The man whose job is to help oversee California’s finances just told an undercover camera what Sacramento has long refused to say out loud: the state is riddled with fraud, the audits that should catch it aren’t happening, and the legislature wants it that way.
Bismarck Obando serves as press secretary for State Controller Malia Cohen, the elected official responsible for auditing California’s sprawling government apparatus.
O’Keefe Media Group published the undercover footage on Tuesday, and the admissions captured on it landed like a grenade inside an already combustible debate over California’s fiscal recklessness.
Obando told the undercover reporter that the Controller’s office has managed to complete only the audits it is legally obligated to perform — a far cry from the kind of aggressive financial oversight that taxpayers might expect from the state’s chief fiscal watchdog.
The reason, according to Obando, comes down to one thing: Sacramento keeps starving the office of the people it needs to do the job.
“Instead of funding us, they cut us. They keep cutting our auditing teams,” he said.
Without the staffing to expand its reach, Obando said the office cannot get ahead of problems before they spiral — and the agencies that should be scrutinized know it.
He told the reporter that California’s state agencies have no interest in being examined, saying that at the agency level, “none of them want us to go in there and audit them.”
Obando reserved his sharpest words for the legislature itself, accusing lawmakers of deliberately withholding the resources needed to do the job.
“The legislation hasn’t given them to us because they don’t want to find out what the deal is,” he said.
The conversation turned even more striking when the reporter asked Obando point-blank whether he believes fraud is actively occurring inside California government.
He did not hesitate.
“Everywhere,” Obando said — rattling off “cities, counties, special districts, hospitals, insurance companies” as locations where he believes it is taking place.
A follow-up question asking whether he was confident that genuine fraud existed in the state produced an answer just as blunt.
“100 percent,” Obando said.
He placed the problem in the context of California’s economic footprint, noting that where enormous sums of money flow, theft follows.
“I mean, we’re like the fourth-biggest economy in the entire world. So yes, there’s money to be found,” he said.
Obando described the conditions that allow the fraud to persist: insufficient audits, runaway spending, and a near-total absence of anyone tracking where the money actually goes.
“Spending money, overspending money, no one accounting for money. But audits are important,” he said.
Even in cases where financial wrongdoing is eventually uncovered, Obando suggested that accountability remains frustratingly out of reach.
“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 has spent months investigating what he describes as California’s “homeless industrial complex” — including alleged instances of homeless individuals being paid cash to sign fraudulent petitions — framed the Obando footage as confirmation of a pattern his reporters have been documenting.
“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 continued: “We’ve just shown you. We’ve taken you through the homeless industrial complex, which is the snowflake on top of the iceberg. Money is not being properly accounted for, and the audits meant to expose it are by the State Controller’s own admission.”
The undercover reporter also drew Obando into a discussion about California’s homelessness emergency, and what state government intends to do about it.
His answer revealed a government that has created the appearance of action without the substance of a real strategy.
“See, the thing is, there’s no statewide homelessness plan,” Obando said.
He acknowledged that California has launched a new agency to deal with the crisis, but said the body is built around managing contracts — not solving the problem on the streets.
“There’s not a plan for how we’re going to fix this,” Obando said.
