Washington, D.C. – Rep. Vince Fong (CA-20) sent a letter to California Governor Gavin Newsom calling for answers and transparency stemming from a U.S. Department of Housing and Urban Development’s (HUD) recent audit showing lack of fraud control during COVID-19.The audit indicates the failure to properly ensure California taxpayers were getting the emergency relief they needed during a vulnerable time for many people and outlines recommendations for anti-fraud measures. Read the full letter attached or see the highlights below.
Federal and California taxpayers expect that when emergency relief is provided to help vulnerable Californians, government stewards of these precious taxpayer dollars will deploy aggressive anti-fraud risk measures. At the very least, these government agencies should follow Federal guidelines regarding fraud countermeasures. The Federal government even provides state agencies with the Antifraud Playbook and the Greek Book, which provides detailed guidance on scaling up fraud detection and risk management when there is an influx of funds. In fact, state agencies receiving Federal dollars are required to establish internal fraud controls in line with the Green Book recommendations, which clearly means that California is out of compliance given the outcome of this audit.
Based on the HUD Inspector General audit and the subsequent responses by California’s Department of Housing and Community Development (HCD) and the HUD Community and Planning Development office in San Francisco, it is clear that sufficient taxpayer fraud protection measures were not implemented, nor did HCD even attempt to fortify their fraud detection as they felt that “it was not necessary to create a separate fraud risk management framework or build upon its existing [enterprise risk management] framework,” even given California’s fraught history with fraud. As stated in the audit, “HCD’s overall fraud risk management practices were at the lowest desired state of maturity,” when monitoring over $319.5 million awarded to the State of California through the Emergency Solutions Grants program from the Federal CARES Act.
Especially as our nation faces a $35 trillion national debt and California recently faced a $68 billion annual shortfall, the buck must stop somewhere; leadership is needed – from you on down to your cabinet secretaries to state agency employees – to safeguard and protect taxpayer dollars from being wasted and to disabuse the nation of the notion that California tolerates waste, fraud, and abuse.
