Feds to investigate potential fraud involving homeless funds in Southern California

LOS ANGELES (AP) — The new U.S. attorney for Los Angeles and surrounding areas said Tuesday that he will investigate potential fraud and corruption involving funds intended to alleviate homelessness in Southern California.

Bill Essayli, who was sworn in last week, announced the formation of the Homelessness Fraud and Corruption Task Force, which will “investigate crimes related to the misappropriation of federal tax dollars” across seven counties.

“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,” Essayli said in a statement issued by the U.S. Attorney’s Office for the Central District of California.

The statement called out Los Angeles County, where recent audits found reckless spending and a lack of transparency at the LA Homeless Services Authority, or LAHSA, the government agency responsible for doling out funds to provide shelter and services for unhoused residents.

Last week the Los Angeles County Board of Supervisors voted to shift more than $300 million in annual taxpayer funds out of LAHSA to create a new department on homelessness. On Friday, the head of LAHSA, Va Lecia Adams Kellum, said she would step down, citing the county’s decision to pull her agency’s funding.

In March, the city of Los Angeles also began exploring how it could sidestep LAHSA and directly contract with homeless service providers.

The region’s homelessness crisis is especially visible in downtown Los Angeles, where hundreds of people live in makeshift shanties that line entire blocks in the notorious neighborhood known as Skid Row. Tents regularly pop up on the pavement outside City Hall. Encampments are increasingly found in suburban areas under freeway overpasses. A 2024 survey found that more than 75,000 people were homeless on any given night across Los Angeles County.

California accounts for nearly a third of the homeless population in the United States.

In addition to investigating programs that receive federal funds, the new task force will look into “fraud schemes involving the theft of private donations intended to provide support and services for the homeless population,” the U.S. attorney’s office said.

Los Angeles County Supervisor Kathryn Barger welcomed the creation of the task force, saying accountability in homelessness spending was “long overdue.”

“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,” Barger said in a statement.