Bismarck Obando, the press secretary for California State Controller Malia Cohen, was captured in undercover footage released Tuesday by O'Keefe Media Group, alleging widespread fraud within California's government and a deliberate lack of resources for auditing. The admissions made by Obando suggest that the state's chief fiscal watchdog office is significantly hampered in its ability to scrutinize financial activities, raising concerns about accountability for public funds.
State Controller Malia Cohen's office is constitutionally mandated to audit California's extensive government operations. However, Obando stated that the office only manages to complete audits it is legally obligated to perform, falling short of what he described as aggressive financial oversight. According to Obando, the primary impediment is a consistent lack of staffing and resources, which he directly attributed to legislative decisions. "Instead of funding us, they cut us. They keep cutting our auditing teams," Obando said in the footage.
Without adequate staffing, Obando indicated that the Controller's office cannot proactively address potential financial problems before they escalate. He further suggested that state agencies are aware of this limitation and are disinclined to undergo scrutiny. "None of them want us to go in there and audit them," he stated, referring to various state entities. Obando's most pointed criticisms were directed at the state legislature, which he accused of intentionally withholding necessary resources. "The legislation hasn't given them to us because they don't want to find out what the deal is," he claimed.
The conversation with the undercover reporter intensified when Obando was directly asked about the prevalence of fraud within California government. He responded without hesitation, unequivocally stating, "Everywhere." He then listed several areas where he believes fraud is occurring, including "cities, counties, special districts, hospitals, insurance companies." When pressed further on his confidence in the existence of genuine fraud, Obando was equally blunt, asserting, "100 percent." He contextualized the problem by noting California's substantial economic size, suggesting that where significant sums of money circulate, opportunities for illicit activities arise. "I mean, we're like the fourth-biggest economy in the entire world. So yes, there's money to be found," Obando remarked.
Obando outlined the conditions he believes enable such fraud to persist: insufficient audits, unchecked spending, and a noticeable absence of tracking mechanisms for how money is utilized. He stated, "Spending money, overspending money, no one accounting for money. But audits are important." Even in instances where financial misconduct is eventually uncovered, Obando expressed frustration over the difficulty in achieving accountability. "People get fired," he said, "but there's not much you can do because you can't really track the money. Once you catch the debit out, what are you going to do with it?"
James O'Keefe, whose organization, O'Keefe Media Group, published the footage, framed Obando's admissions as corroboration of patterns his reporters have been investigating, particularly concerning what he terms California's "homeless industrial complex." O'Keefe has previously documented alleged instances of individuals being paid cash for fraudulent petitions related to homelessness initiatives. "They can't conduct the audits because they don't have the resources. Well, they have a lot of resources. Fraud is happening. Fraud is very real. Overspending is happening," O'Keefe said. He added, "Money is not being properly accounted for, and the audits meant to expose it are by the State Controller’s own admission."
The undercover interaction also touched upon California's ongoing homelessness crisis. Obando's comments suggested a state government that has prioritized the appearance of action over substantive strategy. "See, the thing is, there’s no statewide homelessness plan," Obando stated. While acknowledging the creation of a new agency to address the crisis, he indicated that this body primarily focuses on managing contracts rather than implementing solutions on the ground. "There’s not a plan for how we’re going to fix this," Obando concluded. These revelations are expected to intensify scrutiny on California's fiscal management and governance practices.
