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Federal Fraud Charges Highlight Oversight Gaps in Los Angeles Homelessness Programs
By Drooid · · How we work
Federal Fraud Charges Expose Systemic Weaknesses
Federal prosecutors recently charged three defendants in separate cases alleging that millions of dollars earmarked for Los Angeles homelessness initiatives were misused. One nonprofit received more than $75 million, with prosecutors saying the funds were spent on a nightclub, a bingo hall and bribes tied to fictitious housing referrals. The cases were examined in a House Oversight hearing that also covered similar concerns in Seattle and other cities.
Funding Structure and Recent HUD Actions
Los Angeles’ Continuum of Care, administered by the Los Angeles Homeless Services Authority (LAHSA), has drawn nearly $1 billion in federal dollars over the past five years. In response to alleged financial-management failures, HUD’s Under Secretary Scott Turner moved to suspend LAHSA this year, citing deficiencies in internal controls and conflict-of-interest safeguards. In June, HUD announced a $4.04 billion Continuum of Care funding opportunity that will prioritize treatment, recovery services, and $1.3 billion for new transitional-housing projects while adding anti-fraud measures.
Money Flow and Allegations
- $75 million paid to a suspect nonprofit, now the focus of a federal fraud investigation.
- $1 billion allocated to LAHSA’s Continuum of Care over five years, according to HUD.
- $4.04 billion earmarked for the latest funding round, with $1.3 billion set aside for projects aimed at reducing fraud, waste, and abuse.
Official Statements & Responses
LAHSA has contested HUD’s suspension action in court, arguing that the agency’s financial practices comply with federal requirements.
Verbatim Quotes
- “The only people really getting upward mobility in these programs, it would seem, is the people running the programs,” — Rep. Michael Cloud
- “We’ve got to take those incentives out and get back to making sure that all these programs have incentives for oversight and that the dollars are managed well,” — Rep. Michael Cloud
- “The ‘housing first’ experiment failed Americans by warehousing the vulnerable without results,” — Scott Turner, under secretary
These developments underscore ongoing concerns that federal homelessness funding may be vulnerable to misuse without robust accountability mechanisms.