Federal law enforcement has launched a major crackdown on fraud in California’s multibillion-dollar effort to house the homeless, arresting high-profile developers and placing nonprofit organizations under scrutiny for alleged misuse of taxpayer funds.
U.S. Attorney Bill Essayli, speaking at a press conference in October, did not mince words: “California has spent billions of tax dollars to combat its homelessness crisis, with very little to show for it. Six months ago, I announced the Homelessness Fraud and Corruption Task Force. Today, we begin to hold people accountable,” said in a post on X. Authorities announced arrests and investigations involving more than $40 million in misappropriated homeless housing funds.
Among those charged, Cody Holmes, the former CFO of Shangri-La Industries, Los Angeles, Calif. was taken into custody for allegedly diverting $2.2 million from the Homekey program to personal luxury purchases—money intended for converting motels into homeless housing in Thousand Oaks. Despite an initial $26 million state grant, the project stalled, with substantial funds reportedly spent on Holmes’s credit card bills at high-end retailers.
Shangri-La Industries is a Los Angeles-based real estate development firm established in 1997, specializing in affordable housing, multifamily residential projects, hotels, and assisted living. The company held a prominent role in California’s Project Homekey program by securing grants to convert motels into housing for homeless residents and expanding its operations nationally with projects in Colorado and South Carolina.
In January 2024, the California Attorney General filed a civil case against Shangri-La Industries and its CEO, Andy Meyers, seeking the return of more than $100 million in misused Homekey funds and receivership over several properties. The company was accused of taking out unapproved loans and failing to record required affordability covenants, leading to default notices from lenders.
Despite portraying itself as committed to sustainability and social impact, court records, media investigations, and state lawsuits allege that none of Shangri-La’s motel conversion projects—including partnerships with Santa Monica’s Step Up on Second—were completed. Federal and state authorities have made it clear that investigations into fraud involving homeless funding at Shangri-La and similar developers are ongoing and expanding.
Shangri-La Industries’ business filings list Andrew Abdul-Wahab as CEO and W Investments, LLC as manager.
Weingart Center investigation
In a second case, the DOJ is investigating Weingart Center, a nonprofit led by former California State Senator Kevin Murray. Murray is the president and CEO of Weingart Center Association, a non-profit. The investigation centers on allegations of fraudulent use of public funds meant for homelessness housing, although no charges have been filed.
The probe was triggered by Weingart’s purchase of a Cheviot Hills property from developer Steven Taylor for $27.3 million—despite Taylor having acquired it just months earlier for $11.2 million allegedly using fake bank documents and misrepresentations to his lender. Federal prosecutors describe this as a double-escrow transaction designed to hide the rapid flip and inflated price from lenders and oversight officials.
Funding for the transaction came from both the City of Los Angeles and the California Department of Housing and Community Development, specifically earmarked for the homeless. Prosecutors allege Taylor deceived his lender by stating he would renovate and use the property himself, having already contracted to sell to Weingart Center using public funds. Currently, Steven Taylor faces multiple federal charges, including bank fraud, aggravated identity theft, and money laundering.
Prosecutors have indicated they are “examining everyone,” to determine both Weingart’s and the city’s level of knowledge and involvement in the transaction, as well as any others found to have improperly exploited homeless housing dollars.
Federal authorities characterize these cases as “just the beginning” of a much broader crackdown on widespread fraud in California’s homelessness programs, suggesting more charges and revelations are likely. Murray, for his part, has claimed Weingart Center paid fair market value and had “no prior relationship” with Taylor, but the scale of the price inflation and the use of public money have brought intense scrutiny on both parties.
A corrupted system
These revelations have reignited criticism over California’s approach to homelessness, fueling accusations that state-funded housing programs are plagued by fraud, waste, and minimal results. A Los Angeles County Superior Court audit report found that $2.3 billion in Los Angeles homelessness funds between June 2020 and June 2024 could not be fully accounted for, leaving the system vulnerable to waste and lacking adequate financial controls.
Across the country, similar schemes have surfaced, with prosecutors now examining ties between politicians, nonprofit networks, and Medicaid-related fraud in cities like Minneapolis. “The breadth of fraud in Minnesota’s Housing Stabilization Services program is staggering, and it underscores the urgent need for stronger oversight of nonprofit providers receiving Medicaid dollars,” said Acting U.S. Attorney Joseph Thompson, U.S. Attorney’s Office for the District of Minnesota.
As the DOJ intensifies its investigation, advocates warn that accountability and transparency must come before additional spending. For many critics, it’s yet another reason to question government-run housing programs. They claim that either the housing is never built, or newly constructed units suffer from serious mismanagement, with taxpayers footing the bill.
