! YOU’RE WELCOME!!! Together, we will Make America Great Again!,” he wrote on his social media platform, Truth Social.

Advertisement

Mr. Trump himself, according to his 2024 financial disclosure, owned as much as $5 million worth of Ethereum, a token second only to Bitcoin in popularity. That cryptocurrency has also surged in value since the election.

The new leadership at the S.E.C. is likely to decide on rules that could significantly increase the value of Ethereum, Bitcoin and tokens at World Liberty Financial. They could also pave the way for the company to market its coins to a wider swath of the public,, which would potentially generate hundreds of millions of dollars in additional payouts to Mr. Trump and his family.

A publicly traded company presents another avenue for persuasion.

Last spring, Trump Media & Technology Group, which is the parent company of Truth Social and the president-elect’s single greatest source of wealth, went public. Buying company shares is another new way special interests could try to sway Mr. Trump, its largest shareholder.

For instance, corporations and others could buy shares in the company or advertise on Truth Social. And while foreigners are not allowed by law to make campaign contributions to Mr. Trump, there is no limit on their ability to buy large chunks of stock in his company, perhaps in an effort to intentionally push up the stock’s value and further enrich the Trump family. Mr. Trump did recently transfer his ownership stake in Trump Media to a trust controlled by his oldest son, Donald Trump Jr.

Advertisement

As president, Mr. Trump will also be in a unique position to drive traffic — and ultimately revenue — to Truth Social, whose parent company has been struggling to make money.

He has an agreement with Truth Social to post certain types of content on Truth Social first, before posting to other platforms, like Elon Musk’s X.

Most news releases about cabinet picks and other appointments during the Trump-Vance transition have provided links to a corresponding Truth Social post.

Mr. Trump’s name is on an array of new items, some quite expensive.

Then there are the numerous new merchandise licensing deals, which may not give purchasers a direct line to attempt to influence geopolitics but certainly line Mr. Trump’s own pockets. Since leaving the White House, Mr. Trump has lent his name and image to dozens of products.

Advertisement
  • Bibles and other books. A version of the Bible with Mr. Trump’s signature is available for $1,000.
  • fragrances. Several of these licensed perfumes and colognes bear golden likenesses of Mr. Trump.
  • Trump digital trading cards. Mr. Trump reported making more than $7 million for these “nonfungible tokens,” or NFTs, which depict Trump as a superhero, an astronaut and other characters
  • sneakers. “Trump 47 Crypto President Low Tops” and “Inauguration High-Tops” are among the dozens of styles for sale
  • watches. One model of watch bearing Mr. Trump’s name costs $100,000.
  • guitars. Prices start at $1,000 and go as high as $11,500 for an autographed guitar

The list of such products seems to be growing. It includes three recent books, the first of which relied largely on photos taken by White House photographers, which Mr. Trump repackaged and is now selling for as much as $500 a copy. Mr. Trump more recently has moved to selling Trump Digital Trading Cards, which brought in more than $7 million, according to his latest financial disclosure. He also has helped sell Bibles, earning a cut of the profits. It remains unclear if these merchandise sales benefiting Mr. Trump will continue while he is president.

Almost all of the real estate holdings and deals from Mr. Trump’s first term remain active.

Mr. Trump has an extensive network of assets that he held during his previous term and is carrying into his second, excluding several properties that have been sold since 2017.

In the United States, there are golf clubs and resorts

  • Mar-a-Lago. A membership at Mar-a-Lago currently costs $1 million, triple the price from 2017
  • Trump International West Palm Beach
  • Trump National Bedminster
  • Trump National Charlotte
  • Trump National Colts Neck
  • Trump National Doral. During his last term, Mr. Trump proposed hosting the Group of 7 summit at Doral.
  • Trump National Hudson Valley
  • Trump National Jupiter
  • Trump National Los Angeles
  • Trump National Washington, D.C.
  • Trump National Westchester
  • Trump National Philadelphia

and hotels and residential and commercial properties. Mr. Trump owns some in full or part; others use his name in exchange for a fee.

  • 40 Wall Street
  • Trump International Hotel & Tower Chicago
  • 6 East 57th Street
  • Trump Park Residences
  • Trump Tower. A three-story penthouse in Trump Tower was Mr. Trump’s primary residence for decades.
  • Trump Palace
  • Albemarle Estate
  • Estates at Trump National
  • 555 California Street
  • Trump International Hotel & Tower Las Vegas. Trump International Hotel & Tower, New York City
  • Trump Grande
  • 1290 Avenue of the Americas
  • Trump Towers Sunny Isles
  • Trump Park Avenue
  • Trump Plaza, New Rochelle, N.Y.
  • Park Tower Stamford
  • 610 Park Ave.
  • Trump Parc
  • Trump Parc East.

Overseas, Mr. Trump owns or has branding deals with more than a dozen properties that were also in play during his first administration.

  • Trump Tower Philippines
  • Trump Tower Kolkata
  • Several properties in South Korea
  • Trump Turnberry
  • Château des Palmiers
  • Trump International Golf Links & Hotel
  • Trump International Scotland
  • Trump Tower Punte Del Este
  • Trump International Golf Club & Resort, Lido, Indonesia
  • Trump International Golf Club & Resort, Bali, Indonesia
  • Trump World Golf Club
  • Trump International Golf Club Dubai
  • Trump Tower Mumbai
  • Trump Towers Delhi NCR
  • Trump Towers Pune
  • Trump Towers

And he continues to hold a stake in about half a dozen other assets.

  • Online store. The official retail website of the Trump Organization sells hundreds of Trump-branded products, from hats to wine glasses.
  • Retail store. The store is located in Trump Tower.
  • Aviation: private aircraft
  • Royalties. Mr. Trump still pulls in royalties from “The Apprentice” and books like “The Art of the Deal”
  • Trump International Realty
  • a real estate company.

Before the start of his first term, Mr. Trump made some attempts to distance himself from his businesses.

He said he would place his business holdings in a trust, but the trust was controlled by his two oldest sons instead of an independent entity, which is more the norm. He pledged that there would be “no new deals” by his company involving international real estate projects while he was in the White House.

This month, the Trump family issued an updated ethics pledge that revived many of the earlier promises with one key distinction: The Trump family intends to continue to do new international real estate deals, as long as the counterparties are not foreign governments themselves.

Advertisement

Eric Trump, the family member most responsible for overseeing the Trump Organization and its new deals, said the family is committed to avoiding any transactions that exploit connections to the White House. The company has appointed a well-known outside ethics lawyer, a former federal prosecutor and corporate lawyer named William A. Burck, to review any new contracts worth more than $10 million. “The Trump Organization is dedicated to not just meeting but vastly exceeding its legal and ethical obligations during my father’s presidency,” Eric Trump said in a statement.

Legal questions loom.

Certain ethics lawyers have argued that some of Mr. Trump’s conflicts of interest are not only a problem, but that they also represent a violation of the so-called emoluments clause in the Constitution, which prohibits a president from certain payments from any foreign government. The president and vice president are not exempt from this provision, as they are from conflict of interest laws that require other senior federal officials to divest from companies that might benefit from their official actions.

Several lawsuits filed against Mr. Trump during his first term argued that he had violated the emoluments clause by accepting payments at the Trump hotel he then owned in Washington, among other business operations.

His first term ended before the federal court system could definitively rule on questions related to emoluments, although the courts did ultimately allow the cases to proceed, suggesting that it remained possible that the outcome could have been against Mr. Trump.

Advertisement

But the clock ran out and the Supreme Court ruled that the cases were moot as soon as he left office. The legal fight would have to start all over again, but there is likely to be an allegation that the Trump Organization’s continued business deals through some of its subsidiaries with foreign governments is unconstitutional or illegal, these ethics lawyers said.

In the past 50 years, incoming U.S. presidents have voluntarily taken steps to disentangle themselves from any activities that could be perceived as a conflict of interest or moneymaking venture during their time in office.

Jimmy Carter turned over his peanut farm to a trust, which he learned after he left the White House was deeply in debt. Ronald Reagan announced within two weeks of his inauguration that he had sold off all of his investments, other than his ranch and another home, converting these holdings to cash that was then managed by an independent trustee. Lyndon B. Johnson and his wife put her Texas radio and television holdings in a trust.

But these issues have created questions before — a point Mr. Trump’s family and lawyer raised this month when they laid out Mr. Trump’s own ethics plan. When George Washington was president, the Trump lawyers noted, he continued to own a business that exported flour and cornmeal to Europe and the Caribbean. In the 1970s, Vice President Nelson Rockefeller maintained a stake in Standard Oil, which his grandfather founded.

In Mr. Trump’s case, questions about real or potential conflicts extend beyond the president-elect.

Advertisement

His oldest son, Donald Trump Jr., announced recently that he is joining the venture capital firm 1789 Capital, which focuses on investing in conservative companies and could see its business boosted as a result of its ties to the first family. Mr. Trump’s son Barron is playing a role in World Liberty Financial, as are Donald Trump Jr. and Eric Trump, according to disclosure documents.

And Jared Kushner, the president-elect’s son-in-law, runs a private equity firm called Affinity Partners that has raised $4.5 billion, mostly from sovereign wealth funds of the oil-rich nations of Saudi Arabia, Qatar, the United Arab Emirates, based on relationships he built while in the White House during Mr. Trump’s first term. Mr. Kushner does not plan to return to the White House. But his ties to Mr. Trump will create new ethics concerns as he continues to make investments over the next four years, including luxury hotel deals in Albania and Serbia, where the governments there are his partners.

Most of these potential conflicts did not exist the first time Mr. Trump was in office. It all means these kinds of questions are only going to be more intense this White House term.

Advertisement

Politics

Commentary: Tim Walz isn’t the only governor plagued by fraud. Newsom may be targeted next

Published

on

Commentary: Tim Walz isn’t the only governor plagued by fraud. Newsom may be targeted next

Former vice presidential contender and current aw-shucks Minnesota Gov. Tim Walz announced this week that he won’t run for a third term, dogged by a scandal over child care funds that may or may not be going to fraudsters.

It’s a politically driven mess that not coincidentally focuses on a Black immigrant community, tying the real problem of scammers stealing government funds to the growing MAGA frenzy around an imaginary version of America that thrives on whiteness and Christianity.

Despite the ugliness of current racial politics in America, the fraud remains real, and not just in Minnesota. California has lost billions to cheats in the last few years, leaving our own governor, who also harbors D.C. dreams, vulnerable to the same sort of attack that has taken down Walz.

As we edge closer to the 2028 presidential election, Republicans and Democrats alike will probably come at Gavin Newsom with critiques of the state’s handling of COVID-19 funds, unemployment insurance and community college financial aid to name a few of the honeypots that have been successfully swiped by thieves during his tenure.

In fact, President Trump said as much on his social media barf-fest this week.

Advertisement

“California, under Governor Gavin Newscum, is more corrupt than Minnesota, if that’s possible??? The Fraud Investigation of California has begun,” he wrote.

Right-wing commentator Benny Johnson also said he’s conducting his own “investigation.” And Republican gubernatorial candidate Steve Hilton is claiming his fraud tip line has turned up “(c)orruption, fraud and abuse on an epic scale.”

Just to bring home that this vulnerability is serious and bipartisan, Rep. Ro Khanna, the Silicon Valley congressman rumored to have his own interest in the Oval Office, is also circling the fraud feast like a vulture eyeing his next meal.

“I want to hear from residents in my district and across the state about waste, mismanagement, inefficiencies, or fraud that we must tackle,” Khanna wrote on social media.

Newsom’s spokesman Izzy Gardon questioned the validity of many fraud claims.

Advertisement

“In the actual world where adults govern,” Gardon said, “Gavin Newsom has been cleaning house. Since taking office, he’s blocked over $125 BILLION in fraud, arrested criminal parasites leaching off of taxpayers, and protected taxpayers from the exact kind of scam artists Trump celebrates, excuses, and pardons.”

What exactly are we talking about here? Well, it’s a pick-your-scandal type of thing. Even before the federal government dumped billions in aid into the states during the pandemic, California’s unemployment system was plagued by inefficiencies and yes, scammers. But when the world shut down and folks needed that government cash to survive, malfeasance skyrocketed.

Every thief with a half-baked plan — including CEOs, prisoners behind bars and overseas organized crime rackets — came for California’s cash, and seemingly got it. The sad part is these weren’t criminal geniuses. More often than not, they were low-level swindlers looking at a system full of holes because it was trying to do too much too fast.

In a matter of months, billions had been siphoned away. A state audit in 2021 found that at least $10 billion had been paid out on suspicious unemployment claims — never mind small business loans or other types of aid. An investigation by CalMatters in 2023 suggested the final figure may be up to triple that amount for unemployment. In truth, no one knows exactly how much was stolen — in California, or across the country.

It hasn’t entirely stopped. California is still paying out fraudulent unemployment claims at too high a rate, totaling up to $1.5 billion over the last few years — more than $500 million in 2024 alone, according to the state auditor.

Advertisement

But that’s not all. Enterprising thieves looked elsewhere when COVID-19 money largely dried up. Recently, that has been our community colleges, where millions in federal student aid has been lost to grifters who use bots to sign up for classes, receive government money to help with school, then disappear. Another CalMatters investigation using data obtained from a public records request found that up to 34% of community college applications in 2024 may have been false — though that number represents fraudulent admissions that were flagged and blocked, Gardon points out.

Still, community college fraud will probably be a bigger issue for Newsom because it’s fresher, and can be tied (albeit disingenuously) to immigrants and progressive policies.

California allows undocumented residents to enroll in community colleges, and it made those classes free — two terrific policies that have been exploited by the unscrupulous. For a while, community colleges didn’t do enough to ensure that students were real people, because they didn’t require enough proof of identity. This was in part to accommodate vulnerable students such as foster kids, homeless people and undocumented folks who lacked papers.

With no up-front costs for attempting to enroll, phonies threw thousands of identities at the system’s 116 schools, which were technologically unprepared for the assaults. These “ghost” students were often accepted and given grants and loans.

My former colleague Kaitlyn Huamani reported that in 2024, scammers stole roughly $8.4 million in federal financial aid and more than $2.7 million in state aid from our community colleges. That‘s a pittance compared with the tens of billions that was handed out in state and federal financial aid, but more than enough for a political fiasco.

Advertisement

As Walz would probably explain if nuanced policy conversations were still a thing, it’s both a fair and unfair criticism to blame these robberies on a governor alone — state government should be careful of its cash and aggressive in protecting it, and the buck stops with the governor, but crises and technology have collided to create opportunities for swindlers that frankly few governmental leaders, from the feds on down, have handled with any skill or luck.

The crooks have simply been smarter and faster than the rest of us to capitalize first on the pandemic, then on evolving technology including AI that makes scamming easier and scalable to levels our institutions were unprepared to handle.

Since being so roundly fleeced during the pandemic, multiple state and federal agencies have taken steps in combating fraud — including community colleges using their own AI tools to stop fake students before they get in.

And the state is holding thieves accountable. Newsom hired a former Trump-appointed federal prosecutor, McGregor Scott, to go after scam artists on unemployment. And other county, state and federal prosecutors have also dedicated resources to clawing back some of the lost money.

With the slow pace of our courts (burdened by their own aging technology), many of those cases are still ongoing or just winding up. For example, 24 L.A. County employees were charged in recent months with allegedly stealing more than $740,000 in unemployment benefits, which really is chump change in this whole mess.

Advertisement

Another California man recently pleaded guilty to allegedly cheating his way into $15.9 million in federal loans through the Paycheck Protection Program and Economic Injury Disaster Loan programs.

And in one of the most colorful schemes, four Californians with nicknames including “Red boy” and “Scooby” allegedly ran a scam that boosted nearly $250 million in federal tax refunds before three of them attempted to murder the fourth to keep him from ratting them out to the feds.

There are literally hundreds of cases across the country of pandemic fraud. And these schemes are just the tip of the cash-berg. Fraudsters are also targeting fire relief funds, food benefits — really, any pot of public money is fair game to them. And the truth is, the majority of that stolen money is gone for good.

So it’s hard to hear the numbers and not be shocked and angry, especially as the Golden State is faced with a budget shortfall that may be as much as $18 billion.

Whether you blame Newsom personally or not for all this fraud, it’s hard to be forgiving of so much public money being handed to scoundrels when our schools are in need, our healthcare in jeopardy and our bills on an upward trajectory.

Advertisement

The failure is going to stick to somebody, and it doesn’t take a criminal mastermind to figure out who it’s going to be.

Continue Reading

Politics

Wyoming Supreme Court rules laws restricting abortion violate state constitution

Published

on

Wyoming Supreme Court rules laws restricting abortion violate state constitution

NEWYou can now listen to Fox News articles!

The Wyoming Supreme Court ruled on Tuesday that a pair of laws restricting abortion access violate the state constitution, including the country’s first explicit ban on abortion pills.

The court, in a 4-1 ruling, sided with the state’s only abortion clinic and others who had sued over the abortion bans passed since the U.S. Supreme Court overturned Roe v. Wade in 2022, which returned the power to make laws on abortion back to the states.

Despite Wyoming being one of the most conservative states, the ruling handed down by justices who were all appointed by Republican governors upheld every previous lower court ruling that the abortion bans violated the state constitution.

Wellspring Health Access in Casper, the abortion access advocacy group Chelsea’s Fund and four women, including two obstetricians, argued that the laws violated a state constitutional amendment affirming that competent adults have the right to make their own health care decisions.

Advertisement

TRUMP URGES GOP TO BE ‘FLEXIBLE’ ON HYDE AMENDMENT, IGNITING BACKLASH FROM PRO-LIFE ALLIES

The Wyoming Supreme Court ruled that a pair of laws restricting abortion access violate the state constitution. (Tom Williams/CQ-Roll Call, Inc via Getty Images)

Voters approved the constitutional amendment in 2012 in response to the federal Affordable Care Act, which is also known as Obamacare.

The justices in Wyoming found that the amendment was not written to apply to abortion but noted that it is not their job to “add words” to the state constitution.

“But lawmakers could ask Wyoming voters to consider a constitutional amendment that would more clearly address this issue,” the justices wrote.

Advertisement

Wellspring Health Access President Julie Burkhart said in a statement that the ruling upholds abortion as “essential health care” that should not be met with government interference.

“Our clinic will remain open and ready to provide compassionate reproductive health care, including abortions, and our patients in Wyoming will be able to obtain this care without having to travel out of state,” Burkhart said.

Wellspring Health Access opened as the only clinic in the state to offer surgical abortions in 2023, a year after a firebombing stopped construction and delayed its opening. A woman is serving a five-year prison sentence after she admitted to breaking in and lighting gasoline that she poured over the clinic floors.

Wellspring Health Access opened as the only clinic in the state to offer surgical abortions in 2023, a year after a firebombing stopped construction. (AP)

Attorneys representing the state had argued that abortion cannot violate the Wyoming constitution because it is not a form of health care.

Advertisement

Republican Gov. Mark Gordon expressed disappointment in the ruling and called on state lawmakers meeting later this winter to pass a constitutional amendment prohibiting abortion that residents could vote on this fall.

An amendment like that would require a two-thirds vote to be introduced as a nonbudget matter in the monthlong legislative session that will primarily address the state budget, although it would have significant support in the Republican-dominated legislature.

“This ruling may settle, for now, a legal question, but it does not settle the moral one, nor does it reflect where many Wyoming citizens stand, including myself. It is time for this issue to go before the people for a vote,” Gordon said in a statement.

APPEALS COURT SIDES WITH TRUMP ON BUDGET PROVISION CUTTING PLANNED PARENTHOOD FUNDS

Gov. Mark Gordon expressed disappointment in the ruling. (Getty Images)

Advertisement

One of the laws overturned by the state’s high court attempted to ban abortion, but with exceptions in cases where it is needed to protect a pregnant woman’s life or in cases of rape or incest. The other law would have made Wyoming the only state to explicitly ban abortion pills, although other states have implemented de facto bans on abortion medication by broadly restricting abortion.

CLICK HERE TO DOWNLOAD THE FOX NEWS APP

Abortion has remained legal in the state since Teton County District Judge Melissa Owens blocked the bans while the lawsuit challenging the restrictions moved forward. Owens struck down the laws as unconstitutional in 2024.

Last year, Wyoming passed additional laws requiring abortion clinics to be licensed surgical centers and women to receive ultrasounds before having medication abortions. A judge in a separate lawsuit blocked those laws from taking effect while that case moves forward.

The Associated Press contributed to this report.

Advertisement

Continue Reading

Politics

What Trump’s vow to withhold federal child-care funding means in California

Published

on

What Trump’s vow to withhold federal child-care funding means in California

Gov. Gavin Newsom and other state Democratic leaders accused President Trump of unleashing a political vendetta after he announced plans to freeze roughly $10 billion in federal funding for child care and social services programs in California and four other Democrat-controlled states.

Trump justified the action in comments posted on his social media platform Truth Social, where he accused Newsom of widespread fraud. The governor’s office dismissed the accusation as “deranged.”

Trump’s announcement came amid a broader administration push to target Democratic-led states over alleged fraud in taxpayer-funded programs, following sweeping prosecutions in Minnesota. The U.S. Department of Health and Human Services confirmed the planned funding freeze, which was first reported by the New York Post.

California officials said they have received no formal notice and argued the president is using unsubstantiated claims to justify a move that could jeopardize child care and social services for low-income families.

Advertisement

How we got here

Trump posted on his social media site Truth Social on Tuesday that under Newsom, California is “more corrupt than Minnesota, if that’s possible???” In the post, Trump used a derogatory nickname for Newsom that has become popular with the governor’s critics, referring to him as “Newscum.”

“The Fraud Investigation of California has begun,” Trump wrote.

The president also retweeted a story by the New York Post that said his Department of Health and Human Services will freeze taxpayer funding from the Child Care Development Fund, the Temporary Assistance for Needy Families program, which is known as CalWORKS in California, and the Social Services Block Grant program. Health and Human Services said the affected states are California, Colorado, Illinois, Minnesota and New York.

“For too long, Democrat-led states and Governors have been complicit in allowing massive amounts of fraud to occur under their watch,” said Andrew Nixon, a department spokesperson. “Under the Trump Administration, we are ensuring that federal taxpayer dollars are being used for legitimate purposes. We will ensure these states are following the law and protecting hard-earned taxpayer money.”

The department announced last month that all 50 states will have to provide additional levels of verification and administrative data before they receive more funding from the Child Care and Development Fund after a series of fraud schemes at Minnesota day-care centers run by Somali residents.

Advertisement

“The Trump Administration is using the moral guise of eliminating ‘fraud and abuse’ to undermine essential programs and punish families and children who depend on these services to survive, many of whom have no other options if this funding disappears,” Kristin McGuire, president of Young Invincibles, a young-adult nonprofit economic advocacy group, said in a statement. “This is yet another ideologically motivated attack on states that treats millions of families as pawns in a political game.”

California pushes back

Newsom’s office brushed off Trump’s post about fraud allegations, calling the president “a deranged, habitual liar whose relationship with reality ended years ago.” Newsom himself said he welcomes federal fraud investigations in the state, adding in an interview on MS NOW that aired Monday night: “Bring it on. … If he has some unique insight and information, I look forward to partnering with him. I can’t stand fraud.”

However, Newsom said cutting off funding hurts hardworking families who rely on the assistance.

“You want to support families? You believe in families? Then you believe in supporting child care and child-care workers in the workforce,” Newsom told MS NOW.

California has not been notified of any changes to federal child-care or social services funding. H.D. Palmer, a spokesperson for the Department of Finance, said the only indication from Washington that California’s child-care funding could be in jeopardy was the vague 5 a.m. post Tuesday by the president on Truth Social.

Advertisement

“The president tosses these social media missives in the same way Mardi Gras revelers throw beads on Bourbon Street — with zero regard for accuracy or precision,” Palmer said.

In the current state budget, Palmer said, California’s child-care spending is $7.3 billion, of which $2.2 billion is federal dollars. Newsom is set to unveil his budget proposal Friday for the fiscal year that begins July 1, which will mark the governor’s final spending plan before he terms out. Newsom has acknowledged that he is considering a 2028 bid for president, but has repeatedly brushed aside reporters’ questions about it, saying his focus remains on governing California.

Palmer said while details about the potential threat to federal child-care dollars remain unclear, what is known is that federal dollars are not like “a spigot that will be turned off by the end of the week.”

“There is no immediate cutoff that will happen,” Palmer said.

Since Trump took office, California has filed dozens of legal actions to block the president’s policy changes and funding cuts, and the state has prevailed in many of them.

Advertisement

What happened in Minnesota

Federal prosecutors say Minnesota has been hit by some of the largest fraud schemes involving state-run, federally funded programs in the country. Federal prosecutors estimate that as much as half of roughly $18 billion paid to 14 Minnesota programs since 2018 may be fraudulent, with providers accused of billing for services never delivered and diverting money for personal use.

The scale of the fraud has drawn national attention and fueled the Trump administration’s decision to freeze child-care funds while demanding additional safeguards before doling out money, moves that critics say risk harming families who rely on the programs. Gov. Tim Walz has ordered a third-party audit and appointed a director of program integrity. Amid the fallout, Walz announced he will not seek a third term.

Outrage over the fraud reached a fever pitch in the White House after a video posted online by an influencer purported to expose extensive fraud at Somali-run child-care centers in Minnesota. On Monday, that influencer, Nick Shirley, posted on the social media site X, “I ENDED TIM WALZ,” a claim that prompted calls from conservative activists to shift scrutiny to Newsom and California next.

Right-wing podcaster Benny Johnson posted on X that his team will be traveling to California next week to show “how criminal California fraud is robbing our nation blind.”

California officials have acknowledged fraud failures in the past, most notably at the Employment Development Department during the COVID-19 pandemic, when weakened safeguards led to billions of dollars in unemployment payments later deemed potentially fraudulent.

Advertisement

An independent state audit released last month found administrative vulnerabilities in some of California’s social services programs but stopped short of alleging widespread fraud or corruption. The California state auditor added the Department of Social Services to its high-risk list because of persistent errors in calculating CalFresh benefits, which provides food assistance to those in need — a measure of payment accuracy rather than criminal activity — warning that federal law changes could eventually force the state to absorb billions of dollars in additional costs if those errors are not reduced.

What’s at stake in California

The Trump administration’s plans to freeze federal child-care, welfare and social services funding would affect $7.3 billion in Temporary Assistance for Needy Families funding, $2.4 billion for child-care subsidies and more than $800 million for social services programs in the five states.

The move was quickly criticized as politically motivated because the targeted states were all Democrat-led.

“Trump is now illegally freezing childcare and other funding for working families, but only in blue states,” state Sen. Scott Wiener (D-San Francisco) said in a statement. “He says it’s because of ‘fraud,’ but it has nothing to do with fraud and everything to do with politics. Florida had the largest Medicaid fraud in U.S. history yet isn’t on this list.”

Added California Assembly Speaker Robert Rivas (D-Hollister): “It is unconscionable for Trump and Republicans to rip away billions of dollars that support child care and families in need, and this has nothing to do with fraud. California taxpayers pay for these programs — period — and Trump has no right to steal from our hard-working residents. We will continue to fight back.”

Advertisement

Times staff writer Daniel Miller contributed to this report.

Continue Reading

Trending