Transcription
Over the last decade, billions of dollars have gone towards spending on homelessness, but the results haven't gotten better. A lot of Californians are wondering what's happening with the funding and this money. And recently, a number of nonprofit executives and nonprofits are getting caught embezzling some of this money. Today we sit down with Alex Vanova who is the former sheriff of Los Angeles County, Tita who's an assembly member and Jim Desmond who's a county supervisor in San Diego. We're going to assess what they are seeing with this funding and if there is enough accountability in the system to show where the dollars are and if this money is really reaching the homeless.
"The whole ecosystem of fraud in LA County was uncovered. In the healthcare industries, you have fake uh hospices, you have fake daycare centers."
"Obviously, the money being spent has not been well spent because we haven't made as much of a dent and we just keep putting more and more and more money into it."
"I'm Samak. Welcome to California Insider."
"Alex, it's great to have you on back. Welcome back."
"Uh, thanks. Good to see you, Sam. So, we want to talk to you about nonprofits and LA and homelessness. You know, this is a topic that we've been covering and potentially nonprofits benefiting from the funds that are going towards homelessness. Recently, there was a takedown of one of the CEOs of these nonprofits that he was personally taking the funds and using it for his own expenses. Can you tell us what's going on with this case and then we get into the big picture what's happening in LA?"
The guy was what he was doing was $23 million that went to his nonprofit. And he turned around and bought ramen noodles and a microwave. And that's what how he was going to do outreach to the homeless. And what he ended up doing was pocketing most of the money. Bought himself a mansion, $7 million mansion, a vacation home somewhere in Europe, and luxury goods and, you know, exotic cars. Basically lined his pockets. No shame whatsoever in his operation until he got caught. But the sad thing that he's just a tip, tiny tip of the massive iceberg that is out there and then money is still flowing to these nonprofits.
"You have experience with this. How much of it is out there and what kind of things you've seen that people should know about?"
Well, back in 2020, I had a public corruption unit when I was sheriff, and we ended up getting a complaint from the Met Metropolitan Transit Authority about a uh sweetheart deal between the board of supervisors and a nonprofit called Peace Over Violence, another nonprofit. And the CEO was making good money, you know, six figures from this nonprofit. So we took it in good faith, investigated, and what it was, that was the very first time that a little corner of the whole ecosystem of fraud in LA County was uncovered. We got a glimpse at it. This thing that we saw now with this man who was arrested recently, that's another one. There are so many cases like that where you have in the healthc care industries you have fake uh hospices, you have fake daycare centers. It's kind of embarrassing really this level of fraud, but people are starting to realize, hey, where did all the money go? Why is the problem worse? They want answers and now these people don't really have answers.
"So you think the money is not reaching them? Do you think people are getting jobs out of these nonprofits? Or do you think like people are getting into the business and this has become something for them?"
It's a business model. It's a meal ticket for people. There's one viral video. One lady, she was asked, "Hey, what do you do for a living?" Oh, I'm a uh case worker manager or something in this nonprofit and she makes $240,000 a year. You think about that in a nonprofit and she's as mid-level. Well, it's not even the CEO. We did a a study when I was uh back in '22 and I was campaigning for re-election. The top 10 CEOs of nonprofits in LA County on the homeless, their average salary was $800,000 a year.
"Wow."
If we did the top 25, made it bigger, the average salary was $625,000. So, this is big money for people. The product that comes out at the end that's supposed to help people is tiny. What goes into it is huge.
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"So why do you think this is not getting taken a look at? You know, why do you think people are not questioning it? Is it because people trust the nonprofits?"
People are naive to believe if it's a nonprofit, it must be good. You know, kind of like, oh, an oversight commission, oh, they must be good. They don't realize that any system that's run by man can be corrupted for any purpose. A real good analogy is uh criminals. We we don't have less criminals than before and crime is down. No, we have probably more criminals now. But they've realized I don't have to rob a bank. I just have to open a nonprofit. Instead of, you know, taking money at gunpoint, I can have the government just send me the money. Think about it. Less risk, you make more money. How many bank robberies would that guy have to have done to get $23 million? But no, you just opened a simple nonprofit or a three-piece suit, went to all the nice uh cocktail parties and connected with all the right people, made all the campaign contributions, got in and the vetting process for these nonprofits and accountability, transparency, all these things that government demands of other parts of government, all doesn't exist for the nonprofits. They fill out one simple tax form called the 990. You look at the 990, it tells you how much they pay their executive officers and there's not a whole lot of detail at all in it. That's it. That's the only documentation is that if you go try to well, let me see your books. Let me see where the money is being spent. Oh, you can't. You're not supposed to know that.
"So, in terms of the money that's going into the homeless space, so you were the sheriff of LA. Did you question? Did you think about where is this money going?"
Definitely. And our investigation on Peace Over Violence, that just scratched the surface of one nonprofit cuz remember these nonprofits, they're for homeless, they're for um uh re-entry for inmates being released from custody. They're in the health services. They're in so many different arenas. Uh aid to the people who are undocumented, for example. Oh, the board of supervisors, the city, they rushed to create this money. We're going to do this to all these people. What money is going to get to the actual people that they claim that they're going to benefit? Nothing. Remember the fire aid that concert for the fire for the victims of the Palisades in the Eden fire? They raised $100 million. The actual victims of the fire, they didn't see anything. It went to a bunch of nonprofits that are politically connected. One nonprofit received money to write a song. 100 million. And how many people were dam hurt, killed, hurt, lost everything? $100 million is 10,000 checks of $10,000. They could have written 10,000 checks and given it directly to each family who lost everything in the fire. That would have at least got them a few months of rent, maybe a property taxes, mortgage relief because they're paying mortgage and rent mortgage for a house that doesn't exist and insurance deductible to be able to rebuild. That could have gone a long way to help people directly. No, they had to feed the machine, feed the nonprofit ecosystem, and then whatever they decide to uh give as a byproduct at the very end is just a little trickle compared to all the money that went in at the front end.
"So, how much of this nonprofits, how much of it do you think is real? Because there's an element that are good people that are getting into this. they care about the homeless or they care about the cause and they're really doing it for the cause."
There are people that care about that doing it for the cause, but some of them they're misguided because what they're doing is perpetuating the problem, not solving it. Especially the funding mechanism is u is dictated by how many homeless are being served. The more homeless they serve, the bigger their budget is. That doesn't help because you're incentivizing attracting more homeless, not getting rid of homeless, getting into permanent housing because once someone is no longer homeless, they're no longer receiving funds.
"So, you want to grow as a nonprofit to the way for you to grow is to serve more homeless. The more homeless there is, the better for your business."
It's a perverse incentive that's built into the system that they're funded right now by the county, by the city, by the state. And it's kind of like any summer night, you turn on the rear porch light in the night and what happens? You get all the moths and all the insects come there. Soon as you turn it off, they all disappear. The homeless uh industrial complex is that person turning on the light. And uh the only way you got to stop the funding. There are some good nonprofits out there, but they're few and far in between. They're outnumbered by the outright criminal nonprofits that are just fake and the ones that are real may have been done with good intentions but obviously are not not getting the job done.
"You dealt with this homeless issue like you tried to clean up some areas."
"And what was it like for you when you got involved to to do it? Did you face challenges by these nonprofits?"
Oh my god. When we went to Venice, the place was just out of control. We cleaned it up. We got the people that needed help, the help they needed. We did assessments. We did outreach. We connected them with housing, with temporary housing. We found veterans. We got the Bell has a shelter for for veterans, homeless veterans. We have a a nonprofit called West Coast Care and they actually pay to repatriate people back to their state of origin. So they re-unitei reunite with their family cuz on the boardwalk there was 23 states represented.
"Wow."
And the politicians were saying, "Oh, there are unhoused neighbors." No, they're not. They never were. These people came here because they were going to get free stuff. That's why they were here. Free stuff, no hassles, and cheap drugs. And you had drug dealers on the boardwalk. You had all the homeless, the nonprofits there on the boardwalk handing out free clothes and free food. And it was just a feeding frenzy. But the local economy, the local businesses, the local residents, it was never part of the concerns of these people. It was beneath them.
"Do you think homelessness situation has gotten better in the last few years?"
No, it's not got better. It's actually gotten more intractable because the only difference now in the homeless count from the past is more people are dying. They're celebrating I think a 5% decrease or something.
"There was a 10% decrease. Yeah."
"And uh I don't know if they've released the results yet of the last point in time count, but if you track that with the increase in deaths of people picked up on the street dead from fentanyl overdose, they correspond almost one-on-one. So the reduction in the homeless because more people are dying on the street, not because they're taking shelter or something like that."
"So, Alex, for those people that are in the government that are working and people that are working inside these nonprofits, how would they tell that something is wrong with their leadership or something is wrong, something is fishy about this nonprofit?"
Well, they got to look at the documentation, what they propose to do, how they're doing it, how do they document what they're doing, and ultimately it's the outcome, not the output. Because like the LA Homeless Services Authority, I remember talking to the director back in 2019. I asked him, "Well, how do you know what you're doing is work?" "Oh, we house 21,000 people, you know, the year before, whatever number he gave me." Okay, but if you house 21,000 and they're replaced by 25,000, your problem got 4,000 worse. It didn't improve the situation cuz they never account for that. Acknowledge that that people will just come in and they're attracting people from all over the nation there and state, county, and city government.
"So, you think people are coming because to get the benefits,"
"You got great weather, got free food, cheap drugs, no threat of being arrested, you can do whatever you want, and the cops are not going to hassle you. What's not to like if you're someone that doesn't care about yourself and just wants to do drugs all day? It's a perfect storm."
"So the people that are in the county government in LA and the city government in LA, the leadership believes that this is still a poverty issue."
"Oh yeah. They'll say the high cost of housing and it's all about, you know, living wages all the but 70% of the homeless that we know of either mental illness, drug addiction or a combination of the two. Those are the drivers. Yet you don't see the push to create more mental health institutions that can actually house and treat the mentally ill. No, you always hear about they keep closing. There's less and less of them, not more. Same thing with substance abuse after Prop 47. You don't have halfway houses. You don't have treatment centers that take people off the streets or out of the jail and give them a place to stay and work on their addiction. No. All of that went by the wayside with Prop 47."
"What about Prop 36? Do you think that's going to change anything?"
"It'll change, but marginally."
"I think it's not a cure all. I think getting rid of Prop 47 would have been a more drastic fix."
"Has that changed now?"
"Some of it has changed. There's some signs that now they're starting to prosecute, you know, misdemeanors. They're overwhelmed though by the case load, the backlog all the way from the pandemic era. A lot of, you know, violent felonies that weren't prosecuted. I know they're trying to work hard to get through that backlog to get themselves up to date, but they just don't have the capacity still to handle the size of LA County."
"For people that are in the nonprofit space or they're working for the government and they're seeing questioning contracts or questioning behavior. What should they do? Who should they go to?"
Well, they need to do a hard look and some soul-searching. Are they scam artists or are they a legitimate nonprofit? If they believe they're a legitimate nonprofit. One, you might you might want you might want to start saving all your receipts because at some point you're going to have to explain how you spent, you know, $24 billion, for example. You got to show the receipts. Where did the money go? Was it effective? If it wasn't effective, why do you continue to do it? That means you're addicted to the cash flow coming from government contracts. You're not trying to solve any problem. So, these are hard questions people in the nonprofit world need to ask because now anytime I hear someone says, "Oh, I work for nonprofit." I'm automatically thinking. Potential suspect. What is he doing?
"Do you think more of these will get investigated in the future?"
Yes, I think more. You look at the fraud that was exposed in Minnesota, all the fake uh daycare centers, we had the same problem here in LA. Exact same problem. So there's a lot of money going into this system and they're tied to the government funds.
"Yes. And if you look at the county, the city's budget, the county budget, the state budget, that either doubled or tripled from 2011 to 2025, huge increase of the size of those budgets. But if you look at what they're actually doing, they're doing less of their primary reason to exist. Case in point, the sheriff's department is smaller, costs more, fire department is smaller, less hospital beds, less teachers, less everything, keeps shrinking, but yet the nonprofit world keeps getting bigger and bigger. So where did that doubling or tripling of these budgets go? It went mostly to the nonprofit world. There's so much redundancy and so much waste going on that you start picking apart why these budgets are getting bigger and bigger and you realize they're hollowing out the core functions of government and they're pushing all into the nonprofit world."
"What do you think is the solution to this? Should these nonprofits get cut from getting funding directly from the government? Should there be a change in the way these cities and counties deal with them with these problems?"
I think there needs to be a a come to Jesus moment with the state, the county, and the city to look at all the money that's going to nonprofits and determine are they going to legitimate nonprofits or they're just paper nonprofits, fake ones. That's something that needs to happen immediately. Uh my friend and I, we went on a uh a we went door knocking on some of these uh daycare centers that were listed in this community partners thing. We knocked on eight doors. Seven of the eight we determined were fake. They didn't exist. There was no children there. There was no daycare center operation.
"And they're getting money from the county."
"Yep. You need to get honest politicians in office. Problem is that all these nonprofits, all these boards of directors and CEOs and all that, they're very politically active and they shower money on the"
"They donate to the politicians."
"Oh my god. They donate at the state level. the county level, the city level. Definitely, they're they're very active politically."
"In the past, these nonprofits, the way a lot of the traditional nonprofits, they have to go make the money themselves. They have to either get get the donations from people or do some service that is generating money. Do you think it needs to go back to that? Do you think they need to cut off or or is there a role for the nonprofits to get contracts from the county and cities?"
I think they should stop getting them. They haven't shown the discipline to do the right thing with public money. You have the Midnight Mission in Skid Row. You have the Dream Center off the 101 freeway. Those are two nonprofits that do homeless outreach and they house people, feed people, they do treatment, uh all these recovery things that they're doing for and they take homeless vets, homeless female vets, entire families. I mean, these people go out of their way. Yet what they spend per person per year in a one bed that they house is like a fraction of what it costs the county to do the exact same thing. So there it just shows you that no it can be done when it's private dollars. There's demand for accountability and to be effective with that money but there's no such constraints when it comes to public money. They don't care.
Now we go to Tita who's an assembly member in the California state legislature to see what his perspective is. We want to talk to you about the situation that homelessness and you've been working on this. Can you tell us what's going on with homelessness in California? What do you see out there?
"Wow. It's not a surprise for all of us. The issue homelessness is one of the issue in the state of California. The state California they spend like a lot of money billion of dollars. But the issue of homelessness is still there. If you go around like capital right now, it no surprise that we have more homeless people around the capital in Sacramento than city of San Francisco."
"Wow. One of the issue for homelessness in California because the government they keep spending the money but they never audit. They never audit how the money is spent. So they keep spending the money but there no agency to audit how the money is spent. That's the issue. That's issue in California. So the last few year uh uh California we add up more homeless people. I think right now for the statewide the number like hit up to like 187,000 people homeless people. So the last few years, every year we add up, we add more more because we don't really have uh a really efficient solution."
"Do you think the money is not reaching to the homeless people or do you think that money is going to to"
"That is the issue that a lot of members includen myself we want to know how the money is spent, how the money was spent because there no audit and for the last few year we try to uh we we try to push a bill we try to introduce a bill to make sure that uh the government they have to be responsible how to spend the money for the issue of homelessness. Unfortunately, we didn't have enough vote or even after we passed the bill, the governor he to veto it and he did veto it. So, there no uh process to audit how the money was spent for issue of homelessness and that really sad. That really sad. But I think that we continue we continue to introduce more process because we want to audit we want to see that even if the state of California they provide the funding to audit agency like the county or the city but there must be a process to audit there must be like a proposal if the agency they want to receive the money directly. Directly from the state for handling issue of homelessness. The state need to need to require that agency to show how they spend their money. That is the issue right now because the last few year governor he spent 24 billions but right now if you walk around the state there are more homeless people than ever."
"Does the state have enough housing? You you mentioned that $24 billion have gone to to homelessness. You guys can't audit where it's gone. Is there enough housing for people that are homeless or not?"
"You know that some of the environmental group they put a they put a a lot of pressure on on the businesses on the developer."
"They don't want you to be more houses, right? because they think that okay if you build more houses that going to have a negative impact on the environment. We all love our environment. We want to uh protect environment but if you have a choice right you need to build more housing you need to like continue to support you know provide resources for the people who are homeless. you need to be more shelter. But at the same time, at the same time, you know, the other group, they didn't want to see that. They believe that, okay, there there's so many houses in California already. So they so they try to come up with more regulation, more regulation than ever. And if you have more rule, you have more regulation, it will slow down the process. to build more houses. So that is one of the issue and then the mental health issue too. So the issue for mental health is even more more complicated. In order to tackle that issue, you need an expert. the city, the local government, they need to they need to have a partnership with a nonprofit organization or with an expert to handle that issue because the issue is kind really really complicated. So I can see that uh issue homelessness is still one of the radical issue not in the state of California but for the whole nation and the cost of living is one of the reason the cost of living that really really folks are people they cannot afford to have a house."
"So today if people are losing their homes because of poverty do they have access to a place to go to in the system in California based on what you have seen or is there not enough space for them"
"I don't think there enough space I think we need more housing but at the same time how can we streamline the process everywhere in the state human really really compassionate we really want to help the homeless people but you want to but you want to provide uh the guideline opportunity for the people to get involved. The state need to have the guideline to show our support and at the same time uh at the same time create opportunity for agencies at the local level to have a good partnership."
"You and your colleagues in Sacramento, do you think that there is a better way to spend this money?"
"Yes. And and from my end, last year 2024, I introduced AB 1782. And what was my bill about? My bill 1782, we provide uh the flexibility for the city government to spend up to 500,000 uh to uh handle the issue of homelessness specifically to build more homeless shelter. Uh I think if you if you look at in the past in 2011 the state they terminated redevelopment agencies"
"At a time."
"Yes. 30 development agencies"
"And that that was a loss."
"They were building affordable kind of like good housing. Yeah."
"Correct. So that was a loss for hundred hundred of city in California because the city after their RDA redevelopment agency were terminated they didn't have enough resources and after that that agency turned to be a successor agency is smaller agency and it handles some issue about housing. So I introduced my bill got passed and signed by the governor last year AB1 1782 and my bill that provide the flexibility for the local successor agency to spend up to 500,000 before my bill. each success agency from each city they only allow to spend up to 250,000 for building up like a shelter or something. I try to help all my city in my assembly district and for the last few year I'm I've been really successful. I build a rec partnership and consensus among the city in my district. Yes. So that for my end, but I still believe there's a lot of work that we need to do because the issue of homelessness that require teamwork."
Now we go to Jim Desmond who's a county supervisor in San Diego. He's going to tell us his perspective as a county supervisor.
Across the state in California, we're facing homelessness is a big problem and we're concerned about there's serious concern about nonprofits benefiting from this homeless situation. At the same time, there are a lot of really good people that are involved with these nonprofits that are helping the homeless. What are your thoughts on this?
"Well, unfortunately, the state of California spent over $9 billion dollar on this homelessness issue. It's made a small dent, but not a big enough or significant dent for that amount of money. And so, unfortunately, what what the count the county of San Diego did and several other counties throughout the state has contracted with these non-government entities to help people to go reach out to people to go meet them in the streets and maybe provide shelters or care diff different levels. One thing is though, we we um and this is our fault. I think the government's fault is we have not been able to track those dollars. Normally you when you try to do something and you spend money then you look at the result and you say well is this working or is it not working? It's not working. It's not working yet. We have no resource to go and track those dollars and see how th those monies are spent. We have to and I actually put forward a an agenda item to track dollars uh at a last meeting to come back with and let us know where these dollars have gone, where where have they been. So I think we need we need a better system that that that requires more reporting that requires more information. But um you know that's just kind of a more of an internal thing that needs to be fixed. I I really think instead of just you know hoping and wishing and and asking people if they want help I I do think we should start involuntarily taking people and getting them in into the help they need. They can't a lot of them can't make their own decisions but good decisions on their own."
"Is it hard to track what's happening inside these nonprofits or is there too much trust?"
I think it's too hard to track the dollars and how the dollars are spent. A lot of these non-NOS's, non-government organizations. It's a group of volunteers in most in most part. It's a group of volunteers who, you know, want to do good things, but they're not always professional entities. You know, there's not a CFO. They don't have the tracking availability or auditing availability. They're well-meaning, I think. Uh but unfortunately it leaves opportunities for yeah some bad ones. So I think we really got to rein in those costs and make sure that we we we get accountability. But then the only thing is and it's going to cost more to to have that accountability built in in auditing and things like that. I think that we've done a pretty good job getting those who want help into help and treatment. It's just the ones that are still out there and and we need to be a little bit, you know, tough love. uh you know if it was a family member you know if it was my brother or nephew or something like that out in the streets and I know he's living in filth and everything else if the government would take them that person take my nephew in if that's the case and get him into treatment I I would be ecstatic and that that's where we need to move to.
"So you think there is a bigger problem with the way we handle homelessness than the actual money getting spent?"
Both both obviously the money being spent has not been well spent because we haven't made as much of a dent and we just keep putting more and more and more money into it and so uh I think we there's got to be more accountability and and we also have to fess up to the point that we got to get people into treatment and have the facilities to do that and that's something I'm working on and trying to do. I'm doing it the best I can up in my district in North County San Diego of building treatment and facilities. I don't I'm not a big fan of big shelters. I'm not a fan of of u of uh parking lots and things like that cuz you're just picking up the problem and moving it someplace else. We got to get people into the treatment they need.
"Jim Desmond, county supervisor from San Diego. It was great to have you on California."
"Thank you, CMA. Glad to be here."
"Let us know what you think about what's happening with the money in California that's going toward the homeless. Do you think there is mismanagement and fraud and a lot of it? You can always comment or email us at siamakcaloner.com. We read all of your comments and emails. I'm Sakurami. This is California Insider. We'll see you next time."