Photo by Stephen Oduntan
By Stephen Oduntan
Contributing Writer
LOS ANGELES — Beneath a skyline etched with wealth and power, the shadows of Los Angeles’s tallest skyscrapers stretch toward Skid Row, where the American promise fades into tents and desperation.
On a recent afternoon, a man stood and raised a crumpled California flag over his head, shouting into the air. His voice cracked and rambling, his presence underscored the enduring crisis that billions of dollars have yet to resolve. This is the man the system was supposed to help — still unsheltered, unstable, unseen.
As federal investigators dig into allegations of widespread misuse of homelessness funds across Southern California, the fallout has rippled through Los Angeles’s vast homeless services network. The city and county recently voted to pull more than $300 million in annual taxpayer funding from the Los Angeles Homeless Services Authority, a move that has sparked both criticism and applause.
LAHSA, the agency at the center of much of the public scrutiny, maintains that the system is evolving — and improving. In a statement to The Wave, LAHSA defended its practices and emphasized recent reforms.
“LAHSA welcomes the opportunity to discuss what we found in our internal audit and the changes we’ve made,” the agency said. “No audit has found waste or fraud, and we’ve documented how funds are reimbursed and how performance has improved.”
The agency pointed to the launch of a real-time interim housing tracker and more than 20 publicly available dashboards as evidence of its push for transparency.
“These improvements have been evident in the reductions in unsheltered homelessness seen in the homeless count,” the statement added.
At an April 8 press conference, U.S. Attorney Bill Essayli announced the formation of a multi-county Homelessness Fraud and Corruption Task Force. He put it bluntly.
“California has spent more than $24 billion over the past five years to address homelessness,” he said. “But officials have been unable to account for all the expenditures and outcomes, and the homeless crisis has only gotten worse. Taxpayers deserve answers. If state and local officials cannot provide proper oversight and accountability, we will do it for them. If we discover any federal laws were violated, we will make arrests.”
Supervisor Kathryn Barger welcomed the scrutiny.
“Reform is long overdue,” she said. “People suffering on our streets and taxpayers alike deserve real results.”
Essayli’s announcement has sparked anxiety among many in the outreach community, where some say political backlash is clouding the real work being done on the ground.
“There’s a war on nonprofits right now,” said one longtime outreach worker, who requested anonymity. “It’s being pushed by right-wing think tanks, but some of it’s sticking because the public sees billions spent and the problem only getting worse. We’re housing more people than ever, but more new people fall into homelessness every single day. It’s a system designed to fall behind.”
That system, critics say, doesn’t just suffer from misused funds — but from how the money flows in the first place.
“We opened our center in 2022 and didn’t get a cent from the Civil Rights Department for a year,” said Pastor Cue Jn-Marie of Creating Justice LA, which operates the Peace and Healing Center in Skid Row. “And we’d already done all the work. We only got the money after threatening to go to the media.”
Cue points to a deeper issue: a nonprofit industrial complex in which large, entrenched agencies receive most of the resources, while smaller, grassroots groups are left to do the work with minimal support.
“Most of our staff live here in Skid Row,” he said. “But we never know when our next dollar is coming.”
Others, like Union Rescue Mission, have long questioned not just how the money is distributed — but what it funds. The investigation, they say, came as no surprise.
“We’re not surprised,” said Kitty Davis-Walker, the organization’s spokesperson. “We’ve never taken that kind of funding. We’re privately funded because we don’t believe in models that let drugs and alcohol flow freely. That’s not recovery.”
She was referring to Housing First, a widely used public approach that emphasizes immediate shelter without requiring sobriety. Critics argue it limits how much structure or oversight individual providers can enforce.
Union Rescue Mission, which has operated in Los Angeles for more than a century, offers faith-based, recovery-centered programs for individuals and families. Davis-Walker said those models are often overlooked in policy circles.
“We’ve been ringing the alarm for years — about a broken approach, about accountability, about what actually works,” she said. “Now people are finally paying attention.”
At The Midnight Mission, just blocks away, the critique is more subdued — but no less urgent.
According to Charity Navigator, the Midnight Mission has earned the organization’s highest rating every year since 2015.
“People think of homelessness in numbers or headlines,” said Georgia Berkovich, the organization’s chief communications officer. “But it’s about dignity and connection. And in a world full of mistrust, that still matters.”
Stephen Oduntan is a freelance reporter for Wave Newspapers.
