When Acting U.S. Attorney Bill Essayli set up a Homelessness Fraud & Corruption Task Force, there was never a question about whether it would find fraud and corruption. The only question was whether the FBI would have enough handcuffs for everybody.
The arrests began last month. Of course, everyone accused is presumed innocent until proven guilty in a court of law.
On October 16, the U.S. Department of Justice sent out a press release announcing “the arrest of the former chief financial officer at a downtown Los Angeles-based developer of affordable housing and criminal charges against a Brentwood man who defrauded lenders to aid his property-flipping business, including a Cheviot Hills home that he sold to a homeless housing developer for more than double his original purchase price.”
Essayli called the arrests “only the tip of the iceberg.” Akil Davis, the assistant director of the FBI’s Los Angeles Field Office, said he hopes the charges “send a message to others who may be contemplating similar criminal behavior.”
Even if “similar” crimes are deterred, the number of ways to get rich from taxpayer-funded homelessness spending is rapidly approaching the speed of light. But for what it’s worth, here’s what’s alleged in these two cases:
Beverly Hills resident Cody Holmes is charged with mail fraud. He was chief financial officer of Shangri-La Industries LLC, a downtown L.A. developer of affordable housing. Shangri-La was paid roughly $25.9 million in “Project Homekey” funds from the California Department of Housing and Community Development. The money was supposed to be used to “purchase, construct and operate homeless housing in Thousand Oaks,” according to the U.S. Department of Justice.
To get those grant funds, Shangri-La allegedly showed the state agency fake statements for bank accounts that did not exist, and more than $2 million of the taxpayers’ money went to pay the bills for Holmes’ personal American Express accounts, which did exist.
In an unrelated case, Brentwood resident Steven Taylor is charged with bank fraud, aggravated identity theft and money laundering. The Department of Justice alleges that between August 2019 and July 2025, Taylor fraudulently obtained loans and lines of credit, then acquired or refinanced properties in Silver Lake, Los Feliz, Westlake, Del Rey, Pico-Union and Cheviot Hills.
The DOJ says Taylor acquired a Cheviot Hills property for $11.2 million by using fake bank statements to get a loan for a property he said he would use himself, when he had already made a deal to flip it to a homeless housing developer who would pay $27.3 million using funds from the city of Los Angeles and the state of California. It was a “double-escrow transaction hidden from the victim lender and others,” the DOJ said.
The state and city governments never found any of this fraud, but then, they probably weren’t looking for it. There goes the Trump administration again, breaking norms.
The homeless housing developer that purchased the Cheviot Hills property for $27.3 million is the Weingart Center Association, which last week put two of its top officials on leave while it conducts an internal review.
This action followed inquiries from the Los Angeles Times about the Cheviot Hills property and another one in Torrance, a hotel that Weingart planned to purchase with state and local funds for homeless housing. Weingart had agreed to pay $30 million for the hotel, which independent appraisals valued at no higher than $22.7 million and as low as $10.2 million.
Weingart would have received a developer’s fee of more than $2 million for the Torrance hotel redevelopment plus a chunk of money to run the place, the Times reported, but “community opposition” killed the project.
There are many buckets of money going through many hands and sticking to many fingers. Now there’s a new bucket of cash as a result of voters narrowly passing Proposition 1 in March 2024. It provides money for treatment and housing beds for veterans and other individuals suffering from mental illness and substance use disorder.
Homelessness programs are funded by federal, state, county, city and borrowed money. Countless billions of taxpayer dollars have been thrown at the problem.
Unsurprisingly, the throw has been intercepted.
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