Federal prosecutors charged three Southern California nonprofit leaders with stealing millions in taxpayer funds meant for homeless services, money allegedly blown on a Tahiti vacation, a vintage car restoration, and a high-end nightclub.
FBI agents fanned out across Los Angeles before dawn on Wednesday, September 16, arresting two of the three defendants in an early-morning sweep. Michael Young, 46, the founder of a Culver City-based nonprofit called Home At Last, and Lakiya Malone, 48, an employee of Special Service for Groups, were taken into custody. A third defendant, Donye Mitchell, 55, CEO of a nonprofit called The Big Blue Umbrella, was designated a fugitive, Fox News reported.
The cases lay bare a pattern of alleged graft running through the network of nonprofits that receive public money to house and serve homeless Californians, and raise hard questions about the oversight failures that let the spending go unchecked for years.
Young's nonprofit, Home At Last, received more than $118 million in public funds through government contracts. More than $75 million of that total came from the Los Angeles Homeless Services Authority, the agency responsible for coordinating homeless services across the county. Prosecutors allege Young used shell companies and fraudulent billing practices to siphon taxpayer dollars for his own benefit, misappropriating more than $7.5 million through what they described as a sham vendor scheme.
The alleged spending was brazen. Prosecutors say Young poured more than $1 million into opening and operating Six Seven Five Lounge, a high-end restaurant and nightclub in Inglewood. He allegedly dropped nearly $50,000 on a luxury vacation to Tahiti and spent $140,000 restoring a vintage Chevrolet Impala.
Assistant Attorney General Colin M. McDonald put it bluntly at a Wednesday news conference:
"The taxpayers did not sign up to fund this nightclub."
HUD Secretary Scott Turner, who also spoke at the presser, framed the arrests as part of a broader enforcement push:
"The days of these wire fraud experts flying on private jets, driving around Beverly Hills in Range Rovers and doing lavish things is over."
Malone's case paints a different but equally damaging picture. A 21-count federal indictment alleges she accepted more than $180,000 in bribes and kickbacks from Alexander Soofer, the executive director of another nonprofit called Abundant Blessings. In exchange, prosecutors say, Malone gave Soofer's organization priority referrals, including so-called "ghost" homeless participants who never actually lived at the housing sites.
To make the scheme work, files were allegedly fabricated using fake welcome letters, forged sign-in sheets, and falsified eligibility forms. The paperwork created the appearance of services rendered to real people in real need. Prosecutors say the people never existed, or never received the help claimed on their behalf.
Soofer himself was previously charged with wire fraud and money laundering and has agreed to plead guilty. He admitted obtaining $23 million in public money intended to combat homelessness and pocketing at least $2 million for himself and unrelated businesses. The New York Post reported that Soofer's personal spending included a $7 million mansion and a $125,000 Range Rover, and that the total diverted for personal enrichment may have reached $10 million.
Mitchell, the third defendant, remains at large. Prosecutors allege the CEO of The Big Blue Umbrella obtained more than $1.2 million in grant funding after making false representations about how the money would be used. Instead of serving homeless Californians, prosecutors say Mitchell spent the funds on personal expenses, including bail-bond costs, credit card debt, transfers to family members, and PlayStation charges.
The contrast is hard to miss. Los Angeles has spent billions trying to address a homelessness crisis that remains one of the worst in the nation. Tens of thousands of people sleep on the city's streets. And federal prosecutors now allege that the people entrusted with some of that money were billing taxpayers for video-game subscriptions and bingo halls.
First Assistant U.S. Attorney Bill Essayli issued a direct warning at the news conference:
"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."
Essayli also signaled that the investigation is far from finished. He told reporters the effort was aimed at working up the chain, going after not just the people committing fraud, but those enabling it.
The Los Angeles arrests did not happen in isolation. Just The News reported that the charges came just one day after federal authorities charged 12 people with stealing $10 million in federal childcare aid, part of what appears to be an accelerating pattern of fraud enforcement actions across government-funded social programs.
Brian D. Harrison, acting inspector general at HUD, connected the cases to a broader principle:
"Stealing from programs meant to feed, shelter, and support people experiencing homelessness isn't just a financial crime, it's an attack on the most vulnerable communities provided for by (these) programs."
The scale of the alleged fraud is staggering when the numbers are added together. Between Young's $118 million in contracts, Soofer's $23 million, and Mitchell's $1.2 million, more than $140 million in public funds flowed through organizations now at the center of federal criminal cases. How much of that money actually reached the homeless people it was meant to serve remains an open question.
So does the question of oversight. The Los Angeles Homeless Services Authority distributed tens of millions of dollars to Home At Last alone. Whether LAHSA employees or California state officials face scrutiny in the ongoing investigation has not been addressed publicly.
For years, California's political leadership has demanded ever-larger budgets to fight homelessness, and taxpayers have obliged. The people sleeping on sidewalks in Los Angeles deserve to know where the money went. Based on these indictments, a good chunk of it went to Tahiti, a nightclub in Inglewood, and a freshly restored Impala, and the people it was supposed to help never saw a dime.
