The former chief financial officer for a downtown Los Angeles-based affordable housing developer and a Brentwood man who prosecutors say defrauded lenders are separately facing federal criminal cases for allegedly taking advantage of funds allocated to assist the homeless, officials announced Thursday.
Cody Holmes, 31, of Beverly Hills, was arrested Thursday on a mail fraud charge allegedly linked to millions of dollars in grant money paid by the state to Shangri-La Industries LLC for the purchase, construction and operation of homeless housing in Thousand Oaks.
Holmes allegedly submitted fake bank records to the California Department of Housing and Community Development to prove the developer could complete the homeless housing projects for which it had applied for grants, according to the U.S. Attorney's Office.
But prosecutors contend the bank accounts Shangri-La and Holmes said contained $160 million in grant funds did not exist.
According to court papers, Holmes and Shangri-La also sent the state balance sheets falsely contending that Shangri-La-affiliated entities held millions of dollars in cash. After the documents were submitted, the state housing agency paid millions of dollars more in grant money to Shangri-La for, among others, the Thousand Oaks project.
Prosecutors contend some of the money paid to Shangri-La was used to pay credit card bills for American Express accounts linked to Holmes. In 2022, more than $2.2 million was transferred from a Shangri-La account to a Holmes- controlled account, after which more than $2 million was paid toward American Express cards that had been used to make purchases at various luxury stores, court papers allege.
In the second case, Steven Taylor, 44, of Brentwood, was charged in Los Angeles federal court with seven counts of bank fraud, one count of aggravated identity theft, and one count of money laundering.
According to the indictment, Taylor used fake bank statements and false cash representations to obtain loans and lines of credit to operate his real estate business. Taylor allegedly acquired or refinanced properties in Silver Lake, Los Feliz, Westlake, Del Rey, Pico-Union, and Cheviot Hills, according to the indictment.
Taylor was also charged with lying to lenders about his intended use of the properties, including lying to the lender funding his purchase of the Cheviot Hills property, falsely telling the lender he intended to renovate and use the property himself.
But prosecutors contend Taylor had already agreed to sell the property, which he originally acquired for $11.2 million -- obtained with a loan via fake bank statements -- to a homeless housing developer purchasing it with public funds from the city of Los Angeles and the state for $27.3 million, in a double-escrow transaction hidden from the lender and others.
The indictment contends that Taylor obtained and kept open lines of credit using fake bank statements and false statements concerning cash deposits, including separate unsecured lines of credit of nearly $4 million from two victim lenders.
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Taylor allegedly used the fraudulently obtained lines of credit to make down payments on real estate also obtained with the fraudulent loans, according to the U.S. Attorney's Office.
"Accountability for the misuse of billions of tax dollars intended to combat homeless starts today," acting U.S. Attorney Bill Essayli said in a statement. "The two criminal cases announced is only the tip of the iceberg and we intend to aggressively pursue all leads and hold anyone who broke any federal laws criminally liable."
In both cases, the defendants allegedly took advantage of funds allocated to assist the homeless, said Akil Davis, assistant director of the FBI's Los Angeles bureau.
"The FBI is committed to the Homelessness Fraud & Corruption Task Force to find perpetrators of this insidious fraud and build cases to hold the offenders accountable in court," he said. "It is my hope that the charges we're announcing today send a message to others who may be contemplating similar criminal behavior."
Holmes was expected to make his initial appearance Thursday afternoon in federal court in downtown Los Angeles. Taylor, who is free on a $3.6 million bond, is expected to be arraigned in the coming weeks.
If convicted as charged, both defendants would face decades in federal prison, prosecutors noted.
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