California Attorney General Rob Bonta is suing a contractor involved with the state’s homeless housing program, alleging that they are “putting projects in jeopardy by illegally borrowing against them,” the Los Angeles Times reports.
Bonta wants L.A.-based Shangri-La Industries to repay more than $100 million in Project Homekey funds after the company allegedly took out loans on six of the seven properties with which it was involved.
The state did not approve being part of those loans, the lawsuit explained, comparing Shangri-La’s actions to a Ponzi scheme that left the state on the hook.
“The state learned of the problem when the banks sent notices of default, and all seven properties are now at risk of foreclosure, the complaint said,” the Times reports.
Shangri-La didn’t respond to the Times’ request for comment, but the company’s owner and CEO Andy Meyers told KCRW that “I’m not going to respond to that allegation at all.”
“We are an entity, Shangri-La Industries, and have a number of properties,” he said. “But there’s no Ponzi scheme. Obviously, whomever made such an accusation doesn’t know what a Ponzi scheme is.”
State officials, however, dispute that characterization, noting that “Shangri-La has misrepresented multiple financial considerations and has yet to cure a number of breached contractual obligations to the state and the Homekey program,” Pablo Espinoza, spokesperson for the Department of Housing and Community Development, told The Press-Enterprise in an email.
“The difficulties they find themselves in are of their own making,” he added.