Prosecutor calls Newsom ‘king of fraud’ for oversight failures

By Dave Mason
The Center Square

Editor’s note: This story was updated since its initial publication with information from the White House.

U.S. First Assistant Attorney Bill Essayli Thursday called California Gov. Gavin Newsom “the king of fraud,” accusing him of a lack of oversight on spending to address homelessness.

Essayli made the comments on the “Fox and Friends” telecast, during which he discussed the federal fraud charges that were filed in October against real estate executives Steven Taylor and Cody Holmes for allegedly misusing grant money meant for homeless housing.

Holmes, 31, of Beverly Hills was charged with mail fraud charge that was allegedly linked to millions of dollars in grant money that the state paid Shangri-La Industries to purchase, build and operate homeless housing in Thousand Oaks, just north of Los Angeles. Holmes was Shangri-La’s chief financial officer.

Taylor, 44, of Brentwood, was charged with seven counts of bank fraud, one count of aggravated identity theft and one count of money laundering.

Essayli Thursday said the charges are the “tip of the iceberg” in an investigation he launched with a task force in April. He said more charges would be coming, probably later this month.

The state spent $24 billion in the last five years to address homelessness and can’t account for where the money went, Essayli said on “Fox and Friends.”

President Donald Trump on Tuesday on X said, “California, under Governor Gavin Newscum, is more corrupt than Minnesota, if that’s possible??? The Fraud investigation of California has begun.”

Newsom’s press office fired back on X. It called Trump a liar and noted Newsom has “BLOCKED $125 billion in fraud, arrested criminal parasites leaching off of taxpayers, and protected taxpayers from the exact kind of scam artists Trump celebrates, excuses, and pardons.”

The Center Square reached out Thursday afternoon to the governor’s office, but did not get a response.

When The Center Square asked the White House Thursday about Newsom, the press office pointed to Press Secretary Karoline Leavitt’s comments during a press briefing on Wednesday. Leavitt told reporters that Trump has directed all agencies to look at federal spending programs “in not just Minnesota, but also in the state of California, to identify fraud and to prosecute to the fullest extent of the law, all those who have committed it.”

The Center Square also reached out to the U.S. Department of Justice, but spokesperson Ciaran McEvoy said the DOJ had no additional comment.

But two Republican legislators in Sacramento Thursday shared their views about Newsom with The Center Square.

“When you talk about the amounts of billions of dollars the governor’s spent in homelessness, he could almost buy a home for every homeless person,” state Sen. Tony Strickland, R-Huntington Beach, told The Center Square at the Capitol after Newsom’s final State of the State address.

“There’s no question there is waste in there, and certainly, we need to look to see if there’s fraud and abuse,” Strickland said. “So I welcome the investigation, because we need to maximize every dollar that comes into the state coffers.”

Strickland stressed he wants to learn the truth.

“Those who abused the power and those who wasted dollars and abused tax dollars should be prosecuted,” he said. “Then we should root out waste, because every dollar that is wasted is a dollar that we take from a hard-working citizen who is just trying to make it.

“In California right now, we have an affordability crisis and these are precious dollars, and by Gov. Newsom’s own admission, revenues are up, so California doesn’t have a revenue problem,” Strickland said. “It has a wasteful spending problem.”

Izzy Swindler, a spokesperson for Assemblymember Tom Lackey, said the Palmdale Republican has always supported oversight on spending.

“It is his belief that we should be accountable to our dollars and be able to track the results that come from the taxpayer funded programs,” Swindler said, answering The Center Square’s questions by email. “Accountability should always be at the forefront of discussions. Especially when we are referring to homelessness programs that have been allocated billions of dollars over the past few years.”

Madeline Shannon, a staff writer with The Center Square, contributed to this report.