Federal authorities arrested three individuals in Los Angeles on Wednesday as part of a sweeping crackdown on homelessness services fraud, alleging the suspects misappropriated millions in taxpayer funds intended for unhoused residents to finance luxury lifestyles, real estate, and a Southern California nightclub.
Federal and local law enforcement descended on several Southern California locations in early morning raids on Wednesday, rounding up figures tied to major homeless services nonprofits. The coordinated sweep targets what prosecutors describe as widespread exploitation of public funds meant to alleviate the county’s severe housing crisis. The latest arrests build on an ongoing multiagency probe into the millions funneled through the Los Angeles Homeless Services Authority and other regional entities.
Federal Raids Target Culver City and South Los Angeles Nonprofits
Among those taken into custody on Wednesday were Michael Young, 46, founder of the Culver City-based nonprofit Home At Last, and Lakiya Malone, 48, an employee of Special Service for Groups. A third defendant, Donye Mitchell, 55, the CEO and director of The Big Blue Umbrella, was arrested as part of a federal crackdown targeting homelessness corruption. Agents executed dramatic early morning operations, including using bullhorns outside Malone’s South Los Angeles residence before taking her into handcuffs.
Federal prosecutors allege that Young used his nonprofit to orchestrate complex self-dealing schemes. According to the criminal complaint, Young used shell corporations and fraudulent billing practices to misappropriate funds intended for homeless housing, including through programs administered by the Los Angeles Homeless Services Authority. Prosecutors say he misappropriated more than $7.5 million through these practices.
“The taxpayers did not sign up to fund this nightclub.”
Assistant Atty. Gen. Colin M. McDonald, Justice Department’s National Fraud Enforcement Division
Luxury Real Estate, Vacations, and an Inglewood Nightclub
Instead of providing shelter and services to unhoused populations, Young allegedly funneled the stolen capital into extravagant personal assets. Federal investigators state that he spent millions in taxpayer cash to open and operate a high-end restaurant and nightclub called the Six Seven Five Lounge in Inglewood, complete with an adjacent bingo hall. The spending spree also included luxury vacations, vintage car restorations, and various commercial real estate ventures.
Meanwhile, the parallel case involving Mitchell alleges that he secured more than $1.2 million in grant money from a county-funded nonprofit under false pretenses.
Bribes and Ghost Participants in the Abundant Blessings Scheme
Investigators also detailed a separate, interconnected bribery scheme involving Malone. A 21-count federal indictment accuses her of accepting more than $180,000 in bribes and kickbacks from Alexander Soofer, the executive director of the homeless services nonprofit Abundant Blessings.
In exchange for the kickbacks, Malone allegedly provided priority housing referrals to Soofer’s organization, including fabricating records for ghost
participants who never actually lived at or received services from the sites. Prosecutors stated that Soofer himself misappropriated $23 million in public funds, channeling the money into a $7-million Westwood home, private school tuition, White Lotus
-style vacations, and high-end Hermes apparel.
Federal investigators allege that Malone provided referrals for “ghost” participants who never stayed or received services at Abundant Blessings sites.
Scrutiny Falls on Oversight and the Los Angeles Homeless Services Authority
The latest indictments have intensified sharp criticism directed at the Los Angeles Homeless Services Authority, the joint city-county agency responsible for coordinating aid. Federal officials, including Department of Housing and Urban Development Secretary Scott Turner, pointed to the arrests as evidence of systemic administrative failures.
LAHSA officials stated that the agency canceled its contracts with Home At Last after strong evidence of wrongdoing emerged and HAL failed to meet its contractual obligations. The agency emphasized its ongoing cooperation with federal investigators. Last year, the Los Angeles County Board of Supervisors voted to strip county funds from LAHSA and establish a dedicated department following critical audits that revealed severe tracking and oversight failures.
More Prosecutions Expected as Task Force Continues Its Work
The criminal cases represent the third to emerge from the Homeless Fraud and Corruption Task Force, which was formed in the spring to root out corruption in local relief spending. Bill Essayli, who leads the U.S. attorney’s office in Los Angeles, stressed that investigators are actively pursuing everyone involved in enabling the fraudulent operations.
Los Angeles County District Attorney Nathan Hochman, who unveiled parallel state charges, echoed those warnings at the news conference. Prosecutors and federal inspectors indicated that the ongoing investigation is far from finished, warning other entities misusing public money that additional indictments will follow as authorities audit billions of dollars in homelessness spending.