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PERSPECTIVE - “Opportunity makes the thief,” said the English philosopher and statesman Sir Francis Bacon in the 16th century, and unfortunately duplicitous opportunities are available today in our woefully administered homeless program by governmental agencies.
Sadly, we are witnessing an unfolding scandal of huge proportions related to homelessness engulfing lawyers, bankers, public officials, businesspersons, nonprofits, bureaucrats and lobbyists.
A few days ago, the Department of Justice (DOJ) filed criminal cases against two Los Angeles-area men for fraudulently acquiring public funds that were allocated to address the local homelessness crisis. In custody is Cody Holmes of Beverly Hills for allegedly using fake bank records to receive almost $26 million from the California Department of Housing and Community Development for Shangri-La Industries LLC.
In a separate case, Steven Taylor, a developer and real estate agent of Brentwood, was released on a $3.6 million bond, according to DOJ, after he was charged with bank fraud, identity theft, and money laundering. He was accused of using the fraudulently obtained funds to flip a Cheviot Hills home and selling it to the nonprofit housing developer Weingart Center Assn., for more than double his original purchase. The Weingart Center Assn. used funds from the city and the state`s Homekey initiative for the purchase of the building. However, neither the city nor Weingart and its CEO, whose salary in 2023 was $432,188, exercised the prudent and customary due diligence!
“Accountability for the misuse of billions of tax dollars intended to combat homelessness starts today,” acting U.S. Attorney Bill Essayli said. “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.”
Councilmember Monica Rodriquez demanded accountability as member of the Housing and Homelessness Committee, and because she was asking the tough questions and expressed concerns consistently regarding the wanton waste and abuse of taxpayers` money, as a reward she was bumped off the committee. Los Angeles it seems applies the same axiom as Washington D.C. "Better play by our rules or you lose". Rodriquez has been vindicated by the recent events and she still won at least morally for her ethos.
According to the Westside Current, the arrests come just months after an audit exposed billions in unaccounted homelessness spending—an audit city and county officials fought to keep buried, dragging their feet and doing nearly everything possible to hide the truth. Now, taxpayers are footing the bill as Los Angeles spends millions to defend itself in the fallout.
Following the arrests, Mayor Karen Bass said: “My 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." Unfortunately, such a proclamation is after the fact and although billions have been spent to house the homeless, the unhoused population is increasing. According to a Rand report "......the places with the highest needs are becoming the very places where the county`s official count is most underestimated".
Jamie Page, publisher of the Westside Current, wrote that for two years the westside and many communities met with silence, spin, or outright denial “when we raised the same concerns which are now at the center of a federal criminal investigation.”
For two years, she wrote, our newsroom began asking questions about inflated property values, vacant Project Homekey sites, and opaque financial trails — questions city, county and state officials repeatedly brushed aside. Project Homekey is a statewide effort to sustain and rapidly expand housing for people experiencing homelessness or at risk of homelessness.
Alas, all of this was predictable, as I wrote in my book “The Making of Modern Los Angeles.” The present system to end homelessness comprised a failed structure I called the “Homeless Industrial Complex.” Funding from local, state, and federal sources was continuously made available, and vested interests gradually and methodically influenced public policy and had clear access to those funds.
Miguel Santana, CEO of the California Community Foundation, made an honest observation two years ago when he addressed an Urban Land Institute forum on homelessness. “We have created a system not for the homeless, but for the interests who benefit from that system.”
He was right. Last week, after an excellent investigative reporting, the Westside Current ran a story with the heading " 30 L.A. "Homeless" Nonprofits Went from Pennies to $121 Million-on Taxpayers` Dime" The article exposes the outrageous salaries of the executives of the nonprofits, and details how the nonprofits turned losses into multimillion dollar revenues as homelessness surged 70% across Los Angeles County.
When Mayor Eric Garcetti asked me to rescue the A Bridge Home-Emergency Temporary Housing initiative that established homeless shelters across the city, I was stunned to witness nonprofits supplying services arbitrarily adding unreasonable requirements and demands to the construction of the projects; as a result, construction costs skyrocketed and delays occurred. Further, not a single board member of the Los Angeles Homeless Services Authority (LAHSA) which administered the nonprofits ever attended a single meeting to assess and evaluate plans when the nonprofits presented them.
Variable and excessive requirements were also added that were stricter than the requirements of the Building and Safety Department or the Fire Department, adding to higher costs and delays. Further, nonprofits bluntly said they would not assume the operation of the shelter unless everything on their list was included. Nonprofits arbitrarily were setting the rules. Meanwhile, four of our fellow citizens die every day in the streets of Los Angeles.
Earlier this year, the L.A. County Board of Supervisors decided to redirect county funds from LAHSA to a new homeless department after audits showed poor tracking of funds and programs, risking waste, fraud and abuse. Not a wise decision considering there will be three entities now overseeing homelessness, County, City and LAHSA. Soon we will see fingers pointing left and right for the failures. Santana said at the Urban Land Institute in 2023. "There is no one in charge of homelessness".
One audit, ordered by Judge David O. Carter as part of a homelessness lawsuit, found LAHSA lacked financial oversight to ensure contractors fulfilled their obligations.
An audit released in February 2021 by California State Auditor Elaine Howe, reported that California had the nation’s largest homeless population and that the approach to address it was disjointed. Most telling was the auditor’s biting comment that the state’s plan to mitigate homelessness is not designed to achieve this because, if that was done, then nine agencies and forty-one different programs would no longer be needed, federal and state funding would dry up, and public employee union jobs would be lost. Unfortunately, Governor Gavin Newsom has been busy running for president instead of setting guardrails to protect the taxpayers` money from waste, fraud and abuse.
My observations and the red flags I raised on the “Homeless-Industrial Complex” are underscored by the investigative journalist and editor, Katy Grimes of the California Globe, who reviewed the audit and wrote: “There is no single state entity that comprehensively tracks the sources of funding, the intended uses, or related expenditures for these programs,” nor does the state “track how much funding is available to spend toward addressing homelessness statewide.”
The homeless scandal must end, and all perpetrators must be found and punished. Corruption must not be allowed to thrive. Our society must guard against immorality and strengthen our moral compass. Plato warned that ridiculing virtue erodes civilization... A society that mocks virtue prepares its own collapse.
Our city, our county, our state must recapture accountability, truth, honesty, integrity, pride and justice.
(Nick Patsaouras is an electrical engineer and civic leader whose firm has shaped projects across commercial, medical, educational, institutional and entertainment sectors. A longtime public advocate, he ran for Mayor in 1993 with a focus on rebuilding L.A. through transportation. He has served on major public boards, including the Department of Water and Power, Metro, and the Board of Zoning Appeals, helping guide infrastructure and planning policy in Los Angeles. He is the author of the book "The Making of Modern Los Angeles.")
