In an upscale enclave in the San Fernando Valley, there's a new neighbor on the block. He drives a big Mercedes, sometimes a fancy SUV and residents say he's been living in a three-story mansion, which was empty and going into foreclosure.

His name is Dawud Walli, and neighbors say he moved into a huge empty home last July, furnishing nearly every room of the house.

"We feel unsafe. We can't sleep. We have families," say some of the residents who live nearby.

They say Walli made this a party house.

Inside, we found booze and condoms scattered about. But no one really knew what went on here, because some of the windows were covered with tape and garbage bags.

"They don't want to make contact with the neighbors. They do not want to make eye contact with you. They do not talk to you," says someone who lives nearby.

Prosecutors say this is happening across Southern California.

They've caught squatters illegally living in homes in Bel-Air, Marina Del Rey and Winnetka.

"It's a huge problem and growing every day," says Los Angeles City Attorney Maureen Rodriguez.

"It's just amazing how nervy they can be: presenting false leases," says Rodriguez.

Police believe that's what Walli did. When neighbors asked police to evict him, he showed the cops a lease, which says he was renting from the owner, supposedly named Mike Fassi.

We tried to question Walli about that lease. When we asked him if he had a lease to be in the house he said, "That's none of your business."

Our investigation found Walli's lease appears to be a fake. Title records show the real owner of this home was Thomas Felix, who moved to Northern California as his home went into foreclosure.

Felix says he doesn't know Walli, and that he has, "not leased this property at all."

Authorities admit squatters usually get away with it, partly because they know how to work the system.

But the residents in this community are now fed up with squatters. They tell us that this has happened five times in their neighborhood in the last year.

"A house becomes vacant and the next thing you know, there's a moving truck and people start moving in," said one resident.

They were determined to get Walli out, after seeing him come and go for months They got the owner of the empty house to change the locks, and chain the front door and they got the cops to post "no trespassing" signs.

One afternoon, we spotted Walli moving out of the house, a residence police say he had no right to be in, in the first place. When we asked him to explain why he was in this house illegally? He said, "I don't have to."

Police had opened an investigation into Walli, but now tell us that because he agreed to move out, they did not charge him with a crime.

Authorities tell us that most high-end squatters never get charged.

Do you have more information about this story? Do you have another story for us to investigate? E-mail: Joel.Grover@nbcuni.com.