Federal law enforcement arrested the former chief financial officer of affordable housing developer Shangri-La Industries in connection with a federal criminal complaint charging him with mail fraud, according to a release from the U.S. Attorney’s Office.

“Accountability for the misuse of billions of tax dollars intended to combat homeless[ness] starts today,” Acting United States Attorney Bill Essayli said.

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.

Project Homekey provided private 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.

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.

Based on these false bank records, federal officials say, the state housing and community development department released funds to Shangri-La.

Some of the Homekey money disbursed to 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.

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’s seven properties in receivership, the Los Angeles Times reported at the time.

Shangri-La sued Holmes in May 2024, alleging he embezzled millions from the firm, The Real Deal reported.

In a separate case regarding supposed fraud 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.

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.

Though the homeless housing organization was not named in the criminal complaint, the Cheviot Hills house’s address, 3340 Shelby, corresponds with a property that the Weingart Center lists on its website as an under-construction 78-bed “interim housing solution for seniors 55 years and older.”

The Weingart Center is a long-running organization that has built numerous homeless housing projects across the city and county.

Authorities claim that from August 2019 to July 2025, Taylor utilized false bank statements and cash representations to get loans and lines of credit for his real estate business.

Attorney Michael Freedman, a former federal prosecutor, is representing both Taylor and Holmes. Freedman did not immediately respond to a request for comment.