California's top legal watchdog has thrown the book at an L.A. developer, accusing them of endangering housing for the homeless. Attorney General Rob Bonta has slapped Shangri-La Industries and its CEO, Andy Meyers, with a lawsuit, demanding the repayment of over $100 million in state funds.
Amid allegations of a real estate house of cards, Bonta claims the firm took out illegitimate loans on properties designated for Project Homekey, a program aimed to quickly turn to house the homeless. The company proceeded to boldly put six out of seven properties at risk of foreclosure, an action the state had not green-lit, stated a report from KTLA.
The threatened properties, stretching from Riverside to Thousand Oaks, and even reaching Northern California, have been ensnared in a legal tangle that could spell disaster for the vulnerable residents they were meant to protect. Notices of default served as the state's alarm to the borrowing spree, leaving California potentially on the hook for the mismanaged assets.
The lawsuit filed in the Los Angeles County Superior Court also names other defendants, including service provider Step Up On Second, several lenders, and municipalities involved in the projects. Shangri-La's defense remains adamant, with Meyers flat-out refusing to engage with the allegations, stating to KCRW, "I'm not going to respond to that allegation at all." However, he went on to deny the Ponzi scheme accusation, "But there’s no Ponzi scheme. Obviously, whomever made such an accusation doesn’t know what a Ponzi scheme is."
Meanwhile, Step Up Chief Executive Tod Lipka voiced his organization's dismay at being swept into the scandal, noting the urgent danger to their humanitarian mission. "For us, the danger is that these projects are stalled and not going to move forward," Lipka conveyed his concerns in a statement obtained by The Los Angeles Times.
The State Department of Housing and Community Development, overseeing Project Homekey, harshly criticized Shangri-La's conduct. "Shangri-La has misrepresented multiple financial considerations and has yet to cure a number of breached contractual obligations," the agency's general counsel, Ryan Seeley, stated, as per The Los Angeles Times report.
