Bass said her administration is working “to ensure that anyone who engages in fraud against the city will face the full force of the law”
Los Angeles Mayor Karen Bass pledged a “zero tolerance” stance on corruption in the city’s homelessness programs Friday, Oct. 17, 2025, in response to federal arrests and charges alleging the misuse of public funds for housing projects.
Bass’s statement came a day after authorities detained Cody Holmes, 31, of Beverly Hills, on a mail fraud charge tied to a $25.9 million state grant for homeless housing. Holmes, ex-CFO of downtown L.A.-based Shangri-La Industries LLC, allegedly submitted fake bank statements claiming $160 million in nonexistent accounts to secure the October 2022 Project Homekey funding for a Thousand Oaks motel conversion. Prosecutors say some funds were diverted to cover over $2 million in Holmes’ American Express bills, including luxury purchases, from November 2022 to May 2023. He faces up to 20 years in prison and is set for a downtown L.A. court appearance.
In a related but separate case, Steven Taylor, 44, of Brentwood, was indicted on seven counts of bank fraud, one count of money laundering, and one count of aggravated identity theft. Free on $3.6 million bond, Taylor is accused of using fake statements to secure loans from 2019 to 2025, acquiring properties in areas like Cheviot Hills. One scheme involved buying a Cheviot Hills home for $11.2 million with a fraudulent loan, then flipping it to a homeless housing developer for $27.3 million using city and state funds, netting $16.1 million. He allegedly forged documents to juggle multiple credit lines, potentially facing 30 years per fraud count plus a mandatory two-year identity theft sentence.
Acting U.S. Attorney Bill Essayli described the cases as “the tip of the iceberg,” part of the Homelessness Fraud and Corruption Task Force launched in April to probe California’s $24 billion homelessness spending since 2020. FBI Assistant Director Akil Davis and IRS Special Agent in Charge Tyler Hatcher stressed the harm to vulnerable groups, while Federal Housing Finance Agency Inspector General Herminia Neblina noted interagency cooperation.
Bass, whose administration oversees much of L.A.’s homelessness initiatives, said: “Today we learned that a private developer has been arrested and charged in a complex scheme to defraud lenders across Los Angeles and Ventura Counties. One of the alleged fraudulent schemes involved real estate in West L.A. that was acquired to provide housing for elderly Angelenos experiencing homelessness. My administration has zero tolerance for corruption – period. We’re working with the U.S. Attorney’s office to ensure that anyone who engages in fraud against the city will face the full force of the law and my administration’s unwavering commitment to accountability.”
