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Brian asked, “Is this common or an outlier?”
“Apparently, this is common in the homeless grant process, but it would be highly unusual in the private sector. Cities contract with nonprofits to provide services and yet don’t demand transparency or reports, such as who they helped or how many meals they prepared or individuals they housed. On the surface, this seems unethical but not illegal, as several people have said. Yet there are both federal and state laws that may have been violated regarding the fiduciary responsibility of state and local governments in approving the grants as written.”
“So while the grants themselves or the actions of the nonprofits may not be illegal,” Tony said, “the city’s lack of oversight could be a legal violation.”
“Yes.” Zack nodded. “And if it was willful or, as Mr. Lattimer suggested in his interview, individuals in government profited from the grants, then it’s certainly illegal. However, Mr. Dyson’s files are incomplete. Based on his reputation and the witness statements from Ms. Halliday and Mr. Lattimer, plus the reports from Detective Fox, he should have extensive information that was fed to him by those three individuals. I don’t have it.”
“You’re saying,” Matt began, “that the grand jury files we retrieved from his office are not sufficient to open a grand jury investigation, and that someone may have removed records.”
“Removed them, or perhaps he didn’t keep the records in his office. His notes refer to facts that I can’t verify from the files.”
Heller was very good at his job, but long-winded and talked around everything. It annoyed Matt, but it was hard to overlook the results, and if Heller said that files were missing, then files were missing.
“Briefly, from Dyson’s notes, even though you don’t have files to reference, did he believe he had cause for an investigation?”
“Yes,” Zack said, his voice both increasing in speed and intensity as he spoke. “Based on his written notes, I suspect he planned to use the grand jury process to force an audit. Considering that the city spends one billion dollars a year on these grants, plus receives extensive federal and state money that they also distribute, a grand jury investigation could spur more fiscal responsibility and make the distribution process more efficient. In an audit, every dollar would be accounted for, and the pass-through accounts would be heavily scrutinized. If half of what Dyson claims can be proven, I would think the investigation would force change in the system.”
“But you need those files,” Matt said.
“Yes.”
“What about the flash drive Detective Fox gave me? Or the files from Halliday?”
“The flash drive is documentation about Sunflower Homes, the CEO, the grants, the houses they own. There’s nothing criminal there. It’s one piece of the puzzle. The files from city hall are more of the same, but there’s a lot more and we’re still going through it. It’s clear from the note Ms. Halliday included that she has identified specific missing files that she believes are stored in an old backup at the city data center.”
Matt made note. “Is the information Fox provided useful or not?”
“It could be, once we can compare his evidence with the missing files. I don’t know what’s in those until I see them.”
Brian said, “One of the issues is that the homeless crisis is a political hot potato, and to launch this investigation five weeks before an election makes it problematic.”
“Sometimes, it’s just the way the case lines up,” Tony said. “We’re damned if we do, damned if we don’t. We don’t do anything, and one side says we held back until after the election to favor one political party. We do something, and the other side says we did it to favor the other political party. It doesn’t help when some of our own people have been caught making ill-advised and inflammatory political statements. Believe me, it’s one of the biggest headaches of my career, and it’s only gotten worse.”
“For what it’s worth,” Matt said, “I don’t think that Dyson had politics in mind when he started this. The timeline is clear—he assisted LAPD in the research and the undercover operation stemming from the arrest of Chen back in February and the revelation that Chen received government funding to house the women he trafficked. It’s a legitimate case. That it took seven, nearly eight months to build the case is par for the course, that he was ready to bring it to the grand jury in October before an election is just the way the timing worked. Besides, the grand jury could have taken months before issuing any report.”
“Okay, we’re going to assume his motives were noble and apolitical,” Tony said, “as he wasn’t running for office and has no family running for office. Zack, what is the government’s interest in federal money being used in these pass-through accounts?”
“We have an interest, but the way the grant process works we have given the money to the city to use as they see fit. This limits us. However, we can demand an accounting of all monies spent. Then the government can decide whether to give more or less to the city. Fraud is going to be hard to prove, but these missing files may speak to that. Ryder also has information.”
Ryder was much calmer than Zack. Matt wished he could clone his analyst. The MRT wouldn’t exist without him.
“Agent Wagner and I have been working together since yesterday afternoon,” Ryder said. “We’ve reviewed all nonprofit tax filings for entities listed by Detective Fox and Mr. Lattimer. There are several nonprofits that have received substantial sums of money and do not appear to do anything other than pass through the money to other nonprofits.”
“But that’s not illegal,” Zack quickly said.
“Not on the surface,” Ryder said. “But let me finish. The principles receive hefty salaries, and one thing caught my eye. Some of these people are the same. Muriel Coplin is the CEO of Angel Homes. Angel Homes is the nonprofit that’s building a city-approved 170-unit project in Venice Beach. She has allocated grants to other nonprofits for different aspects of the project, such as construction, supplies, environmental reports and more.”
“Which is pretty standard,” Brian said. “One organization doesn’t have the skill or expertise to handle all aspects of a multimillion-dollar project.”
“True,” Ryder said, “but it depends who is getting these contracts and if there is a bidding process. But I’m jumping ahead. The CEO for Sunflower Group Homes is Ben Kaprielian. Sunflower has received tens of millions of dollars over several years. It funds group homes for transitional housing, and has received funding from Angel Homes as well as directly from the city. Kaprielian is Coplin’s brother. Agent Wagner?”
Ryder nodded and Sloane spoke. “I worked primarily in public databases to confirm identities and run backgrounds on all the key names in the grants process. Lydia Zarian is a member of the board of supervisors. She is also a sister to Kaprielian and Coplin. She has decision-making authority over many of the projects that benefit these nonprofits. Kaprielian and Coplin, along with several other people I’ve identified, run other nonprofits. They profit through contracts in building, housing, food, supplies, et cetera. Ryder and I are putting together a matrix of how this works, but it’s going to take more time. Halliday and Lattimer have extensive documentation we’re still culling.”
“If you need more people, you have them,” Brian said.
“Thank you,” Sloane said. “The other thing we uncovered is that the individual responsible for approving all homeless-related grants is Jonathan Avila. He was appointed after the election of the mayor four years ago, and answers directly to Theodore Duncan. Avila is married to Duncan’s sister, Annabelle. Avila is also the son of Rebecca Chavez, as I informed you yesterday.”
Hearing Sloane lay out the bread crumbs so clearly put everything in perspective, Matt thought. Clear, concise, to the point. He could visualize now how the entire operation worked—who approved the funding, who benefited and why.
