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Federal law enforcement arrested the former chief financial officer of affordable housing developer Shangri-La<\/a> Industries in connection with a federal criminal complaint charging him with mail fraud<\/a>, according to a release from the U.S. Attorney\u2019s Office.<\/p>\n \u201cAccountability for the misuse of billions of tax dollars intended to combat homeless[ness] starts today,\u201d Acting United States Attorney Bill Essayli said.\u00a0<\/p>\n Cody Holmes was the chief financial officer at Shangri-La Industries in 2022, when the California Department of Housing and Community Development paid approximately $25.9M in grants to Shangri-La for a Project Homekey property.\u00a0<\/p>\n Project Homekey provided\u00a0private developers access to state funds to create homeless housing. The funds given to Shangri-La were to build and operate homeless housing in Thousand Oaks.\u00a0<\/p>\n The U.S. Attorney alleged Holmes knowingly submitted fake bank records that falsified the amount of money Shangri-La had on hand, making the company appear more financially capable than it actually was.<\/p>\n Based on these false bank records, federal officials say, the state housing and community development department released funds to Shangri-La.<\/p>\n Some of the Homekey money disbursed\u00a0to Shangri-La was used to pay credit card bills for American Express accounts associated with Holmes, federal officials allege. The bills amounted to at least $2M.\u00a0<\/p>\n In January 2024, the state accused Shangri-La of fraud, demanded that it return more than $100M in Project Homekey funds and asked the court to place the firm\u2019s seven properties in receivership, the Los Angeles Times reported at the time<\/a>.\u00a0<\/p>\n Shangri-La sued Holmes in May 2024, alleging\u00a0he embezzled millions from the firm, The Real Deal reported<\/a>. \u00a0<\/p>\n In a separate case regarding supposed\u00a0fraud in California homeless housing, a developer named Steven Taylor was charged with seven counts of bank fraud, one count of aggravated identity theft and one count of money laundering.<\/p>\n The charges stem from a scheme Taylor allegedly executed that involved buying a Cheviot Hills apartment building for $11.2M and selling it to a homeless housing organization for $27.3M. The homeless housing organization was purchasing it with funds from the city of Los Angeles and the state of California.<\/p>\n