Feds Expose California’s $70 Billion Homeless Grift

The feds are finally doing what California’s politicians refused to do: follow the money. First Assistant US Attorney Bill Essayli promises ‘massive’ fraud prosecutions are just getting started.

Archived tweet

We will bring accountability to California. It has been missing for a long time. https://t.co/DlNik8WmgA

F.A. United States Attorney Bill Essayli @USAttyEssayli January 07, 2026

‘We Followed the Money’

A coalition of federal agencies has uncovered wrongdoing on a staggering scale in California’s homeless services—and the recent indictments are just the beginning.

According to the New York Post, Essayli blasted Democrats as “colossal failures” for letting corruption fester for years: “We followed the money and very quickly we uncovered massive amounts of fraud.”

The recent indictments of housing executives Cody Holmes and Steven Taylor were just the tip of the iceberg. Holmes, former executive at Shangri-La Industries, allegedly embezzled about $2 million from “Homekey"—a homeless housing program created during the pandemic—and used the proceeds for luxury purchases for himself and his girlfriend. Taylor, a Brentwood developer, is accused of defrauding lenders in a scheme to "flip” a property to Weingart Center Association, a state-funded homeless nonprofit.

The federal homeless fraud task force includes the FBI, IRS, and Office of the Inspector General—the kind of independent oversight California’s state agencies never provided.

The $70 Billion Black Hole

The scale of mismanagement is almost incomprehensible. A 92-page State Auditor report found over $70 billion in taxpayer funds have been lost or mismanaged across California agencies—including $24 billion spent on homelessness programs with no tracked outcomes.

A 2024 State Auditor report found California didn’t properly track outcomes for that $24 billion. A court-ordered audit described Los Angeles homeless services as a “financial black hole” with no accountability or clear outcomes. And in San Francisco, the homelessness budget went up 5x in recent years—now over $1 billion annually—while the problem got worse.

The auditor placed 8 California agencies on a high-risk watchlist with potential taxpayer exposure of $76.5 billion. That’s not a typo. Seventy-six billion dollars at risk because nobody was watching the books.

‘They’re Liars, They’re Straight Up Liars’

Essayli, a former California Assemblyman, didn’t mince words about his former colleagues:

“They will feign shock and horror but continue to push the money out the door,” he told the Post. “They care about spending money—they don’t care about accounting for money.”

State oversight has been described as little more than lip service. Critics are now asking the obvious question: Why did California need the feds to catch “totally obvious” taxpayer-funded fraud?

Essayli has the answer: “There needs to be independent oversight from someone who is not politically connected to these individuals. The only people who can do that right now is the federal government—the FBI, the IRS.”

With more indictments promised in the coming weeks and dozens of investigations ongoing, this may be the beginning of a reckoning for California’s homeless-industrial complex. As Essayli says: “Everything and anything is on the table.”

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