Shangri-La Industries accuses COF of stealing

After months of embezzlement litigation from the State of California, Shangri-La Industries have shifted their blame by filing a lawsuit against Cody Holmes, the company’s recently fired chief financial advisor. The lawsuit accuses Holmes of misappropriating part of the $117 million in state funds, which was supposed to go towards low-cost housing and services for the homeless.

With $117 million in state funds from Project Homekey for seven total California projects and a $26.7 million state grant dedicated specifically for the Thousand Oaks project, Shangri-La industries began renovation in 2022 on the former Quality Inn & Suites in Thousand Oaks. The purpose of Project Homekey was to turn the motel into 77 studio apartments for homeless people who are unable to stay housed due to disabilities, illnesses or other conditions. Shangri-La Industries wanted to provide them with ways to handle substance abuse, psychiatric treatment, job training and counseling. For the past six months, the motel has been left semi-abandoned. Shangri-La Industries failed to pay some of the contractors, which resulted in two default loans and suits by contractors causing the lack of progress within the renovations of the property. Shangri-La Industries did not fulfill the payment of nearly $12 million in loans on the property as well. Under the Project Homekey program, Shangri-La had seven motel renovation projects. Of the seven, two were completed. Several of them have “apparent violations,” including unpaid loans and unpaid subcontractors, which contravened Shangri-La’s contracts with California’s Department of Housing and Community Development. Six of the projects across California did not complete agreements with their local governments for the guarantee that the properties would become and remain low-cost housing.

After Holmes was fired in January, Shangri-La’s suit accuses Holmes of spending the misappropriated money on maintaining his personal life; he transferred significant sums of company money and property, and transferred half ownership of the company on Shangri-La’s behalf without permission. Holmes allegedly hid the company’s financial condition and forged signatures on loan documents and leases to give himself an “extravagant lifestyle in Beverly Hills”.

In January, the California Department of Housing and Community Development sued Shangri-La to return the state grant money that they received to prevent the foreclosure of the Homekey properties. This was done for the guarantee that these projects would still be used for affordable housing. As the property is being placed on auction, there is a chance for another owner to take over the project and bring together the funds to finish and operate the housing facility.