Federal authorities on Wednesday arrested two people employed at Los Angeles-area homeless nonprofits, including one who allegedly misappropriated more than $7.5 million in taxpayer funds and used it to finance the construction of a nightclub and adjacent bingo hall.
Michael Young, 46, a founder of the Culver City-based nonprofit Home At Last, and Lakiya Malone, 48, an employee of Special Service for Groups, were arrested as part of a federal crackdown targeting homelessness corruption.
Young and Malone have not yet appeared in court to enter pleas in response to the charges. Their attorneys did not immediately respond to a request for comment.
FBI agents arrested Michael Young. Young, 46, founder of the Culver City-based nonprofit Home At Last (HAL), is accused of spending millions in LAHSA funds on private vacations and a nightclub.
(FBI)
Young, who is charged with wire fraud, allegedly spent more than a million dollars in taxpayer money to open and operate a high-end restaurant and nightclub in Inglewood called Six Seven Five Lounge. He also allegedly misused millions in taxpayer funds on luxury vacations, vintage car restorations, and commercial properties unrelated to homeless housing.
“The taxpayers did not sign up to fund this nightclub,” Assistant Atty. Gen. Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division said at a news conference Wednesday. “To those defrauding taxpayer-funded programs created to support vulnerable Americans, know this: Your momentary fraud fling will not be worth it.”
According to a 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.
LAHSA, which paid the nonprofit more than $75 million for homeless housing services, canceled its contracts with Home At Last in June, according to the complaint. The agency did not immediately respond to a request for comment on the charges against Young.
Last year, the L.A. County Board of Supervisors voted to remove county funds from LAHSA and set up its own department. It came in the wake of two critical audits that found LAHSA, a joint city-county agency, failed to properly track its funds and programs, leaving them vulnerable to waste and fraud.
At the Wednesday news conference, Department of Housing and Urban Development Secretary Scott Turner slammed LAHSA as having “a failing record.”
“LAHSA has continually funded the homeless industrial complex on the backs of American taxpayers while fraud has continually run rampant,” he said.
FBI agents arrested Lakiya Malone at her South Los Angeles home. Federal investigators say Malone took more than $180,000 in bribes and kickbacks for signing up so-called “ghost participants” in homelessness services programs.
(Dept. of Justice)
Malone was charged in a 21-count indictment accusing her of taking more than $180,000 in bribes and kickbacks from Alexander Soofer, who was the executive director of the nonprofit Abundant Blessings. Soofer was charged earlier this year and has agreed to plead guilty to wire fraud and money laundering.
According to the indictment, Malone allegedly provided priority referrals of homeless housing participants, including “ghost” participants who never stayed or received services at Abundant Blessings sites.
In a statement, Special Service for Groups, the nonprofit organization where Malone was employed, which is a separate entity from LAHSA, said it has put in place prevention protocols and compliance practices, and that the organization “has taken further steps to strengthen them.”
“Every dollar entrusted to us — federal, state, local, or private — must be protected and used as intended,” the statement read.
The FBI is still searching for Donye Mitchell, 55, the CEO and director of The Big Blue Umbrella, an L.A.-based nonprofit. Federal authorities allege Mitchell was fraudulently awarded more than $1.2 million in grant money from a Los Angeles County-funded nonprofit.
Mitchell, who is charged with wire fraud, allegedly used money from a Los Angeles County-funded nonprofit for personal expenses, including paying his own bail bond costs after a 2024 arrest for domestic violence and assault, inflated salary payments, credit card debt, family transfers, rent and PlayStation charges.
“The scale and brazenness of these fraudsters expose a profound failure by the State of California and Los Angeles County to safeguard public funds,” First Assistant U.S. Atty. Bill Essayli said in a statement. “Taxpayers deserve accountability. We will follow the money, expose the corruption, and prosecute those who exploit the American people for personal gain.”
Times staff writer Andrew Khouri contributed to this report.
