Two men, one the former chief financial officer at a downtown Los Angeles-based developer of affordable housing, were charged in separate cases Thursday, Oct. 16, with illegally obtaining funds meant to help provide housing for the homeless, authorities said.
“In both of these cases, defendants took advantage of funds allocated to assist the homeless, some of the most vulnerable people in society and many of whom may be suffering from myriad conditions, including addiction,” said Akil Davis, assistant director of the FBI’s Los Angeles field office.
Cody Holmes of Beverly Hills, at the time CFO of Shangri-La Industries LLC, is accused of receiving $25.9 million in grant money from the California Department of Housing and Community Development for Project Homekey, after submitting fake bank records to HCD that purportedly showed approximately $160 million, indicating Shangri-La had the capacity to fulfill the homeless housing projects, including one in Thousand Oaks, said Bill Essayli, acting U.S. Attorney.
Holmes, 31, and Shangri-La allegedly also submitted balance sheets to HCD falsely representing that Shangri-La-affiliated entities held millions of dollars in cash that they did not actually have on deposit, federal authorities said.
The former CFO was accused of transferring $2.2 million of the grant money to his own accounts to pay off his American Express account in November and December 2022. From November 2022 to May 2023, more than $2 million was paid toward American Express cards and what Essayli said was Holmes’ “lavish lifestyle,” federal authorities said.
“Essentially, he stole the money,” Essayli said.
According to an indictment, Steven Taylor of Brentwood used fake bank statements and cash representations to obtain loans and lines of credit to operate his real estate business.
Taylor, 44, also allegedly lied to a lender funding his purchase of a Cheviot Hills property, falsely telling the lender he planned to renovate and use the property himself. Taylor acquired the property for $11.2 million, but prosecutors said he had already agreed to sell it to a homeless housing developer, which was purchasing it with public funds from the city of Los Angeles and the state for $27.3 million, in a double-escrow transaction hidden from the lender and others.
In other alleged fraudulent transactions, Taylor acquired or refinanced properties in Silver Lake, Los Feliz, Westlake, Del Rey and Pico-Union, authorities said.
Taylor was also accused of obtaining and keeping open lines of credit using fake bank statements and false representations regarding cash deposits, including a $3 million line of credit from one lender and another $1 million line of credit from another.
Taylor would then use those lines of credit to make downpayments on the real estate that he also obtained with fraudulent loans, authorities said.
Essayli, the U.S. Attorney, said the two cases were “just the beginning” in the federal government’s investigation into missing homelessness funds.
“We will go wherever the evidence takes us,” Essayli said.
Holmes was taken into custody Thursday, and search warrants were served in Beverly Hills and Century City related to the investigation, Davis said.
Taylor was indicted a month ago on separate charges involving similar conduct for submitting forged or fraudulent documents to lenders, Essayli said, with the grand jury indictment Wednesday adding to those charges. Essayli did not elaborate on the previous charges.
Taylor is out of custody after posting $3.6 million bond, authorities said.
Holmes faces a statutory maximum sentence of 20 years in federal prison if convicted of mail fraud, while Taylor could face a statutory maximum sentence of 30 years in federal prison, if convicted, for each of seven counts of bank fraud, 10 years if convicted of one count each of money laundering and 2 years if convicted of one count of aggravated identity theft, federal authorities said.
Embattled LA developer accuses its financial chief of looting millions intended for homeless housing