LOS ANGELES, September 16 — Federal authorities in Los Angeles on Wednesday charged three people with stealing $12 million in federal and state homelessness aid to pay for real estate, luxury trips and vintage vehicles, according to the Associated Press. Two defendants, Lakiya Malone, 48, and Michael Young, 46, were arrested early Wednesday in Los Angeles. A third defendant charged with wire fraud, Donye Mitchell, 55, is considered a fugitive.
It was the second such arrest of people on federal fraud charges in Southern California that week, as President Donald Trump’s administration tries to emphasize a crackdown on fraud and waste in government and aid programs. On Tuesday, September 15, 12 people were charged with stealing more than $10 million in federal childcare aid.
Nonprofits and the LAHSA connection
The three defendants each worked for or ran Southern California-based nonprofit organizations, which often contracted with city, county, state or federal agencies to provide aid or money to find housing and social services for homeless people. Prosecutors allege that the defendants used funds from those contracts to pay personal expenses, accepted bribes, and billed for services that were never provided.
“Make no mistake, HUD and the Trump administration will not tolerate the theft and abuse of taxpayers in this country,” Secretary of Housing and Urban Development Scott Turner said at a news conference. Turner used the indictments to accuse the Los Angeles Homeless Services Authority (LAHSA), which approved grants to these defendants, of being negligent with taxpayer dollars.
Young is the founder of Home At Last, a nonprofit that took in more than $118 million in public funds since 2019 for its stated mission of providing housing and aid to homeless people. Federal prosecutors say Young instead created shell companies that he claimed were independent contractors but were, in fact, controlled by him. This alleged self-dealing allowed Young to be paid both at Home At Last and overbill federal and local authorities, prosecutors said.
They say Young misused an estimated $7.5 million in taxpayer funds through fake contractors and vendors. Young used the proceeds to take luxury trips to Tahiti, and used funds to open a nightclub in Inglewood called the Six Seven Five Lounge and other commercial real estate projects, prosecutors allege.
Mitchell is the CEO of Big Blue Umbrella, which was awarded more than $1.2 million from a federally supported nonprofit for housing and mental healthcare aid. Prosecutors say Mitchell not only misstated his organization’s ability to provide such services, but also used money from the award to pay off his credit card debts, give funds to family members, buy video games and pay legal expenses for an unrelated case. Malone was charged with accepting more than $180,000 in bribes from another homelessness-aid nonprofit.
Malone allegedly not only accepted bribes but also placed people in homeless aid programs who weren’t homeless.
A fourth person pleads guilty
Separately, federal prosecutors announced that a fourth person pleaded guilty to wire fraud and money laundering charges for stealing at least $2 million in homeless aid. Alexander Soofer, the executive director of Abundant Blessings, admitted to working with Malone to bill federal and state authorities for homelessness aid services when there were no participants in his programs. Some 72,000 to 75,000 people live in shelters or encampments in Los Angeles and Los Angeles County, making it one of the largest homeless populations in the country.
It has been a significant issue in Southern California for years, and Los Angeles Mayor Karen Bass made it a cornerstone of her 2022 election campaign. City and county authorities spend roughly $1 billion a year trying to help the homeless population, often using LAHSA to coordinate aid.
What to watch next: whether Mitchell is apprehended, and how LAHSA responds to Turner’s accusation of negligence with taxpayer dollars.
