A Ferrari, a $111K Birkin bag: CFO stole millions, developer of T.O. homeless project says
When developer Shangri-La Industries stopped paying its bills and stopped its state-funded work turning motels in Thousand Oaks and other cities into housing for the homeless, one of the big unanswered questions was: What happened to the money?
Shangri-La has now provided its answer: The company’s recently fired chief financial officer took it and spent much of it on Beverly Hills real estate, expensive cars, private jet travel, VIP passes to Coachella and more than a quarter of a million dollars in jewelry and handbags for his girlfriend.
Last month, Shangri-La, its CEO and companies affiliated with it filed a lawsuit in Los Angeles County Superior Court against Cody Holmes, who was the companies’ CFO until he was fired in January. The lawsuit accuses Holmes of misappropriating millions of dollars from Shangri-La and the other businesses, including some of the $117 million in state funds the company was awarded under Project Homekey, a state program to fund the conversion of hotels into low-cost housing and service centers for the homeless.
One of Shangri-La’s seven Homekey properties in California is the former Quality Inn & Suites in Thousand Oaks. Shangri-La was awarded a $26.7 million Homekey grant in 2022 to buy the motel and convert its rooms into 77 studio apartments for homeless people with counseling and other services on site.
Work began last summer and stopped a few months later. Shangri-La is in default on two loans on the property and has been sued by contractors who say they’re owed millions of dollars for work the developer never paid for.
The lawsuit filed by Shangri-La against Holmes claims the former CFO transferred to himself “vast sums” of company cash and property, including half ownership of Shangri-La Industries itself, and took out loans on Shangri-La’s behalf, all without the knowledge of CEO Andy Meyers.
The suit also says he hid the company’s financial condition from Meyers, forged Meyers’ signature on loan documents and leases, and engaged in other types of fraud and embezzlement, “in order to maintain an extravagant lifestyle in Beverly Hills.”
Holmes’ “mismanagement, lies and outright theft,” the lawsuit alleges, caused Shangri-La to “plunge into financial chaos” and to suffer “tremendous reputational damage.” The company claims the actions of its CFO were the reason it defaulted on its loans on the property in Thousand Oaks and other Homekey properties, and the reason it violated its contracts with the state on those properties.
Shangri-La is seeking at least $40 million in damages and the return of assets it says it rightfully owns. It is also asking the court to seize eight bank accounts connected to Holmes and one held by Madeline Witt, who is now Holmes’ ex-girlfriend. Witt is also named as a defendant in the lawsuit.
Holmes declined to comment for this article. Witt could not be reached for comment. Through an attorney, Shangri-La executives also declined to comment.
Contractor: 'They're just trying to place blame'
The lawsuit is one of many related to Shangri-La Industries and its stalled Homekey projects. The California Department of Housing and Community Development sued Shangri-La and its partners in January, seeking the return of Shangri-La’s state grant money and court orders to stop foreclosure proceedings on its Homekey properties and guarantee that they be used for affordable housing.
The suit by Shangri-La lists 14 other lawsuits that it attributes to misconduct by Holmes, most of them filed by lenders, contractors and other businesses that are owed money by Shangri-La. That list is incomplete, as it does not include at least four lawsuits filed by contractors and subcontractors on the Thousand Oaks property.
The general contractor on the Quality Inn & Suites conversion is F. Roberts Construction. It sued Shangri-La in December, seeking $2.9 million for unpaid work. Since then, three of its subcontractors on the project have sued F. Roberts for lack of pay.
Morgan Delijani, the chief compliance officer for F. Roberts, said she’s skeptical of the idea that Shangri-La's problems are Holmes' fault.
“Our impression is that they’re just trying to place blame,” she said. “They did everything together, and we think they knew exactly what was going on. … They’re just trying to redirect attention from themselves.”
Officials with the state Department of Housing and Community Development declined to comment on the accusations against Holmes.
“We will, however, continue our work to ensure accountability and that the public funds are used to meet our housing affordability goals,” department spokesperson Pablo Espinoza said in a statement emailed to The Star.
Ingrid Hardy, Thousand Oaks' assistant city manager, said in an email, "if the allegations are true, we hope that Mr. Holmes is prosecuted to the fullest extent of the law."
Tod Lipka is the CEO of Step Up, a nonprofit that partnered with Shangri-La on the Homekey grants and was supposed to operate the supportive housing facilities in Thousand Oaks and other cities. He said that whether Holmes is primarily to blame “is Shangri-La’s business.”
“The only thing I’ll say is that we were very devastated by Shangri-La’s failure to come through on the project for whatever the reasons,” Lipka said.
Holmes oversaw Shangri-La’s loans and its grants from state and federal agencies, including the Project Homekey funding, the lawsuit states. According to the terms of the state grants, Shangri-La was not supposed to take out loans on the Homekey properties. The grants were supposed to provide enough money to buy and renovate the motels and to pay for the first few years of operating them as housing and services for homeless individuals.
In Thousand Oaks, Shangri-La was expected to spend $2.7 million of its own money, with the rest coming from government agencies.
But Shangri-La borrowed tens of millions of dollars against its Homekey properties, and is now in various stages of default and foreclosure on those loans. The state's housing agency is trying to stop foreclosure auctions and obtain court orders that ensure the properties are only used for affordable housing.
According to Shangri-La’s lawsuit, Holmes didn’t tell Meyers and other executives when Shangri-La stopped making payments on the loans. In one case, the company claims Holmes forged Meyers' signature on documents to refinance a $9.7 million loan on a Homekey property in Salinas.
Even in January, after Shangri-La's troubles were widely reported and its Homekey properties were in default or foreclosure, Holmes was allegedly trying to cover up the company's financial condition.
According to the Shangri-La lawsuit, on Jan. 2 Holmes gave the California Department of Social Services a forged letter that was supposedly from an employee of a lender that still regarded Shangri-La "in good standing." But the "lender" was actually a company Holmes created, and the name on the letter was that of an employee of a different bank, whose signature Holmes copied, the lawsuit alleges.
A Ferrari, a Bentley and a $111,000 Birkin bag
Holmes joined Shangri-La Industries as an intern in 2014, when he was still an undergraduate at the University of Southern California, according to the company’s lawsuit. He stayed with the company while he finished college and obtained a master’s degree in finance, and by 2019 he was Shangri-La’s director of finance.
That year, the company’s CFO left, and Meyers promoted Holmes to the position. As CFO, he was in charge of the company’s accounting and financial operations and had access to all of its bank accounts.
Meyers trusted Holmes, Shangri-La’s lawsuit alleges, and Holmes “exploited that trust … in order to enrich himself and his then-girlfriend.”
Shangri-La’s lawsuit focuses on Holmes’ actions in 2022 and 2023, but it states he was making unauthorized transfers of company assets as early as 2018, when he allegedly amended an operating agreement to give himself 50% ownership of Shangri-La Industries.
During his time as CFO, Holmes “went to egregious lengths” to hide the company’s financial condition from Meyers and other executives, the lawsuit alleges. For example, Shangri-La claims that Holmes denied the company’s controller access to its bank accounts, created and used company email accounts and phone numbers in Meyers' name and intercepted the company’s physical mail so other executives wouldn’t see it.
Shangri-La also claims Holmes “went to significant lengths” to transfer money and assets to Witt. The lawsuit claims Holmes created an email address for Witt at a company affiliated with Shangri-La, and added her as an authorized user for a bank account held by a different Shangri-La affiliate, when Witt never worked for Shangri-La or any related company.
The lawsuit against Holmes and Witt lists 16 "embezzling transactions" from July 2022 to October 2023, in which Holmes allegedly diverted a total of $7.3 million in company funds into accounts he and his girlfriend controlled. In some cases, Shangri-La said, Holmes did this by using the company's payment processing software to direct payments to his own accounts, rather than Shangri-La's.
Shangri-La lists another 12 examples in 2022 and 2023 of its company money being used to pay for Holmes' and Witt's personal debts and purchases, without the knowledge of other Shangri-La executives. Those payments total more than $1 million and include $48,000 per month for at least a year to pay the rent for a house in Beverly Hills and $5,000 per month for the lease on a Ferrari Portofino. Shangri-La also claims Holmes forged Meyers' signature as a co-signer on the lease for a 2021 Bentley Bentayaga and the loan for a different house he bought in Beverly Hills.
A limited liability company controlled by Holmes bought that Beverly Hills house, an 11,000-square-foot mansion, for $13.4 million in 2022, according to court records. The LLC is now in bankruptcy, and the primary lender on the home is trying to have the bankruptcy thrown out so it can foreclose on the property.
In addition to payments on the rental house and the Ferrari, Shangri-La claims that in 2022 Holmes used company money to pay auction houses for a $35,000 diamond watch, a $127,000 diamond necklace and a $111,000 Himalaya Birkin from Hermès, one of the world's most expensive handbags. On top of that six-figure purchase, Holmes used $45,000 in company funds to buy seven other designer handbags at auction, the lawsuit alleges.
Housing for the hardest of cases
In early October 2022 — in a week in which Holmes allegedly spent $31,000 in company funds on four handbags — Shangri-La closed its purchase of the Quality Inn & Suites in Thousand Oaks for $18.5 million, according to Ventura County property records.
City officials held a groundbreaking for the planned conversion of the hotel a week earlier, but it was ceremonial, and the real work didn't start until the summer of 2023.
The idea was that by the end of 2023, the property would become home for at least 77 people who hadn't had stable homes for years. Sometimes referred to as the "chronically homeless," the target population for Project Homekey is people who need more than just a roof over their heads. To keep from becoming homeless again, they need substance abuse counseling, psychiatric treatment, job training or a variety of other services that would be provided on site.
The state's agreements with Shangri-La and other Project Homekey recipients say the homes must be affordable for people who make 30% or less than the area's median income. In Ventura County, that means people with incomes of less than $14,000 per year, according to U.S. Census Bureau data. That's about what Social Security pays in benefits to many disabled people; homeless people without even that source of income could have their rent covered by grants from the state and elsewhere.
The work on the Quality Inn site stopped a few months after it started. By that time, Shangri-La was in default on its loans.
The company started missing payments in April 2023, around the same time Holmes allegedly spent $54,400 in company funds on 20 VIP passes to the Coachella Valley Music and Arts Festival. Frank Ocean, Bad Bunny and Blackpink headlined the first weekend.
Tony Biasotti is an investigative and watchdog reporter for the Ventura County Star. Reach him at tbiasotti@vcstar.com. This story was made possible by a grant from the Ventura County Community Foundation's Fund to Support Local Journalism.
This article originally appeared on Ventura County Star: CFO stole millions, says developer of T.O. homeless project in lawsuit
