Los Angeles affordable housing developer Shangri-La Industries is accusing its former CFO of embezzling millions, forging signatures and documents, altering bank statements, and creating fake lending companies, which the developer says is to blame for its failure to make payments on the properties under its management.
Shangri-La was granted millions in public funds for seven property renovations under Project Homekey—a state initiative to convert hotels and motels into housing for the homeless—but has defaulted on its loans and faces foreclosures on all seven properties, according to court documents filed in Los Angeles Superior Court. The properties are in Salinas, San Bernardino, King City, Thousand Oaks, San Ysidro, Redlands, and Los Angeles.
For the past two years, former CFO Cody Holmes, 29, embezzled millions in cash earmarked for the company’s management of its properties, transferring large amounts to himself and his alleged ex-girlfriend Madeline Witt, 28, and to shell companies he created, according to court documents.
Shangri-La sued Mr. Holmes and Ms. Witt on Feb. 1, seeking at least $20 million in “financial and reputational” damages. The lawsuit requested that the court freeze some of Mr. Holmes’s and Ms. Witt’s bank accounts.
A temporary restraining order filed March 12 asked the court to freeze the accounts immediately to “prevent the public funds embezzled by Holmes from being hidden, withdrawn, or used to purchase extravagant expenses,” according to documents filed in Los Angeles Superior Court. A judge denied that request March 18, with no reason given.
The Los Angeles developer also faces a lawsuit from state Attorney General Rob Bonta for its misuse of public funds, according to the documents.
Between July 2022 and September 2023, Mr. Holmes made multiple illegal transfers to himself, his shell entities, and Ms. Witt, ranging from a $100,000 transfer to Ms. Witt’s account to a $13 million transfer to his own Goldman Sachs account, according to documents filed in the March 12 temporary restraining order request.
He used Shangri-La’s funds to live an “extravagant lifestyle with his girlfriend,” attorneys wrote, including purchasing a Beverly Hills mansion valued at $13.4 million, leasing a Ferrari Portofino for $5,000 month, booking a private jet with Ms. Witt to Las Vegas for $43,475, spending over $200,000 at Coachella—a three-day music festival in Riverside County—and spending hundreds of thousands of dollars at auctions purchasing luxury bags such as Louis Vuitton and Hermes, with some bags costing $100,000 alone, according to the March 12 court filings.
Despite an internal investigation launched into Mr. Holmes in January for “misappropriation of funds,” the former CFO has continued his spending spree by leasing himself a new Porsche Taycan and renting another luxury home in the Hollywood Hills, attorneys wrote.
Mr. Holmes started working at Shangri-La around 2014 while he was an undergraduate at the University of Southern California, and was promoted to CFO in 2019, according to company representatives.
