Trump-appointed U.S. Attorney Bill Essayli announced Thursday that two Los Angeles-area men have been charged in separate federal cases involving the alleged misuse of millions of dollars in public funds intended for homelessness and affordable housing programs.
Essayli, who leads the Central District of California, said the cases are part of a broader federal probe into the state’s homelessness spending, which has totaled billions of dollars over the past several years with little measurable progress.
“California has spent billions of taxpayer dollars to combat its homelessness crisis with very little to show for it,” Essayli said in a post on X.
“Six months ago, I announced the Homelessness Fraud and Corruption Task Force. Today, we begin to hold people accountable by announcing two cases where more than $50 million of homelessness funding was fraudulently obtained.”
California has spent billions of taxpayer dollars to combat its homelessness crisis with very little to show for it. Six months ago, I announced the Homelessness Fraud and Corruption Task Force. Today, we begin to hold people accountable by announcing two cases where more than… pic.twitter.com/jUFpLhBmsZ
— Acting U.S. Attorney Bill Essayli (@USAttyEssayli) October 16, 2025
According to the Department of Justice, one of the defendants, Cody Holmes, 31, of Beverly Hills, was arrested Thursday morning.
Prosecutors allege Holmes used falsified financial records to secure nearly $26 million from the California Department of Housing and Community Development (HCD) through a state program known as Project Homekey.
Holmes previously served as chief financial officer for Shangri-La Industries LLC, a Los Angeles-based development company that received funding to build affordable housing in Thousand Oaks.
The DOJ alleges Holmes diverted the money to pay personal expenses, including credit card bills and purchases at luxury retailers, instead of completing the state-funded housing project.
“Even though the developer received all the money from the state, the developer did not complete the construction of the Thousand Oaks project,” Essayli said at a news conference Thursday.
“Essentially, he stole the money.”
🚨 BREAKING: In a bombshell revelation, US Attorney Bill Essayli just exposed that California Democrat officials oversaw MASSIVE homelessness fund fraud
— Eric Daugherty (@EricLDaugh) October 16, 2025
It has resulted in MILLIONS of dollars worth of fraudulent spending.
"Billions of California tax dollars intended to solve… pic.twitter.com/rIN9uMVJlF
In a separate case, real estate developer Steven Taylor was indicted by a federal grand jury on charges of fraudulently obtaining loans through false statements to financial institutions.
Prosecutors allege Taylor inflated property values to secure additional funds, including one property in Cheviot Hills that he later sold to a homeless housing developer for more than double its original price.
Essayli said both cases were uncovered as part of his office’s newly formed Homelessness Fraud and Corruption Task Force, which launched earlier this year to investigate potential misuse of state and federal funding related to California’s ongoing homelessness crisis.
“Federal agents this morning arrested Cody Holmes, the former CFO of Shangri-La Industries, and a grand jury yesterday indicted real estate developer Steven Taylor, both of whom are charged with fraud in separate cases,” Essayli said.
“Holmes allegedly siphoned public funds for homelessness and used millions of dollars for his own use. Taylor is accused of lying to banks to fraudulently obtain loans.”
Project Homekey, the state program at the center of one of the cases, was launched in 2020 to convert hotels, motels, and other properties into permanent housing for the homeless.
The program has distributed billions of dollars in state and federal funds to developers and local governments.
Essayli said the arrests mark the beginning of a series of investigations into potential fraud linked to California’s homelessness programs.
He emphasized that federal authorities intend to pursue additional cases where evidence shows that public money was misused.
California has spent more than $20 billion on homelessness initiatives since 2018, according to state data, yet the state continues to have the largest homeless population in the country.
Federal officials said the new task force will focus on tracing where that money has gone and ensuring accountability for individuals and organizations that misused taxpayer funds.
Both Holmes and Taylor are expected to make their initial court appearances in the coming days in the U.S. District Court for the Central District of California.
If convicted, they each face multiple counts of wire fraud and related financial crimes.
Essayli said his office will continue coordinating with federal and state agencies to ensure that taxpayer money intended to address homelessness is properly used.
“We will hold accountable those who exploit this crisis for personal gain,” he said.
