Concerns about the management of public funds in California are intensifying as independent investigator Nick Shirley and his colleague, David, focus on rampant fraud in state programs, particularly homelessness and infrastructure. Their exploration into what Shirley describes as “tens of billions” in mismanaged resources has energized discussions about fiscal accountability.
Shirley gained national recognition in late 2025 for exposing a substantial fraud scheme related to daycare facilities in Minnesota. Now, he is turning California into his next battleground. In a widely circulated video, Shirley declared, “There is MASSIVE fraud in California. The homelessness increases as they receive more money!” He emphasized his point by highlighting issues with light rail funding, adding, “The fraud is CRAZY in California. And they have the highest taxes!” Such assertions are resonating throughout the state, prompting calls for a thorough audit of public spending.
The urgency for financial scrutiny is underscored by California’s notorious tax burden, which, according to the Tax Foundation, includes the steepest marginal income tax rate in the nation at 13.3%. Yet, despite this high taxation, key public issues remain unaddressed. Over the past five years, more than $20 billion has been allocated to combat homelessness, yet the homeless population continues to grow by over 6% annually, according to state data.
Rising Spending, Worsening Results
A troubling 2023 report from the California State Auditor confirmed flaws in how the state monitors its homelessness funds, concluding, “The state lacks both reliable homelessness data and key accountability metrics.” Alarmingly, it noted that of the planned 22,500 housing units under the Project Homekey initiative, only about 543—less than 3%—had been completed by mid-2023. The project has suffered from significant delays, escalating costs, and a lack of effective oversight.
Shirley is now questioning whether fraud rather than mere mismanagement might explain these disappointments. He is recognized for his practical, on-the-ground investigative style. His previous work in Minnesota featured revealing visual evidence of fraudulent daycare operations, with numerous facilities claiming taxpayer money while showing zero children present. “I received real physical threats,” Shirley remarked in an interview about the backlash he faced for exposing that scheme. “They tried to shut me up just for stating the facts.”
Shirley’s investigation appears broader than previous efforts and is not limited to homelessness issues. He has spotlighted massive rail and infrastructure projects, with the California High-Speed Rail emerging as a notorious example. Originally projected to cost $33 billion, current estimates for the project exceed $128 billion. More than 15 years after its inception, not a single mile of rail service is operational for passengers.
Audit Demands Are Growing
Shirley’s inquiry has intensified bipartisan calls for accountability regarding California’s financial practices. Many lawmakers have expressed frustration with the lack of follow-through on previous audit requests concerning major spending areas such as homelessness and transportation, which have been met with resistance.
Assemblyman Vince Fong (R-Bakersfield) articulated a common sentiment in 2022: “We are spending more than ever before, and the problems are only getting worse. Taxpayers deserve to know where every dollar is going.” With Shirley’s involvement, there is renewed hope that the veil of secrecy may finally be lifted, as his trademark grassroots approach of gathering firsthand footage could amplify calls for transparency.
Some officials worry that outside scrutiny may expose extensive issues. A source with insider knowledge of Los Angeles County governance, who requested anonymity, commented, “There’s always a worry with outside eyes coming in. Not because they’re wrong, but because they might show how deep the rot goes.” Recent events, such as the arrest of former LA City Councilman José Huizar for federal corruption, highlight the potential for financial misconduct at all levels of local governance.
Timing and Context
Shirley’s investigation comes at a critical moment, as California faces a projected $73 billion budget shortfall—a situation likely to bring heightened scrutiny over past spending practices. In response to this financial crisis, lawmakers are considering budget cuts, tax hikes, or a combination of both. Each option is poised to prompt critical discussions about how effectively state funds have been used.
With urban areas such as San Francisco facing acute homelessness challenges, the situation appears dire. In December 2025, San Francisco Mayor London Breed declared a “state of emergency” in the Tenderloin district for the third time in two years, citing escalating drug use and increased homelessness. Despite more than $1 billion earmarked for homeless services in fiscal 2024-2025, the gap between spending and results raises valid questions. “How can things be this bad after spending so much?” a protester queried at a rally in January outside San Francisco City Hall. Shirley’s investigation seems to target that very question.
Looking Ahead
While California’s Democratic leadership has yet to respond to Shirley’s claims or the forthcoming investigation, the demand for transparency is mounting. Calls for an audit of California’s financial practices are gaining traction among fiscal watchdogs, policy analysts, and grassroots activists who are pushing for a thorough review of how public funds are allocated.
Shirley has indicated that he plans to release video evidence, data, and interviews with whistleblowers intermittently in the upcoming weeks. If his new investigation mirrors the intense scrutiny of his past work, it could lead to a significant political reckoning not only within California but across the nation as issues of fiscal responsibility come to the forefront ahead of the 2026 elections.
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