SACRAMENTO – California Attorney General Xavier Becerra and Assemblymember Mark Stone today advanced a bill, AB 2570, to update California’s False Claims Act to fight fraud that harms California families. The legislation, authored by Assemblymember Stone and sponsored by Attorney General Becerra, strengthens the ability of the Attorney General and other prosecuting authorities to investigate fraudulent claims and recover public funds lost due to fraud or misrepresentation — which ultimately helps protect California taxpayers. Fraud and false claims against the government rob our communities of funding necessary to support essential public services, such as improving our schools, providing healthcare, increasing public safety, and fixing our roads.
“When companies cheat our government, hard-working taxpayers are left holding the bag,” said Attorney General Becerra. “AB 2570 would give my office and local prosecutors improved legal tools to protect our state’s programs and services against fraudulent actors, including those committing egregious cases of tax fraud.”
“The California False Claims Act has been an effective tool at revealing, deterring, and punishing those who defraud the government of public funds," said Assemblymember Stone. "AB 2570 will expand and improve upon this law, allowing California to better protect public dollars and combat fraud against the state and local governments.”
"At a time when fraud and corruption have been normalized and excused at the highest levels in our nation, California can lead the way and demonstrate what accountability to the public looks like,” said SEIU Director of Revenue, Budget, and Pensions Terry Brennand. “California's taxpayers, workers, and communities deserve to know that our tax system applies to all — and that the money we invest in our communities is used scrupulously."
Prosecuting Fraud that Hurts Communities Will Help Recover Billions of Dollars in Funding and Protect Vital Services
Over the past decade, California has seen a rise in its annual estimated tax gap, the difference between total taxes owed and total taxes paid on time. California’s estimated tax gap is $20 billion. This bill would authorize the Attorney General and other prosecuting authorities to pursue tax fraud cases under the False Claims Act.
Harnessing the Power of Whistleblowers to Uncover Fraud
The False Claims Act also provides a monetary incentive for inside whistleblowers to come forward. Through this incentive, AB 2570 would strengthen tax enforcement in California by helping to reveal new cases of tax fraud that would otherwise be unknown.
$102 Million Recovery for the State Using the False Claims Act
In January 2018, Attorney General Becerra announced a $102 million settlement with BP Energy and its affiliates over allegations that it intentionally overcharged the State of California for natural gas that the state purchased between 2003 and 2012. Attorney General Becerra has successfully recovered millions of dollars for the state and local communities using the False Claims Act, but there is more money waiting to be recovered. Examples like these demonstrate that the False Claims Act has a proven track record of helping the government recover lost funds due to fraud. By strengthening elements of the False Claims Act, more funding can be returned to defrauded communities.