Federal law enforcement authorities on Oct. 16 announced the arrest of the former chief financial officer at a downtown Los Angeles-based developer of affordable housing.
“Accountability for the misuse of billions of tax dollars intended to combat homeless[ness] starts today,” Acting United States Attorney Bill Essayli said.
Cody Holmes, 31, of Beverly Hills, was arrested on Oct. 16 on a federal criminal complaint charging him with mail fraud, a felony offense that carries a statutory maximum sentence of 20 years in federal prison.
According to an affidavit filed with the complaint, in October 2022, the California Department of Housing and Community Development paid approximately $25.9 million in grant money – for a state homelessness project called “Homekey” – to Shangri-La Industries LLC, a downtown Los Angeles-based developer of affordable housing. The grant funds were sent with the provision that the money be used to purchase, construct and operate homeless housing in Thousand Oaks.
The payments followed many millions of dollars HCD had already paid to Shangri-La to buy, build and operate housing for the homeles. Holmes – as Shangri-La’s CFO – knowingly submitted fake bank records to HCD that purportedly showed approximately $160 million supposedly controlled by Shangri-La and its affiliates to prove that Shangri-La had the capacity to fulfill the homeless housing projects. In fact, the bank accounts Shangri-La and Holmes said contained the funds did not exist, prosecutors said.
Holmes and Shangri-La also submitted to HCD balance sheets falsely representing that Shangri-La-affiliated entities held millions of dollars in cash that the entities did not actually have. Holmes and Shangri-La submitted the fake bank statements and false balance sheets with the intent that HCD should rely on them and release grant money to Shangri-La.
After the documents were submitted, HCD paid millions of dollars more in grant money to Shangri-La.
Some of the Homekey money paid to Shangri-La for homeless housing was used to pay credit card bills for American Express accounts associated with Holmes. In November and December 2022, more than $2.2 million was transferred from a Shangri-La account to a Holmes-controlled account.