Feds Charge Three in $12 Million LA Homelessness Fraud, Money Allegedly Spent on Nightclub, Tahiti Trip and Vintage Cars

Federal agents fanned out across Los Angeles early Wednesday, September 16, arresting two people and charging a third as a fugitive in a fraud crackdown targeting homelessness aid programs, according to the Justice Department. Prosecutors say the trio stole roughly $12 million meant to house and support homeless Californians.

The Nightclub, the Impala and the Tahiti Trip

At the center of the case is Michael Young, 46, founder of the Culver City nonprofit Home At Last, which took in more than $118 million in public funds since 2019, including over $75 million from the Los Angeles Homeless Services Authority, according to the Justice Department. Prosecutors allege Young ran shell companies disguised as independent vendors to overbill the government and pay himself twice, diverting an estimated $7.5 million.

He allegedly spent more than $1 million of that money opening Six Seven Five Lounge, a high-end restaurant and nightclub in Inglewood, plus an adjacent bingo hall, according to the Los Angeles Times. Federal officials also say he spent nearly $50,000 on a Tahiti vacation and $140,000 restoring a vintage Chevrolet Impala.

"The taxpayers did not sign up to fund this nightclub," said Assistant Attorney General Colin M. McDonald of the Justice Department's National Fraud Enforcement Division. HUD Secretary Scott Turner put it more bluntly: "The days of these wire fraud experts flying on private jets, driving around Beverly Hills in Range Rovers and doing lavish things is over."

Lakiya Malone, 48, an employee of the nonprofit Special Service for Groups, was arrested on a 21-count indictment alleging she took more than $180,000 in bribes and kickbacks from Alexander Soofer, executive director of the nonprofit Abundant Blessings. Prosecutors say Malone placed people who weren't actually homeless into aid programs and fabricated files with fake welcome letters, forged sign-in sheets and falsified eligibility forms to create "ghost" participants.

Donye Mitchell, 55, CEO of Big Blue Umbrella, remains a fugitive. He's charged with wire fraud after allegedly misstating his organization's ability to provide housing and mental health services while collecting more than $1.2 million in grant funding. Prosecutors say he used the money to pay off credit card debt, cover bail-bond costs, hand cash to relatives, buy video games and pay legal fees for an unrelated case.

A Guilty Plea, With a Number That Moved

Soofer, separately charged earlier this year, has agreed to plead guilty to wire fraud and money laundering, admitting he obtained $23 million in public money and pocketed at least $2 million for himself and unrelated businesses, according to the Justice Department. That admitted figure is notably lower than what prosecutors initially alleged: an LAist review of the case reported prosecutors accused Soofer of illegally pocketing at least $10 million, which he allegedly used to buy a $7 million Westwood house, a $125,000 Range Rover, private school tuition, private jet travel and luxury resort stays. Soofer had pleaded not guilty and repaid LAHSA $1.25 million in a settlement without admitting wrongdoing before the guilty plea was reached.

LAHSA Knew and Kept Paying

The Los Angeles Homeless Services Authority, the joint city-county agency that funneled money to several of these groups, says it canceled its contracts with Home At Last in June after "strong evidence of wrongdoing emerged," and that no LAHSA personnel are implicated. The agency says it has cooperated with federal investigators.

But an LAist review of more than 7,000 pages of public records found LAHSA leadership approved at least $3.5 million in new contracts to Soofer's nonprofit throughout 2024, months after the agency's own compliance officials issued a formal "delinquency notice" labeling the group "High-Risk" on May 6, 2024. Auditors also found LAHSA violated federal law by waiting eight months to alert federal funders after obtaining credible evidence of possible crimes.

It's easy to dismiss Turner's claim that "LAHSA has continually funded the homeless industrial complex on the backs of American taxpayers while fraud has continually run rampant" as political theater from a Trump administration official looking to score points against a Democrat-run city. Turner has an obvious incentive to make LA look as bad as possible. The LAist documents, which predate and are independent of Wednesday's press conference, show LAHSA's own staff raised red flags and leadership kept the money flowing anyway.

The LA County Board of Supervisors already acted on that track record last year, voting to pull county funding from LAHSA and stand up its own homelessness department following two critical audits that found the agency failed to track its funds and programs.

What Happens Next

Young and Malone have not yet entered pleas, and their attorneys did not immediately respond to requests for comment, according to the Los Angeles Times. Mitchell remains at large. On Tuesday, September 15, prosecutors charged 12 people with stealing more than $10 million in federal childcare aid, according to KPBS and the Independent. Whether more contracts tied to LAHSA face similar scrutiny, and whether the agency's leadership faces any consequence beyond losing county funding, remains an open question.