Federal prosecutors charged three people with stealing millions in taxpayer dollars meant to house homeless Californians, spending the money instead on a nightclub, a Tahiti vacation, and a vintage car restoration.
FBI agents fanned out across Los Angeles before dawn on Wednesday, September 16, arresting two of the defendants and launching a public crackdown on what officials described as a sprawling fraud ring that drained public homelessness programs of tens of millions of dollars. A third defendant is now a fugitive. A fourth figure in the scheme has already agreed to plead guilty.
The cases, filed separately in federal court, center on nonprofit organizations that won government contracts to shelter and serve the city's homeless population, then allegedly funneled the cash into shell companies, personal bank accounts, and lavish purchases that had nothing to do with getting anyone off the street. The charges land at a moment when Los Angeles remains one of the most visible symbols of the nation's homelessness crisis, and when billions in public spending on the problem have produced results that taxpayers can barely see.
Michael Young, 46, founded a Culver City-based nonprofit called Home At Last. Federal prosecutors say the organization received more than $118 million in public funds through government contracts, including more than $75 million from the Los Angeles Homeless Services Authority, the agency responsible for coordinating the city's response to homelessness. Fox News reported that Young allegedly used shell companies and fraudulent billing practices to divert more than $7.5 million through a sham vendor scheme.
Where did the money go? Prosecutors allege Young spent more than $1 million to open and operate a high-end restaurant and nightclub called Six Seven Five Lounge in Inglewood. He allegedly dropped nearly $50,000 on a luxury vacation to Tahiti. And he allegedly poured $140,000 into restoring a vintage Chevrolet Impala.
Assistant Attorney General Colin M. McDonald put it plainly at Wednesday's news conference:
"The taxpayers did not sign up to fund this nightclub."
The New York Post reported that Young was charged with wire fraud and that the total amount he allegedly stole reached $12 million, a figure that includes the sham vendor scheme and additional diversions. The Post also reported that a previously charged co-conspirator, Alexander Soofer, spent his cut on a $7 million mansion, a $125,000 Range Rover, and private jet travel.
Lakiya Malone, 48, an employee of Special Service for Groups, a social services organization, was arrested at her home during the early-morning FBI operation. She faces a 21-count federal indictment alleging she accepted more than $180,000 in bribes and kickbacks from Soofer, the executive director of a nonprofit called Abundant Blessings.
In exchange for the payments, prosecutors say Malone provided priority referrals to Soofer's organization, including referrals for so-called "ghost" homeless participants who never actually lived at housing sites. Federal authorities allege that Malone's files were fabricated using fake welcome letters, forged sign-in sheets, and falsified eligibility forms. The scheme allowed Abundant Blessings to bill the government for services it never provided to people who never existed in its housing.
The pattern is familiar. Federal fraud charges against public officials have become a recurring feature of pandemic-era and social-spending programs, where oversight often lagged far behind the rush to distribute funds.
Soofer, for his part, has already admitted to obtaining $23 million in public money intended to combat homelessness and pocketing at least $2 million for himself and unrelated businesses. He agreed to plead guilty to wire fraud and money laundering.
The third defendant, Donye Mitchell, 55, is the CEO of a nonprofit called The Big Blue Umbrella. Prosecutors say Mitchell obtained more than $1.2 million in grant funding after making false representations about how the money would be used. Instead, Mitchell allegedly spent the grant money on personal expenses: bail-bond costs, credit card debt, transfers to family members, and PlayStation charges.
Mitchell was not among those arrested Wednesday. Prosecutors designated Mitchell a fugitive.
First Assistant U.S. Attorney Bill Essayli issued a direct warning at the news conference, aimed well beyond the three defendants already charged:
"If you or someone you know has defrauded money allocated for the homeless, I suggest you report it to law enforcement. If you don't, your door may be the next one we're hitting."
The Post quoted Essayli going further, saying prosecutors are "working our way up the chain" and targeting "those who are enabling the fraud, and not just the fraudsters themselves." That language suggests the investigation is not finished, and that the people who approved contracts, signed off on billing, or looked the other way may face scrutiny next.
HUD Secretary Scott Turner appeared at the news conference and framed the arrests as part of a wider effort to hold accountable those who exploit federal housing and homelessness programs. Turner did not hold back:
"The days of these wire fraud experts flying on private jets, driving around Beverly Hills in Range Rovers and doing lavish things is over."
Turner's presence elevated the announcement beyond a routine local fraud case. His involvement signals that the Department of Housing and Urban Development views the Los Angeles homelessness-spending pipeline as a target-rich environment, one where federal dollars have flowed with minimal accountability for years.
The scale of the alleged fraud is staggering even by the standards of government waste. Home At Last alone received more than $118 million. Abundant Blessings pulled in $23 million. The Big Blue Umbrella collected $1.2 million. Across just these four defendants, the total public money that passed through their hands exceeds $140 million. The amount allegedly stolen or misused runs into the tens of millions. And these cases may represent only a fraction of the problem. Active criminal investigations into public figures accused of fraud have expanded across multiple federal agencies in recent months.
Los Angeles has spent billions of dollars on homelessness over the past decade. The city and county have approved massive bond measures, created new bureaucracies, and funneled money through a network of nonprofits and service providers. The results have been, by nearly any measure, dismal. Tent encampments still line major thoroughfares. Shelters remain overcrowded. And the per-unit cost of building permanent supportive housing in the city has climbed into the hundreds of thousands of dollars.
Now federal prosecutors are pulling back the curtain on where at least some of that money actually went: into nightclubs, luxury vacations, vintage cars, mansions, Range Rovers, and private jets. The people who were supposed to benefit, homeless Californians in need of shelter and services, got ghost files and forged paperwork instead.
The question that hangs over these cases is not just whether the defendants are guilty. It is how a system that processed more than $118 million through a single nonprofit failed to catch fabricated clients, sham vendors, and millions in unexplained personal spending. Federal funding programs have faced growing scrutiny over whether the agencies distributing taxpayer dollars exercise meaningful oversight, or simply pen checks and hope for the best.
LAHSA, the agency that sent $75 million to Home At Last, has not been charged with wrongdoing. But the sheer volume of money that flowed to an organization now at the center of a federal fraud case raises hard questions about who was watching, who signed off, and whether anyone bothered to verify that the services being billed were actually delivered.
Essayli's warning, "your door may be the next one we're hitting", suggests federal investigators believe the rot extends beyond the four people charged so far. Large-scale corruption investigations often start with the most flagrant offenders and work inward toward the institutional failures that made the fraud possible.
For years, Los Angeles officials told taxpayers that homelessness was simply too expensive and too complex to solve without ever-larger infusions of public money. These indictments suggest a different problem: the money was there, and the thieves got to it first. Until the system that let them in is dismantled and rebuilt with real accountability, every new dollar is just another opportunity for the next fraud ring.
