Judge blasts LA homeless spending as a ‘train wreck’ and threatens to seize control

A frustrated federal judge on Thursday lambasted L.A. city officials for failing to properly track billions in spending on homelessness, and called for a forensic audit to look into potential fraud and waste. He also threatened to appoint a court-ordered receiver to take control of the spending.

At a hearing in downtown L.A., U.S. District Court Judge David O. Carter convened a who’s who of top officials, including Mayor Karen Bass, City Council President Marqueece Harris-Dawson, L.A. County Board of Supervisors Chair Kathryn Barger and City Controller Kenneth Mejia.

The judge focused heavily on a recent audit he oversaw, which found major failures in tracking more than $2 billion of city homelessness spending and holding contractors accountable. It comes after multiple audits over many years with similar findings, according to records Carter showed in court.

“This is a slow train wreck,” Carter told top city and county elected officials.

Criticism of LAHSA

The Los Angeles Homeless Services Agency was at the top of Carter’s list of concerns.

He pointed to years of audits going back to 2007, 2019, 2021 and this year of the agency the city has been sending much of its homeless services dollars to — LAHSA. Those reviews all found the agency failed to properly keep track of the money and ensure it was being properly spent, he said.

“Nobody is asking our providers what they did or what services they performed,” the judge said, pointing to findings of the audit report released this month.

That audit looked at about $2.4 billion spent by the city over a four-year period ending last summer, which includes the first year-and-a-half of Bass’ administration. It found LAHSA has made it impossible to accurately track homelessness spending, in large part by failing to collect accurate data on its vendors and hold them accountable.

Criticism of Bass

Bass was also criticized over her refusal to allow Mejia, the city controller, to audit the mayor’s Inside Safe initiative.

“Folks, you've got to solve this, or else the court is going to step in,” Carter told Bass and other officials.

The city attorney’s position is that the city charter “prohibits the controller from auditing Inside Safe without the mayor’s consent.”

That position has been disputed by the controller and the chair of the committee that wrote the charter language.

The language in the city charter is that the controller’s powers include conducting “performance audits of all departments” and “performance audits of city programs.”

Bass told Carter she does not consent to the controller’s office auditing programs under her office because it wouldn’t be consistent with the charter, and she believes it’s not right for one elected official to audit another.

Bass added that there’s much more for the city to do on homelessness. “But it needs to be focused on the people and what their needs are, and not on the administration,” she said.

Carter wasn’t satisfied: “We pay your bills. Figure this out.”

If the mayor doesn’t come to a voluntary agreement allowing auditing of programs under her control, including Inside Safe, Carter said he would consider a request for him to appoint a receiver to commandeer control of city homelessness spending.

Next steps

Carter is giving officials until May to make a series of decisions — including whether Bass will allow outside audits of Inside Safe — before he decides whether to appoint a receiver to take control of city spending on homelessness.

He acknowledged efforts by the mayor and other elected officials, who he said had inherited a “mess” from decades of failures to ensure accountability. But the responsibility to fix it has fallen on them, he said.

“I am your worst nightmare,” the judge told officials. “I can make your lives miserable.”

The background

The explosive hearing comes as the city and county officials consider whether to end their funding of LAHSA. County supervisors are scheduled to vote Tuesday on doing so. And the L.A. City Council recently voted to explore the idea, which Bass has said she opposes.

LAist has also reported on an ethics breach at the agency involving LAHSA’s top executive, Va Lecia Adams Kellum, signing a $2.1 million contract with her husband’s employer — despite previously saying she had followed conflict-of-interest rules banning her from such involvement.

Her husband is the director of compliance at the vendor.

LAHSA ultimately paid about $1.7 million under that one-year contract, without any reports on the vendor’s performance or contract compliance.