(Editor’s note: This story first appeared in the Westside Current on October 15 and is reprinted with permission.)
Acting U.S. Attorney Bill Essayli joined FBI Assistant Director in Charge Akil Davis and IRS Criminal Investigation Special Agent in Charge Tyler Hatcher arrested Cody Holmes and Steven Taylor for fraud by taking money meant for the homeless.
By JAMIE PAIGE and CHRISTOPHER LEGRAS
Federal prosecutors on Thursday announced criminal charges and arrests in two separate cases alleging the theft and misuse of millions in taxpayer funds intended to combat California’s homelessness crisis — marking what authorities called the beginning of sweeping federal accountability efforts.
At a press conference inside the U.S. Courthouse in downtown Los Angeles, Acting U.S. Attorney Bill Essayli joined FBI Assistant Director in Charge Akil Davis and IRS Criminal Investigation Special Agent in Charge Tyler Hatcher to unveil what they described as “significant developments” in a long-running probe into corruption surrounding state-funded homeless housing programs.
“California has spent more than $24 billion over the last five years with little to no progress in solving our homelessness epidemic,” Essayli said. “Too often this money has been wasted, mismanaged, or outright stolen. That accountability starts today.”
Beverly Hills Developer Charged in $26 Million Project Homekey Scheme
Cody Holmes
Federal agents arrested Cody Holmes, 31, of Beverly Hills, early Thursday morning. Holmes, the former chief financial officer of Shangri-La Industries, a downtown Los Angeles affordable-housing developer, is accused of defrauding the state’s Project Homekey program — a multibillion-dollar initiative that converts motels into homeless housing.
According to the criminal complaint, Holmes and Shangri-La applied for multiple Homekey grants with several California cities, including a $26 million project in Thousand Oaks — a site first uncovered by Westside Current click here during its ongoing investigation into vacant and mismanaged Homekey properties across Los Angeles, Ventura and San Francisco counties.
In 2024, the Current published an investigation revealing hundreds of Homekey units sitting empty click here while state agencies continued to funnel money into under-performing projects. The Thousand Oaks location was among those flagged for prolonged inactivity and irregular financial reporting.
Federal prosecutors said Holmes fabricated bank statements showing $160 million in deposits the company didn’t have. Despite the false documentation, the state disbursed nearly $26 million for the project, which was never completed. Investigators allege at least $2.2 million was diverted to pay Holmes’s personal American Express bills, including purchases at luxury retailers.
“He stole the money,” Essayli said.
Brentwood Developer Accused of Flipping Cheviot Hills Property
This building was purchased for $11.2 million in December 2023 and quickly resold it to the Weingart Center, a nonprofit homeless-housing developer, for $27.3
In a separate case, a federal grand jury returned a nine-count superseding indictment against Steven Taylor, 44, of Brentwood, charging him with defrauding lenders and concealing real-estate transactions involving a Cheviot Hills property — another deal the Westside Current first exposed in 2023 deal click here.
The Current’s reporting revealed a web of transactions surrounding the senior living facility at 3340 Shelby Drive, a longtime neighborhood institution that changed ownership twice in less than two weeks. Taylor purchased the building for $11.2 million in December 2023 and quickly resold it to the Weingart Center, a nonprofit homeless-housing developer, for $27.3 million — more than double the price — without disclosing the resale to his lender or other parties.
“That money used to purchase the property was paid with City of L.A. and Homekey funds,” Essayli said. “He obtained the $11 million loan fraudulently and hid the resale from parties involved.”
The Shelby Drive sale, first scrutinized by the Current, raised questions about inflated appraisals, valuation discrepancies, and the city’s limited oversight of transactions tied to Project Homekey Round 3.
Feds Vow Broader Crackdown
Essayli said Thursday’s cases are “just the beginning.” Agents from the FBI and IRS executed multiple search warrants in Beverly Hills and Century City connected to the investigations.
“These defendants exploited the homelessness crisis for personal gain,” said FBI Assistant Director Akil Davis. “This is not a victimless crime — the millions of dollars lost could have been used to house the homeless or fund other community needs.”
IRS Agent Tyler Hatcher called the schemes part of a pattern: “Businessmen, realtors, and developers have taken advantage of local, state, and federal programs aimed at helping vulnerable citizens. This unchecked fraud stops today.”
A 2024 State Auditor’s report similarly criticized the California Interagency Council on Homelessness for failing to track costs and outcomes, citing “little to no oversight” of billions in expenditures.
Essayli warned that the investigation remains active and could widen to include other recipients — including public officials. “We are tracking billions of dollars of public money,” he said. “If you steal money, or allow it to be stolen, we will find you and we will prosecute you.”
Both Holmes and Taylor face multiple federal counts, including wire fraud and money laundering. Members of the public with information about misuse of homeless funds are urged to contact tips.fbi.gov or call 1-800-CALL-FBI.
HURRAY for these arrest. PLEASE CONTINUE YOUR WORK FBI AND IRS AGENTS. The amount of moneu WASTED on homelessness is ludicrous.
Thank you for publishing this article with links to the GREAT investigative reporting by Jamie Paige and Chris Legras. This is just the beginning. Thanks to Acting U.S. Attorney Bill Essayli. His statements and objective reflect our hopes: “If you steal money, or allow it to be stolen, we will find you and we will prosecute you.”
Thank you to the Westside Current for your tireless reporting of the incompetence and lack of oversight by many of our public officials who can’t keep track of $100 or $1000 or $1 million of our tax dollars. If they knew how to balance a checkbook, criminal behavior by bad guys would not go unnoticed or worse unreported. The mystery around where our sky high tax dollars are going is finally being exposed & reveled – it’s about time.