Seventy-five million dollars. That's what the Los Angeles Homelessness Services Authority paid a single nonprofit while the city's sidewalks doubled as campgrounds. On Wednesday, three defendants were charged in separate fraud cases tied to LA's homelessness programs — with alleged expenses that included nightclub outings, bingo hall tabs, and bribes connected to fake housing referrals.
That's what they found in the line items they bothered to check.
LAHSA has taken in nearly $1 billion over the past five years. In that time, homelessness in Los Angeles went up — not down, not sideways, up — to record levels. The agency's budget grew. The tent cities grew faster. And now federal investigators are pulling receipts that run through some venues you wouldn't normally associate with housing the vulnerable.
Rep. Michael Cloud, a Texas Republican on the House Oversight Committee, summarized the arrangement, "The only people really getting upward mobility in these programs, it would seem, is the people running the programs," Cloud said. "And that's not really what the program's supposed to be about."
The fraud cases announced Wednesday are the ones prosecutors could wrap in a bow — bribes exchanged for fake housing referrals, taxpayer funds redirected to nightclubs and bingo halls. Those are crimes with receipts. The larger problem is structural: a billion-dollar pipeline feeding an ecosystem of agencies and nonprofits where the primary measurable outcome is the continued existence of agencies and nonprofits. The tents are still there. The grant applications are thriving.
HUD Secretary Scott Turner went after the ideology behind the spending. "The 'housing first' experiment failed Americans by warehousing the vulnerable without results," Turner said. "This ideology promised to end homelessness. Instead, billions of taxpayer dollars were spent while homelessness increased to record levels."
HUD has since announced a $4.04 billion Continuum of Care funding opportunity, with $1.3 billion earmarked for transitional housing and supportive services — an explicit pivot away from the "housing first" model that LA rode into a ditch at full speed.
Mayor Karen Bass quietly stepped down from the LAHSA commission mere days before administrators were charged with crimes. The timing is worth appreciating. The city's top elected official removed herself from the oversight board of its largest homelessness agency right around the time federal investigators started pulling threads. Bass hasn't explained what changed about her interest in oversight. She doesn't need to.
Cloud pointed to a pattern that extends well beyond Los Angeles. "You [are seeing], as we begin to look into waste, fraud and abuse, why is it that these Democrat-led states are saying, 'No, we don't want the controls in place,'" he said.
You don't fight audits because your books are clean. You fight audits because the books are the problem, and every dollar accounted for is a dollar someone has to explain. The resistance to oversight is the confession the oversight hasn't gotten to yet.
This is how the machine works in every Democrat-run city that treated homelessness as a funding category instead of a problem to solve. Federal money flows to a city agency. The agency distributes it to nonprofits. The nonprofits hire staff, lease offices, file reports showing they spent the money. The homeless population grows. The agency cites the growing population to request more federal money. The nonprofits expand. The cycle doesn't break because breaking it would defund the people running it.
"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," Cloud said.
Nearly a billion dollars in five years. Three fraud indictments on a single Wednesday. A mayor who walked away from the oversight board. And somewhere in the paperwork, a bingo hall receipt filed under "homeless services."
