California Gov. Gavin Newsom is trying to dodge questions about his connections to Cody Holmes, the 31-year-old former CFO of a Los Angeles-based developer called Shangri-La Industries that was supposed to be providing housing for homeless people in Southern California. Holmes was arrested and charged with mail fraud in October by First Assistant US Attorney Bill Essayli for the Central District of California, with mail fraud. Susan Crabtree, host of the On Background podcast and a California-based reporter for RealClearPolitics, has learned that Holmes and other figures connected to the alleged fraud scam gave money to Newsom’s political campaign and the governor has dodged answering her questions about whether Newsom would be returning the money. On this episode of On Background, Crabtree and co-host Eric Eggers discuss that story and the news that Los Angeles Mayor Karen Bass watered down the internal report on how the city handled the catastrophic Palisades fire 13 months ago. Writing for RealClearPolitics, Crabtree explained, Holmes, who pleaded not guilty, is accused of embezzling more than $ 2 million in taxpayer funds slated for homeless housing construction to host extravagant parties; a $ 46,000-per-month Beverly Hills mansion; private jet travel; leases of exotic cars; high-end handbags totaling $ 128,000; a $ 35,000 diamond watch; and 20 VIP passes for the 2023 Coachella Music and Arts Festival. The scandal underscores a wave of social welfare spending fraud that is coming to light in the state. It’s really become Gavin Newsom’s Homeless Hell, Crabtree says, explaining that might be why his office did not respond to questions she posed while writing the article. I was pretty upset that Gavin Newsom was too busy with his fawning interviews in Vogue this week to deal with my questions about, ‘What are you doing with this money from this fraudster homeless firm?’, Crabtree tells Eggers. She’s working to pin down the amount of donations the firm may have made to Newsom and to the ballot initiative he sponsored last year to allow the state to redraw congressional districts before the US Census. I looked at the latest ballot initiative and there was a mysterious $ 30,000 donation from Shangri-La Investments, but there were also donations from PG&E, after Newsom swore off donations from PG&E, Crabtree says. I’m trying to prove that’s the same firm as Shangri-La Industries. So, I asked them whether this is the same firm… Crickets. In her story she writes, Meanwhile, Shangri-La Industries executives showered Newsom and Los Angeles County Democrats with political donations as they were applying for some $ 100 million in state contracts that the CFO later allegedly looted to fund his and his ex-girlfriend’s lavish lifestyle. Even after federal prosecutors exposed the massive fraud, Newsom and LA Democrats haven’t severed ties with the embattled developer and have kept political donations from the firm’s executives. Newsom has also allowed the construction firm to continue to tout his endorsement on its social media. Crabtree and Jedd McFatter, of the Government Accountability Institute, wrote a book on fraud in California last year called Fool’s Gold, that addressed multiple instances of financial shenanigans by the state’s political leaders. In other Golden State news, Crabtree says, Richard Nixon had Watergate, and now Los Angeles Mayor Karen Bass has “Watered-down Gate. The LA Times quoted two informed sources this week as saying that Bass told the city’s then-interim Fire Chief Ronnie Villanueva that his report could expose the city to legal liabilities for its failures leading up to the Palisades Fire that ravaged Malibu and Pacific Palisades, destroying thousands of homes. Bass wanted key findings about the fire department’s actions removed or softened before the report was made public, which it did. The Trump administration has seized on the state’s and city’s slow responses to the devastation, and to recent news of welfare spending fraud led it to name Vice President JD Vance to lead an effort to tally up all of the fraud going on with federal assistance money that is going to the state. The citizen journalist whose YouTube videos on fraudulent daycare centers and fraud in feeding programs in Minnesota made him a viral sensation is apparently also on the case. Nick Shirley is now in California, Crabtree notes.
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