Gov. Gavin Newsom supports crackdown on businesses charging veterans illegal fees

Lia Russell, The Sacramento Bee on Feb 12, 2026

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SACRAMENTO, Calif. — Gov. Gavin Newsom announced an effort to crack down on fraud targeting California military veterans as the White House has singled out Democratic states for allegedly allowing waste and abuse to run rampant.

Newsom signed Senate Bill 694 from Sen. Bob Archuleta, D-Pico Rivera, and Assembly member Pilar Schiavo, D-Chatsworth, which strengthens oversight of businesses that charge veterans to help file benefit claims by requiring them to have federal accreditation and barring them from charging unauthorized fees or requiring veterans to provide sensitive personal information.

The state will also offer veterans a $20,000 tax credit starting this year, Newsom announced during a news conference on Tuesday at the California Department of Veterans Affairs.

Newsom said “lax federal enforcement” had allowed a cottage industry of unscrupulous businesses to flourish and scam veterans seeking help to claim benefits from the U.S. Department of Veterans Affairs. In October, the Washington Post reported that “bipartisan political indifference and a weak array of checks and balances” had allowed veterans to bilk the VA for billions in dubious service-connected disability claims, like acne and hemorrhoids.

California is the latest state to come under fire from the federal administration as President Donald Trump has seized upon vague claims of fraud or mass illegal immigration as a pretext for investigating liberal states like Maryland, Maine and Minnesota, often despite scant evidence, or years after investigators already punished wrongdoers.

Newsom, who is expected to run for president in 2028 after he is termed out of the governor’s office next January, has positioned himself as Trump’s chief Democratic foe. He denied that he was preempting any potential federal fraud investigation, calling his signing of Archuleta’s bill “the right thing to do.”

Veterans service organizations like the American Legion and Veterans of Foreign Wars, the California Professional Firefighters union and AARP supported SB 694.

According to CalMatters’ Digital Democracy database, a handful of organizations like the Black Veterans Empowerment Council, Purple Heart Homes and United Veteran Benefits Agency lobbied against it.

The latter firm, a Missouri-based consultancy that files claims on veterans’ behalves, argued that the current VA claim system was “at best cumbersome and adversarial,” and “at worst broken” and forced veterans to rely on “powerful boutique law firms” to appeal their benefits claim denials.

Trump has punished blue states by sending Homeland Security officials to conduct immigration raids and withholding federal funds for state programs. This has resulted in lawsuits in Minnesota’s case, the deaths of Alex Pretti and Renee Good, whom DHS agents fatally shot while the two observed deportation raids in Minneapolis.

Last month, federal health official Mehmet Oz filmed a video outside an Armenian bakery in Los Angeles, claiming the city was rife with health care fraud driven by the “Russian Armenian mob,” raising state officials’ fear that California would be the administration’s next target.

Newsom filed a civil rights complaint against Oz, claiming the Turkish-American Trump ally had discriminated against Armenians, one of the largest ethnic groups in Los Angeles, and who were persecuted by the Turkish Ottoman Empire.

An hour before Newsom held the Tuesday news conference, the San Francisco Chronicle obtained documents detailing the White House’s plans to claw back tens of millions of dollars in already-allocated grants that went to Bay Area public health systems and nonprofits.

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