Borrowing from novelist James Hilton, who coined the word “Shangri-La” to describe a Tibetan utopia in a 1933 novel, Franklin Roosevelt gave that name to the peaceful retreat we know as Camp David. For California Gov. Gavin Newsom and Los Angeles Democrats, Shangri-La hasn’t become synonymous with a place that connotes peace on earth. It stands for a hellish homeless housing nightmare, eye-popping alleged fraud, and the ease and scale with which alleged con-artists rip off taxpayers. In October, federal agents arrested Cody Holmes, the 31-year-old former CFO of Shangri-La Industries, a downtown Los Angeles-based developer who was supposed to...