The former CFO of a downtown Los Angeles-based affordable housing developer was arrested Thursday on charges of mail fraud, the U.S. Attorney’s office for the Central District of California announced this week.
Federal prosecutors said Cody Holmes, who served as finance chief of developer Shangri-La Industries, “knowingly submitted fake bank records” to the California Department of Housing and Community Development in attempt to prove that his firm “had the capacity to fulfill the homeless housing projects for which it had co-applied for grants.”
But, in an affidavit, FBI Special Agent Kevin McMullen said that said bank accounts “did not exist.” The agent went on to accuse Holmes of sending California’s housing department balance sheets that falsely showed entities affiliated with his business held millions of dollars in cash they didn’t actually have.
Holmes submitted those bank statements to California’s housing department so that it would “rely on them and release grant money” to his business, according to McMullen. The affidavit said the California Department of Housing and Community Development paid millions in grant money to Holmes’ business that was to be used, in part, to build a homeless housing project in Thousand Oaks, California.
Instead, Holmes is alleged to have diverted “at least some of the money” the state of California paid for that project “for his own purposes.” That included payments for American Express accounts associated with Holmes.
Prosecutors said that, in November and December 2022, more than $2.2 million was transferred from a Shangri-La account to an account controlled by Holmes. Then, from November 2022 to May 2023, more than $2 million was paid toward American Express cards, according to the U.S. Attorney’s office.
“The charges on those credit card accounts included purchases at a well-known luxury retailer,” the office said in a news release. “Law enforcement believes these payments were made at least in part for Holmes’s benefit.”
Holmes was expected to make an initial appearance in court on Thursday.
In the release, Acting United States Attorney Bill Essayli said that the case against Holmes marks “only the tip of the iceberg” in his office’s efforts to get “accountability for the misuse of billions of tax dollars intended to combat [homelessness].”
This isn’t the first time Holmes has been sued over the matter; in March 2024, he faced a lawsuit from Shangri-La Industries for allegedly using government money for his own lavish purchases.
Essayli’s own time in office has not been without controversy. U.S. Attorney General Pam Bondi first appointed him to his role on an interim basis in April.
The Los Angeles Times in July reported that Essayli had failed to secure many indictments of people who were charged with misconduct during protests against immigration raids. At the time, the newspaper cited legal experts who said that Essayli’s “low number of indictments raised concerns about the strength of the cases he is filing.”
