Borrowing from novelist James Hilton, who coined the phrase “Shangri-La” to explain a Tibetan utopia in a 1933 novel, Franklin Roosevelt gave that title to the peaceable retreat we all know as Camp David.
For California Gov. Gavin Newsom and Los Angeles Democrats, Shangri-La hasn’t develop into synonymous with a spot that connotes peace on earth. It stands for a hellish homeless housing nightmare, eye-popping alleged fraud, and the benefit and scale with which alleged con-artists rip off taxpayers.
In October, federal brokers arrested Cody Holmes, the 31-year-old former CFO of Shangri-La Industries, a downtown Los Angeles-based developer who was speculated to be offering housing for homeless individuals in Southern California. First Assistant U.S. Legal professional Invoice Essayli for the Central District of California, a Trump appointee, charged him with mail fraud.
Holmes, who pleaded not responsible, is accused of embezzling greater than $2 million in taxpayer funds slated for homeless housing development to host extravagant events; a $46,000-per-month Beverly Hills mansion; non-public jet journey; leases of unique automobiles; high-end purses totaling $128,000; a $35,000 diamond watch; and 20 VIP passes for the 2023 Coachella Music and Arts Pageant.
In the meantime, Shangri-La Industries executives showered Newsom and Los Angeles County Democrats with political donations as they had been making use of for some $100 million in state contracts that the CFO later allegedly looted to fund his and his ex-girlfriend’s lavish way of life.
Even after federal prosecutors uncovered the large fraud, Newsom and L.A. Democrats haven’t severed ties with the embattled developer and have stored political donations from the agency’s executives. Newsom has additionally allowed the development agency to proceed to tout his endorsement on its social media.
Highly effective Mates
Holmes allegedly defrauded the California Division of Housing and Neighborhood Improvement by submitting fabricated financial institution accounts in its purposes for state contracts to construct homeless housing. Performing on behalf of Shangri-La, Holmes allegedly falsified $160 million in belongings managed by Shangri-La and its associates to reveal that the agency had liquid funds to contribute to the development initiatives, in accordance with court docket paperwork.
In keeping with the federal government, most of these funds by no means existed. The FBI traced solely an estimated $24,000 that the developer had readily available on the time of the purposes for Newsom’s signature Homekey contracts, a program launched amid the COVID pandemic lockdowns that transformed empty motels into homeless housing. Holmes is accused of offering false financial institution statements for Shangri-La Industries to accumulate the greater than $100 million in state grant cash for seven Homekey initiatives, in accordance with an affidavit filed with the criticism and different court docket paperwork.
Former President Invoice Clinton has been linked to Shangri-La Industries and served as a strategic adviser for the agency. (AP Photograph/John Raoux)
Shangri-La Industries has historic roots to billionaire Steve Bing and Invoice Clinton, whom the Bing-led firm paid greater than $2.5 million to function a strategic adviser. Bing died by suicide in 2020, greater than a decade after founding the funding, leisure, and philanthropic empire.
California housing authorities are additionally suing Shangri-La Industries for breaching contracts underneath Newsom’s signature Venture Homekey homeless housing venture in a possible futile try and get well the lacking tens of millions. But, no legal motion was taken in opposition to anybody concerned till Essayli issued his indictment in opposition to Holmes final fall.
Shangri-La Industries CEO Andy Meyer, who additionally goes by Andy Abdul-Wahab, in accordance with court docket paperwork, has blamed Holmes for the financial institution and mail fraud and filed a lawsuit in opposition to him. The go well with accuses Holmes, his former intern, of embezzling firm funds by shifting the cash to accounts and shell corporations that he managed whereas allegedly additionally transferring cash to Madeline Witt, his then-girlfriend. Witt is known as as a co-defendant within the go well with.
Newsom, L.A. Dems Mum on Returning Shangri-La Donations
Newsom’s workplace didn’t reply to an inquiry into whether or not he deliberate to return any of the funds Shangri-La workers have donated to his campaigns over the past decade. A RealClearPolitics overview of marketing campaign donations discovered at the very least $18,000 from Abdul-Wahab to Newsom’s campaigns for governor and lieutenant governor.
Newsom’s workplace additionally didn’t say whether or not he stands by a quote endorsing Shangri-La Industries and its companion, Step Up On Second Road, which Shangri-La has used on its now-defunct web site underneath the heading, “What Our Clients Are Saying,” and on its lively Instagram account.
“In a matter of months, not years, Shangri-La and Step Up gave a few of the most weak Californians the dignity of a key, a lock, a door, a spot to name house,” the Newsom quote states in reference to a homeless housing venture in San Bernardino. California’s marketing campaign finance database additionally reveals a mysterious $30,000 donation from Shangrila Funding LLC in assist of Newsom’s signature Proposition 1 homeless poll initiative. The initiative, which barely handed with 50.2% of the vote in March 2024, accepted a $6.4 billion bond for extra state homelessness spending and makes an attempt to deal with associated psychological well being and dependancy for the primary time.
Within the last days of the mail-in voting election, as the end result hung within the steadiness, either side, Newsom and people opposing the poll measure, urged voters whose ballots might have been rejected to repair their signatures.
But, to date, Newsom’s “CARE court docket” venture, making an attempt to deal with psychological well being and dependancy, has reportedly fallen far in need of expectations. Different controversial donations to the homeless poll initiative embody $100,000 from Edison Worldwide and affiliated entities, the guardian firm of SoCal Edison, whose tools prompted the Eaton hearth that killed 19 individuals final yr; and $250,000 from PG&E and affiliated entities, the Northern California utility that prompted the 2018 Camp Hearth, the deadliest hearth in state historical past, answerable for 84 deaths.
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It’s unclear whether or not this $30,000 donation from Shangrila Funding LLC is said to Shangri-La Industries or different affiliated entities that court docket paperwork connect with the embattled developer. Neither Newsom’s workplace nor Capitol Compliance, the D.C.-based entity that helps run Newsom’s poll committee, returned repeated requests for remark.
Requested if the donation made by Shangrila Funding LLC is affiliated with the Shangri-La developer on the coronary heart of the fraud scandal, Holmes’ high-powered legal professional Michael Freedman, who has represented Harvey Weinstein and Invoice Cosby, replied solely: “No remark.”
State campaign-finance information present that Abdul-Wahab additionally showered donations on state and native officers, together with $30,000 to the Los Angeles County Democratic Celebration in 2022, when the developer was attempting to win the homeless contracts. The Los Angeles County Democratic Celebration didn’t reply to an inquiry about whether or not it deliberate to return the funds.
Different donations from Meyer Abdul-Wahab went to former Assemblywoman Wendy Carillo, who represented Glendale and components of East Los Angeles and is the primary former unlawful immigrant to be elected to the state Meeting. Further donations went to Assemblywoman Cecilia Aguiar Curry, who represents a west Sacramento district that features areas of components of Napa and is serving as majority chief of the Meeting; Sen. Sabrina Cervantes of Riverside and components of San Bernardino County; Assemblywoman Jacqui Irwin who represents town of Thousand Oaks; Sen. John Laird of Santa Clara and Monterey; Assemblyman Alex Lee of Fremont, Milpitas and West San Jose; and Assemblywoman Buffy Wicks of the East Bay.
In December 2021, U.S. Rep. Robert Garcia, a Democrat and the previous mayor of Lengthy Seaside, the place Meyer Abdul-Wahab resides, returned two Shangri-La donations throughout Garcia’s run for lieutenant governor, in accordance with Cal-Entry, the state marketing campaign donations database.
Lobbyists for Shangri-La Industries embody Panorea Avdis, companion at Sacramento Advocates, a public affairs and lobbying agency, together with a number of different agency associates, in accordance with a state lobbying database. Earlier than turning into a lobbyist, Avdis was chief of employees to Lt. Gov. Eleni Kounalakis, and beforehand served a stint as a director of exterior affairs at California’s housing division throughout the administration of GOP Gov. Arnold Schwarzenegger, in addition to the state’s Enterprise and Financial Improvement workplace underneath Democratic Gov. Jerry Brown. Sacramento Advocates didn’t return requests for remark about its relationship with Shangri-La Industries.
Not less than two of the Homekey motel conversion initiatives in Southern California have been renovated and are actually absolutely occupied: a 98-unit former Good Nite Inn in Redlands (now referred to as Step Up in Redlands) and a 76-unit former All-Star Lodge in San Bernardino (now Step Up in San Bernardino).
Shangri-La Stiffed Subcontractors
Subcontractors and suppliers to the San Bernardino and Redlands initiatives filed $2 million in liens for unpaid work and supplies, and at the very least some contractors say they’ve but to be paid and are rising more and more uncertain that they ever might be. Shangri-La Industries allegedly illegally obtained greater than $50 million in new loans for a number of Homekey properties throughout the state with out notifying the state housing division.
Adolfo Gomringer Sr., who owns AG Flooring, instructed RCP that he has but to obtain $93,000 that Shangri-La owes him for steel framing, drywall, demolition, and flooring work his firm carried out for the San Bernardino motel conversion in 2023. Gomringer mentioned he has written to Newsom, L.A. Mayor Karen Bass, and L.A. and San Bernardino County officers, asking for his or her assist, however has not acquired a response.
“Sadly, I didn’t hear again from anyone, so I simply gave up hope,” Gomringer instructed RCP this week. “Actually, it’s simply surprising that there was nothing in place to guard us – the contractors truly doing the work on these jobs.”
In keeping with the FBI agent’s affidavit used within the legal criticism in opposition to Holmes, the younger CFO utterly fabricated a Financial institution of America account assertion displaying $59 million that didn’t exist.
Richard Staropoli investigated financial institution fraud circumstances for years as a Secret Service agent, then went on to function chief info officer and head of danger for the worldwide hedge fund Fortress Funding Group. Staropoli instructed RCP that the California housing division ought to have carried out primary due diligence practices to confirm the financial institution accounts Shangri-La claimed to have, and the precise quantities in them.
“Are you kidding me?” Staropoli mentioned in response to the FBI’s investigative findings within the Holmes case. “Are you telling me that at this degree of the quantities of cash that’s concerned right here, no person’s checking this? This simply speaks to the extremely poor practices of California’s housing authorities.”
In early January, Essayli warned that extra arrests are coming after discovering “large” fraud in California’s homeless companies.
In mid-January, police arrested Alexander Soofer, who allegedly used tens of millions of taxpayer {dollars} slated to accommodate and feed lots of of homeless to buy a $7 million mansion in Westwood, pay for personal jet journey, lavish spending at luxurious resorts throughout the USA and a trip property in Greece, his kids’s non-public faculty tuition, and a $125,000 Vary Rover.
Soofer can also be accused of feeding 600 homeless individuals – which his group, Considerable Blessings, housed – Ramen noodles, canned beans, and breakfast bars as an alternative of the three wholesome meals a day the contract required.
“California is the poster baby of rampant fraud, waste, and abuse of tax {dollars},” Essayli mentioned, referring to the greater than $24 billion the state has spent on fraud with out demonstrating any affect from the funding.
“The state has facilitated the spending of billions of {dollars} to fight homelessness, with little to point out for it and virtually no oversight.”
“Fortunately, the federal authorities has begun auditing California’s spending and at present’s is only one instance of how fraudsters have swindled tens of millions of {dollars} from taxpayers,” he added. “This cash ought to have gone to these in want, as an alternative it strains the pockets of people subsidizing their lavish way of life.”
In a testy e mail change final week, Essayli labeled Newsom the “king of fraud” for failing to offer primary oversight measures to guard taxpayer funds and blasted him for claiming the homeless fraud isn’t his fault.
Newsom’s press workplace, responding to a conservative influencer blasting the governor over homeless fraud after Essayli’s indictments in opposition to Soofer, denied any culpability.
“TOTALLY FALSE to indicate the Governor was answerable for this fraud! Fraud is unacceptable — and in contrast to Donald Trump, who pardons fraudsters, Newsom calls for anybody who steals taxpayer {dollars} be prosecuted to the fullest extent of the legislation.”
“WRONG,” Essayli responded in an X submit. “You and the California legislature facilitated this fraud by handing out billions in tax {dollars} to those nonprofits with zero vetting and 0 state oversight.”
Billionaire Bing’s Ties to Shangri-La Industries
Shangri-La Industries – the agency ensnared within the homeless fraud scandal – initially was created by billionaire leisure mogul Steve Bing, a Democratic Celebration mega-donor, movie and music producer, and the grandson of Manhattan actual property developer Leo Bing.
At 18, Bing inherited a $600 million fortune from his father, then dropped out of Stanford College in his junior yr to maneuver to Hollywood and produce and put money into motion pictures. Alongside the way in which, he additionally fathered British actress and mannequin Elizabeth Hurley’s son Damian in 2002.
Bing gave at the very least $50 million to candidates and California poll measures over 20 years, together with Newsom, former Well being and Human Companies Secretary Xavier Becerra, who’s working for governor, Sen. Alex Padilla, in addition to Hillary Clinton, John Kerry, Al Gore, and Nancy Pelosi. He shaped Shangri-La Leisure, Shangri-La Music, and Shangri-La Development, which later turned Shangri-La Industries.
Moreover the $2.5 million Shangri-La Industries paid to Invoice Clinton in 2009 and 2010, in accordance with Forbes journal, Bing additionally gave between $10 million and $25 million to the William J. Clinton Basis in 2008.
Bing’s demise continues to be shrouded in thriller. When the 55-year-old jumped to his demise from the twenty seventh flooring of a luxurious condo constructing in Century Metropolis, he was practically broke with solely $300,000 in belongings. Mates urged he was depressed due to a scarcity of contact with individuals throughout the COVID lockdowns, however the true purpose stays unknown.
Bing’s daughter, Kira Kerkorian, in a lawsuit filed in opposition to Abdul-Wahab, alleged that Bing bought Shangri-La Development to him in 2017, however accused Abdul-Wahab of by no means paying the agreed-upon quantity. The accusation raises questions on whether or not a dispute over the gross sales value contributed to Bing’s depleted funds, melancholy, and suicide. The lawsuit, nonetheless, was dismissed with out prejudice, which means {that a} decide terminated it, however Kira Kerkorian may resolve to amend it and refile.
Thus far, Kerkorian hasn’t refiled. She was basically disowned and disinherited by two fathers. Her mom, former tennis professional Lisa Bonder, was married to on line casino and media mogul Kirk Kerkorian, who was 48 years her senior, for under 28 days in 1999. When Bonder turned pregnant, she insisted Kerkorian was the daddy and secured a $100,000-per- month baby assist settlement and established a $7 million belief for Kira.
However non-public detective Anthony Pellicano swiped a bit of dental floss utilized by Bing, a former boyfriend of Bonder, proving via DNA testing that Bing was Kira’s father. Kira was left with $8.5 million when Kerkorian died in 2015 at age 98.
At some point after Bing died, Shangri-La Development’s Instagram account eulogized Bing in a submit titled, “With Heavy Hearts We Bear in mind: Steve Bing.”
“Endlessly beneficiant and passionate concerning the individuals and causes he liked, he was really a rolling stone — he belonged to no person, however he gave a bit of himself to everybody and all the pieces he crossed.” The submit additionally promised that Shangri-La Industries would “always remember his ardour for serving to individuals,” and promised to “proceed to advance this mission each day.”
Susan Crabtree’s article first appeared on RealClearPolitics
