Shangri-La accuses former CFO of embezzling $40M

First the state accused Shangri-La Industries of fraud. Now the developer of homeless housing has accused its former beancounter of living high on the hog after stealing from the firm.

The Downtown Los Angeles-based developer of motel-to-home conversions has sued Cody Holmes, its former chief financial officer, for allegedly embezzling millions of dollars, the San Bernardino Sun reported.

Shangri-La accused the 29-year-old Holmes of bank fraud and check kiting from 2022 through last year from company lenders, banks and brokers, according to the complaint.

The firm alleges its former CFO moved vast sums of company cash and property to bank accounts and shell companies he set up and controlled, and to his suspected ex-girlfriend, Madeline Witt, 28, also a defendant in the lawsuit.

The suit, filed last month in Los Angeles Superior Court, seeks more than $40 million in damages.

While the developer defaulted on loans tied to its Project Homekey sites, Holmes and his girlfriend hit the L.A. high life, according to the complaint.

To Witt: Covering $46,000 a month in rent at a leased home in Beverly Hills. Regular travel on private jets. Leased Bentley Bentayga and Ferrari Portofino cars. And $12,000 to cover a student loan payment, according to the lawsuit.

Holmes also rewarded himself and his girlfriend with two Birken handbags worth nearly $128,000. Chanel and Louis Vuitton handbags valued at more than $14,000. A $127,000 Riviera diamond necklace. A $35,000 Audemars Piguet diamond watch. And 20 VIP passes for last year’s Coachella Music and Arts Festival, worth more than $53,000, according to the suit.

Holmes and Witt did not respond to multiple emails, telephone calls and text messages requesting comment.

Shangri-La fired Holmes in January following an internal investigation, according to court records. He started working at Shangri-La as an intern in 2014 while an undergraduate at USC, earned a master’s degree in finance while working at the company as director of finance, then in 2019 rose to CFO.

Attorneys representing Shangri-La, its affiliate businesses and CEO Andrew Meyers Abdul Wahab, who professionally goes by “Meyers,” filed the suit seeking a temporary restraining order to prevent Holmes from withdrawing money from nine bank accounts he controls.

After he was fired, Holmes continued to make hefty purchases, including leasing a new Porsche Taycar and renting a luxury home in the Hollywood Hills, according to Shangri-La attorney Brian Sun.

A judge denied Sun’s request on March 7, but the lawyer said he plans to push the issue by filing another motion. In a telephone interview, Sun said Holmes is “dissipating assets as we speak. He’s selling off assets.”

Circumstances at Shangri-La are no less harmonious.

Since 2020, the state Department of Housing and Community Development has provided Shangri-La Industries more than $121 million in Homekey funds to convert motels up and down the state into permanent supportive housing for the homeless.

Then the developer defaulted on loans tied to seven properties, and owed about $41 million in delinquent debt as of Dec. 1, The Real Deal reported. In separate court cases, lenders had sued Shangri-La and asked the court for receiverships, an alternative to bankruptcy.

In January, Shangri-La Industries lost control of six out of seven former motels for Project Homekey sites to court-appointed receivers in Salinas, King City, San Bernardino and Redlands.

After TRD reported on the defaults, the state opened an investigation into Shangri-La and found the firm had violated its operating agreements tied to six of the properties. In January, state Attorney General Rob Bonta filed a lawsuit against the firm, claiming the developer breached state contracts and alleging fraud.

Shangri-La still manages and owns a site in Thousand Oaks contracted under Project Homekey, though the firm faces at least three lawsuits from contractors over that property, claiming unpaid mechanic’s liens.

The late Hollywood producer Steve Bing founded Shangri-La. Meyers, the CEO, has previously blamed the state for the company’s defaults, arguing that because officials failed to sign regulatory agreements for the deals, lenders triggered defaults.

— Dana Bartholomew