(TNND) — A federal investigation has led to an arrest and criminal charges, in separate cases, for fraudulently accessing and using public funds that were meant for homelessness and affordable housing, according to the Department of Justice.
In both of these cases, defendants took advantage of funds allocated to assist the homeless, some of the most vulnerable people in society and many of whom may be suffering from myriad conditions, including addiction,” said Akil Davis, the Assistant Director of the FBI’s Los Angeles Field Office in a written statement.
Los Angeles Mayor Karen Bass said she has “zero tolerance” for corruption in response to the charges.
“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,” Bass said in a written statement.
In the first case, a former CFO of a Los Angeles-based affordable housing developer, Cody Holmes, was arrested for allegedly using false bank records for $26 million from the California Department of Housing and Community Development.
The money, meant for Project Homekey, was instead used to pay off credit cards and for “well-known luxury retailers,” according to the DOJ. The developer still received the money for the project, but it was never completed.
In another case, Steven Taylor, a developer and release estate agent, was released on a $3.6 million bond. He was charged with bank fraud, identity left and money laundering.
If convicted, Taylor would face a maximum sentence of 30 years in federal prison for each bank fraud, up to 10 years in federal prison for a money laundering count, and a mandatory consecutive two-year prison sentence for the aggravated identity theft count.
The DOJ alleged Taylor used the funds to flip a home and sell it to a homeless housing developer for more than double the price. Davis said he “took advantage” of the city and state’s efforts to fix the homelessness crisis.