Introduction to Homeless Funding Fraud
The U.S. Department of Justice on Thursday announced charges against two real estate executives accused, in unrelated cases, of misappropriating millions of dollars in state funds allocated to combat homelessness.
Charges Against Steven Taylor
Prosecutors charged Brentwood resident Steven Taylor, 44, with seven counts of bank fraud, one count of aggravated identity theft, and one count of money laundering over allegations that he used fake bank statements to get loans and lines of credit for a series of real estate transactions. One of those transactions involved a nursing home in an upscale Los Angeles neighborhood that prosecutors say he bought under false pretenses and quickly flipped for more than double the price to the nonprofit housing developer Weingart Center Assn. To purchase the 70-plus-unit building in Cheviot Hills, Weingart used funds from the city and the state’s Homekey initiative, a program to quickly convert hotels and other buildings into apartments or shelters for homeless people.
Details of the Allegations Against Taylor
Taylor is accused of lying to the lender funding his $11.2-million purchase, saying that he intended to renovate and use the Cheviot Hills property himself. At the time, Taylor had already contracted to sell the property to Weingart for $27.3 million, prosecutors said. The U.S. Attorney said this involved a double-escrow transaction that was hidden from the lender and others. In another incident, he sent a lender an email purporting to be an employee of another bank, fictitiously confirming that the credit line with the bank had been closed, according to the criminal complaint. The complaint says that Taylor altered real bank statements, changing the dollar amounts and bank account numbers to show millions of dollars in deposits that didn’t exist.
Investigation and Response
Taylor did not immediately respond to a request for comment and his attorney, Michael Freedman, declined to comment. The Westside Current online publication reported on the Cheviot Hills sale in 2024, disclosing that Weingart paid more than double what the seller paid. Prosecutors said they were investigating what the city and Weingart knew about Taylor’s actions. Kevin Murray, Weingart’s president and CEO, did not immediately respond to a request for comment. When asked about the transaction in August, he said he had “no prior relationship with the seller and no continuing relationship” and that taxpayers paid fair market value for the property. In a statement, Los Angeles Mayor Karen Bass said her “administration has zero tolerance for corruption — period.” “We’re working with the U.S. Attorney’s office to ensure that anyone who engages in fraud against the city will face the full force of the law and my administration’s unwavering commitment to accountability,” Bass said.
Charges Against Cody Holmes
In the second case, Cody Holmes, 31, a Beverly Hills man who was the CFO of affordable housing developer Shangri-La, was arrested Thursday morning for his role in another Homekey project. The state paid $25.9 million in Homekey money to affordable housing developer Shangri-La Industries LLC to convert a building in Thousand Oaks into homeless housing. Prosecutors said Holmes and Shangri-La submitted fake balance sheets to the state, overstating the cash it had. The grant funds were then used to pay credit card bills for American Express accounts associated with Holmes, prosecutors said. In November and December of 2022, more than $2.2 million was transferred from a Shangri-La account to a Holmes-controlled account. From November 2022 to May 2023, more than $2 million was paid toward American Express cards, including transactions at luxury retailers.
Background and Consequences
In a lawsuit in Los Angeles County Superior Court, Shangri-La accused Holmes of embezzling housing money and spending it on personal extravagances, including tickets to the Coachella Valley Music and Arts Festival, jewelry and rent for a Beverly Hills mansion. Freedman, the attorney who is also representing Holmes, declined to comment. “Accountability for the misuse of billions of tax dollars intended to combat homeless starts today,” acting U.S. Atty. Bill Essayli said in a statement. “The two criminal cases announced is only the tip of the iceberg and we intend to aggressively pursue all leads and hold anyone who broke any federal laws criminally liable.” “If you steal money, or allow it to be stolen, we will find you and we will prosecute you,” he said at a news conference Thursday morning.
Conclusion
The charges announced Thursday come six months after Essayli announced the launch of a federal task force to investigate potential fraud and corruption involving local homelessness funds and among growing concern from the public and some elected officials that the money spent hasn’t resulted in larger drops in the number of people sleeping on the street. The number of homeless people across L.A. County dropped 4% this year, according to the annual count released in July. An estimated 72,308 people were living in shelters or on the streets in the county, including 43,699 people in the city of L.A. The cases highlight the need for increased transparency and oversight in the allocation and use of funds intended to combat homelessness.
FAQs
- Q: What were the charges against Steven Taylor?
A: Steven Taylor was charged with seven counts of bank fraud, one count of aggravated identity theft, and one count of money laundering. - Q: What was the nature of the transaction involving the Cheviot Hills property?
A: Taylor bought the property under false pretenses and quickly flipped it for more than double the price to the nonprofit housing developer Weingart Center Assn. - Q: What were the allegations against Cody Holmes?
A: Holmes was accused of submitting fake balance sheets to the state and using grant funds for personal expenses, including luxury items and rent for a Beverly Hills mansion. - Q: What is the Homekey initiative?
A: The Homekey initiative is a program to quickly convert hotels and other buildings into apartments or shelters for homeless people. - Q: What was the response from Los Angeles Mayor Karen Bass to the allegations of fraud?
A: Mayor Bass stated that her administration has zero tolerance for corruption and is working with the U.S. Attorney’s office to ensure accountability.
