Feds to look into potential fraud and corruption in Southern California homeless funds
- Share via
Bill Essayli, the newly appointed U.S. attorney for Los Angeles and surrounding areas, on Tuesday announced the formation of a criminal task force to investigate potential fraud and corruption involving local homelessness funds, saying there will be arrests if federal laws have been broken.
The U.S. Attorney’s Office in L.A. took particular aim at Los Angeles County in a news release announcing the task force, citing millions of dollars in federal funds that have been allocated to address homelessness and a recent court-ordered audit that found major flaws in homeless services.
“Taxpayers deserve answers for where and how their hard-earned money has been spent. If state and local officials cannot provide proper oversight and accountability, we will do it for them,” said Essayli, a Republican and former State Assemblymember who was appointed to his post by Atty. Gen. Pam Bondi last week.
The Homelessness Fraud and Corruption Task Force will “investigate crimes related to the misappropriation of federal tax dollars intended to alleviate homelessness” in the Central District of California, which covers an estimated 20 million people across seven counties.
Along with reviewing federal, state and local programs that receive federal grants and funding, the task force will “investigate fraud schemes involving the theft of private donations intended to provide support and services for the homeless population,” according to the U.S. Attorney’s office.
L.A. County has a homeless population of more than 75,000, of which more than 45,000 are within the city limits of L.A., according to last year’s official count. Among the remaining six counties in the district, the homeless population is about 21,000.
Tuesday’s announcement comes one week after the Los Angeles County Board of Supervisors voted to pull more than $300 million out of the Los Angeles Homeless Services Authority, or LAHSA, a city-county agency that oversees contracts for an array of homeless services.
L.A. County Supervisor Kathryn Barger said she welcomed the creation of the task force, calling accountability in homelessness spending “long overdue.”
“This action aligns with steps the County just took following a scathing audit of LAHSA contracts, and it sends a clear message: public funds meant to serve our most vulnerable must be managed with transparency and integrity,” Barger said in a written statement. “I believe this task force will add a much-needed layer of oversight that will help restore public trust and ensure resources actually reach those in need.”
The new task force will be made up of federal prosecutors from the Major Frauds section, the Public Corruption and Civil Rights section and the Civil Division’s Civil Fraud section, according to the U.S. Attorney’s office. The FBI, the United States Department of Housing and Urban Development Office of Inspector General and the IRS will also assist.
Essayli weighed in regularly on the issue of homelessness when he was a state legislator, referring derisively to what he called the “homeless industrial complex.” In 2023, he spoke against Proposition 1, a bond measure to pay for mental health treatment facilities and housing for the state’s homeless population.
While arguing against that measure, Essayli said government agencies should “force people off the streets by enforcing anti-camping laws” and “give the tools back to law enforcement” to move people into mental health or substance treatment programs.
“We have already spent $23 billion on homelessness and there’s nothing to show for it,” he said on X at the time. “The money is going to build overpriced apartments and to enrich politically connected ‘non-profits.’”
A wide-ranging investigation into homelessness programs could create a new distraction for Mayor Karen Bass, who made the issue a centerpiece of her administration. Since 2022, her Inside Safe program has been moving people off the street and into hotels, motels and permanent housing.
Asked about the new task force, Bass spokesperson Clara Karger said her office is focused on “outcomes and saving lives.” During the mayor’s first year in office, the city experienced a 10% reduction in “street homelessness,” the number of people living outdoors, Karger said.
“These results are in part due to increased accountability and transparency around results and budgeting,” she said. “The City of Los Angeles will continue to push forward disrupting the status quo and saving lives — that must remain the focus.”
The city of Los Angeles provides 35% of the funds that are provided to LAHSA. In recent months, Bass has voiced alarm at the county’s pullout from that agency, saying it could derail the progress seen so far on homelessness.
Los Angeles County officials are on track to remove not just funding, but also hundreds of workers, from LAHSA by July 2026.
The supervisors endorsed that plan following two scathing audits that identified lax accounting procedures and poor financial oversight at the homeless authority. One of those reports, commissioned by U.S. District Court Judge David O. Carter, concluded that weak oversight had created the potential for fraud and waste.
On Friday, Va Lecia Adams Kellum announced she was stepping down as the top executive at LAHSA, citing the county’s decision to pull funding — and potentially hundreds of employees — out of her agency.
In recent weeks, Adams Kellum has attempted to defend her agency’s work, pointing out that it reported reductions in street homelessness both in the city and county last year. Adams Kellum said her agency expects to report another reduction next year. Despite those assurances, she and her agency have been the subject of lacerating critiques from Carter, the federal judge.
Carter, at a recent hearing, said LAHSA had been offering “meaningless” promises to improve its operations.
“If they were going to do it, they should have done it, or they should have given you a road map now of ... how they’re going to do it,” he said.
Essayli toured Skid Row, the section of Los Angeles with the highest concentration of homeless residents, with Carter on Sunday. The task force was formed over the weekend.
Councilmember Nithya Raman, who heads the City Council’s homelessness committee, declined through a spokesperson to comment.
Councilmember Monica Rodriguez, an outspoken critic of LAHSA, said she wasn’t surprised by Tuesday’s announcement, given the findings of the audit presented in federal court. “It was only a matter of time before it piqued the interest of federal agencies,” she said.
“I think we can’t be apologists for a failed system,” Rodriguez added. “And I hope this helps to elevate people’s sense of urgency to change, and not defending the status quo.”
Sign up for Essential California
The most important California stories and recommendations in your inbox every morning.
You may occasionally receive promotional content from the Los Angeles Times.
