I

gotta tell you, I'm tired.

It's been a long 18 months.

Many people have been so great, so kind, so generous to us as we try to to help the state of California.

You know, we got some problems here.

But we got a lot of good things going on, too.

We got this $4.5 trillion economy.

Hilton.

Explain to people.

Well, we're having a lot of fun with this website.

We wanted to put together a compilation of the business news stories about her, let's say, achievements in office.

And we decided to amalgamate them all.

We were going to put them on a new website.

And we tried to think of a name of it.

And we said, well, how about MaliaCohen.org? And shockingly, it was available.

What do you think you'd find if you start doing an audit of that particular department?

How much does this concern you?

It concerns me a lot.

You know, if you think about it, up until the last, say, decade or two, the two parties would work together on things that were completely obvious, such as stopping fraud, whether it's financial fraud or voter fraud.

And regardless of who the administration is, if they sent you a letter and a list of names and said, these people are not citizens, 20 years ago, no matter who party was on either side of that letter, they would have said thank you, and they would have taken the non-citizens off of the voter rolls.

But here we are today in California.

We are so completely out of touch with our eight executive leaders, and this is now Shirley Weber, our Secretary of State, Rob Bonta, our Attorney General, Malia Cohen, our state controller who has no idea what a state controller is supposed to do.

They get this letter from the Department of Justice and they say, we're not even going to open the list.

CAN YOU SHARE AN EXPERIENCE FROM THE CAMPAIGN TRAIL OR ANY LOCAL LEADERS OR ANY FOLKS YOU'VE TALKED TO WHO MIGHT NOT NORMALLY BE REPUBLICANS, BUT WHO ARE BACKING YOUR CAMPAIGN because they want the checkbook to balance.

unpack that? She thought auditing and investigating all the fraud would be a waste of time and resources because the legislature is already doing that, but the legislature is the one shoveling out the money.

Yeah, so first off, the legislature wasn't doing any audits.

The legislature doesn't do audits.

There is the state auditor who does traditional financial audits.

The state controller has two types of audits that she's supposed to do.

Number one is pre-audit all state spending and for statutory compliance before it goes out the door.

And number two is on a selective basis, do performance auditing.

Herb?

Am I wrong?

Well, you know, I don't know her personally, but when you look at the behavior that she's, uh, shown during her time in office, there's, there's not been any criminal referrals, for example, for waste or fraud.

All of the fraud that happens y- we hear people talking about it.

We got Nick Shirley with the video camera.

We've got JD Vance now focused on it.

We've got First Assistant US Attorney Bill Assaley focused on it.

I wrote a, a research report on it, which is on my website, herbmorgan.com.

What more should the controller's office do to make sure that unclaimed property gets back to the proper owner?

know her

personally but when you look at the behavior that she's uh shown during her time in office there's there's not been any criminal referrals for example for waste or fraud all of the fraud that happens we hear people talking about it we got nick shirley with the video camera we've got jd vance now focused on it we've got first assistant u.s attorney bill assaili focused on it i wrote a research report on it which is on my website herbmorgan.com Literally nobody from any party or political persuasion is saying that we don't have a massive fraud problem in California.

It is universal.

Where I think there's a disconnect is people don't realize whose job it is to protect the resources.

The controls are not in place.

In fact, we found out that Malia Cohen is not performing duty number one of the job.

She is actually not pre-auditing and signing off on the expenses.

what more should the controller's office do to make sure that unclaimed property gets back to the proper owner

Mm

... uh, phony medical clinics.

There's fraud in the education system.

There's consultants everywhere.

Everybody's a consultant because- We have limits on salaries for government employees, but there's no limit on consultant pay.

So everybody's got a PowerPoint and everybody's become a consultant, and the, and every time we up the amount of money available to a program, bad actors get in front of it.

And what happens is the good people that are people that are doing work to try to help, uh, our meekest citizens, the drug and alcohol addicted, the mentally deficient people, um, uh, homeless veterans, single mothers on the street, there are some people who need that, and there are some organizations who provide great care.

People get mad, and I'm like, "What?" [laughs]

yes uh and this is why i wanted to have you on most people don't know first of all that your office exists and what it is you do and how extensive your responsibilities are how important it is and with the one of the overwhelming stories out of sacramento in the last year being endless reports of fraud and stolen money actually through the whole newsom second term especially And that you could provide a valuable role in in stopping a lot of this or exposing it at the very least.

Yeah, in fact, you know, we all know that the the fraud story in California is ubiquitous.

We know that it's national.

It's even international news.

I got a message from a friend in the UK this week about what the hell's going on in California with the fraud.

it's proven the arrests are being made now none of these arrests have come from our own california law enforcement community the arrests and there's been some convictions they've all come from federal intervention and then people think well where did that come from it came from this kid nick shirley no it didn't nick's doing a great job it actually all of this came about because i i wrote a white paper back in december at the request of steve hilton he asked me to do the research on the fraud in california because after all it's the job of the controller to prevent fraud that's literally the job and so we talk about the fraud and we blame gavin newsom we blame the assembly but in reality it's the fault of malia cohen this is who's not that she stole the money not that she's guilty but that she's incompetent and unable to do the job of fraud prevention this is a highly complex financial system that we have And we're being robbed blind of our wealth.

We are the wealthiest state and the richest country in the history of the world.

What could you have done in this case?

I just want to make sure everybody knows about her.

Yeah, that's right, because I need her there.

And then the state controller.

The state controller has audit authority, but it's a different kind of audit.

So the Constitution was written in 1879, our state constitution, and it was designed to prevent the theft of state resources.

So they created a job, a person, an elected official, whose job it is to prevent fraud by using financial controls.

So the audit duties of the state controller, the very first duty is to pre-audit all state spending for legality and compliance.

know where $6 million is.

And that poll is very encouraging.

It gets better because we then go on and say, what are the three highest priorities? Again, only 30% of the people that responded are Republicans, but 63% said find the waste and fraud.

57% said protect the taxpayers from government mismanagement.

And 44% said increase transparency in state spending.

We then went on and say, well, Herb Morgan, do you know who he is? He's endorsed by Sacramento Bee, he's endorsed by Orange County Register, Southern California News Group, et cetera, et cetera.

And by the way, how would you feel about Herb Morgan's plan for radical transparency, published detailed information online showing where state government is spending the taxpayer money? I have never seen a poll response this high in any poll ever.

95.3% of people support that.

How do you want to call that

Speaking of track, what about the California high-speed rail fiasco? What would you do with that?

Well, as far as Prop 1A was very, very clear that the voters did pass it.

It authorized $10 billion of debt issuance to build a train for about $30 billion.

And it was going to go 800 miles today.

It's 177 miles and they do not have the legal right away for all one 77 and the cost of balloon to $230 billion.

And by their own admission, the CEO's business plan of the high speed rail authority says very clearly that they will need an operating subsidy to exist.

Prop one a says you may not build the track.

Before I lose my thought of train, compare your experience to the incumbent's.

board.

You can't get much worse than being too financially inept that Karen Bass resigns from the board.

There's it's an amazing thing.

We all talk about the fraud, the fraud, the fraud, the fraud.

We know it's there.

There's arrests every day.

Uh, 10, uh, 10 fraudulent daycares in San Diego.

Tell us what you are pledging to do if you are elected to this important position.

Have you found that the good people who may be the beneficiaries of some of these grants are backing you to stop the dilution into all of these terrible areas?

I think all of the opposition to what I'm doing is being done behind closed doors.

Everybody says to me publicly, regardless of political party, Herb, that's a great idea.

We could actually put the Nick Shirley out of business in California.

He'd have to go back and do his job in Minnesota.

Because not only will we stop prospective fraud, but when I publish every transaction online in an open source database, I'm also going to go back eight years.

So we're going to need a bigger jail in California for the people that have been involved in the grift and the theft.

Do you see the state controller making the type of criminal referrals that would advance accountability in the criminal space?

Specifically, how are you going to dismantle this multibillion-dollar enterprise that seems to invite more homelessness and more tragedy on Californians?

Well, Matt, it's good to be here.

It's good to see you.

We know that $24 billion wasn't just spent on homelessness.

We know that $24 billion was lost on homelessness spending in California.

The major contributor to this was the lack of financial controls.

The California state controller is the individual who's responsible for determining that money is allowed to go out.

What's your best pitch to voters who might not ever want to vote for a Republican, but whose vote you need to win this election?

Then I want to get a little bit about your background, too.

Sure.

So the state controller of California is established by the 1879 Constitution.

It's one of our eight executive offices.

Of the eight executive offices, in my opinion, it's the most powerful because it's the only of the executive offices that has total and complete access to the books and the records and the checks and the accounts.

That is what gives it the power.

And we have a $354 billion budget.

You've got a tremendous depth of experience in finance.

from

the high-speed rail CEO.

Yes.

She can audit everything.

any entity that touches state money.

So when I'm state controller, I can edit, I can audit state divisions, accounts, capital projects, universities, high schools, cities, counties, or 58 counties, 482 cities, all of their accounting falls under my jurisdiction, right down to the dog catchers and the water boards.

It is a massive job.

I hear all kinds of various explanations.

Because they're talking $236 billion now.

Why, Herb, why? Well, that they are.

So as you correctly pointed out, we, the citizens, voted November of 08 to issue $10 billion in debt.

Now, we issued general obligation debt as opposed to project debt.

That's an important distinction.

Because if the debt were tied to the project, there would be no revenue to pay for the debt, pay the bonds, the interest in the principal and those bonds.

So they were very crafty with that.

Herb, if you're elected, what do you see as the controller's responsibility and maybe stopping or improving this high speed rail project?

But are you concerned about, as they did, diving so deeply into the new technologies?

It's, you know, AI is a valuable technology.

And by the way, that, you know, Doge doesn't even exist anymore, interestingly enough.

But yes, of course, you always have concerns about the use of AI.

But my plan for using AI, I'm going to give you an example.

There's two.

Number one, California built a website called OpenFizzCal.

So I'm curious if you have the power to do this, I guess, is the question.

Well, hey, Herb, let's start off with California's high-speed rail because you and the people that you are running with on the golden ticket have uncovered a whole bunch of violations of Prop 1A, the bond measure voted on in 2008 to get that high-speed rail completed San Francisco to Los Angeles in 2020, which was six years ago.

Yeah.

How's that working out? So here's the deal with high-speed rail.

We voted.

We voted to issue general obligation debt, not project debt, because if we'd issued project debt, nobody would've bought it.

So it's backed by all of you, not backed by the project.

That's the first shenanigan.

[laughs]

How did the state budget get that much bigger in such a short amount of time? Where is that money going?

Well, Health and Human Services is a big one and all the different subsidiaries there.

Uh, we have Prop 98, which ensures that 40% of our general fund revenue goes to education.

This year's education budget is 140 billion.

When you combine the state funds with the federal funds, we're at $27,776 per kid.

Yet the metric, the scorecard, we are 46th in the nation in e- in, uh, in education in terms of reading and mathematical comprehension at the fourth-grade level.

Um, we have over one-third of all people in California, I didn't even qualify that as legal people in California, over one-third receive Medi-Cal benefits.

It, it sure seems that we need a hell of a lot more oversight on every single contract, and there should be no conflicts of interest whatsoever

What would a decent state controller have meant to a state like Minnesota, given what we're seeing there now?

Yeah, such an insightful question because the state controller's role really in every state, it's similar, right? Whether it's Minnesota, Florida, California, the state's controller's role is to be that financial centurion, that cop who just makes sure that everybody follows the rules and And we've gotten to this point in American politics where states are all red or all blue.

When you do that all red or all blue, what you lose is the checks and balances that this country was built on.

It made our country great, right? So what's happened in California, I hate to say it, but could have also happened in an all red state, right? It's what happens when you have every office and every part of the state government, people start slowly misbehaving.

And then other people see the people around them misbehaving, and then they start to misbehave.

And then the next generation comes in and they think, well, it's okay to misbehave.

When I say misbehave, I mean steal the money.

Caleb doesn't need to go

I guess we have both in California.

This, this is definitely the latter.

In fact, I authored the paper that came up with the...

You hear everybody talking about $425 billion.

I was the guy who actually did the research, wrote the paper.

This is what launched our California DOGE initiative that I'm doing with Steve Hilton.

Um, and I really think that number is light, 'cause I tried to be as appropriate and conservative as you can be.

[laughs]