DOJ Says Workers at L.A. Homeless Nonprofits Spent Tax Dollars on Vacations, Nightclubs, Bail
· Reason
The U.S. Department of Justice (DOJ) announced Wednesday that it had charged three individuals with defrauding federal funds intended for Los Angeles–area homelessness programs.
Two of the defendants, Michael Young and Lakiya Malone, were arrested by federal agents at their homes Wednesday morning. Both have been charged with wire fraud. A third defendant, Donye Mitchell, remains at large.
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Young is the founder of the nonprofit Home At Last. The DOJ says that the nonprofit received $118 million in public funds through various contracts with the Los Angeles Homeless Services Authority (LAHSA), a city-county body tasked with coordinating and managing a wide range of city, state, and federal homeless grant programs.
Federal prosecutors allege that Young misappropriated $12 million of those funds for his own personal expenses, including vacations and business ventures like a nightclub he founded in Inglewood.
Malone, an employee of the nonprofit Special Service for Groups, is accused of accepting $180,000 in bribes and kickbacks from another nonprofit homeless provider, Alexander Soofer, to place homeless clients in programs administered by his charity, including fictitious "ghost clients" who only existed on paper.
Soofer was arrested in January on fraud charges related to these schemes and has admitted to misappropriating $10 million in public funds for his own use. He's expected to plead guilty to felony fraud charges in the coming weeks, according to the DOJ.
Mitchell, who prosecutors said during a press conference this afternoon had not been arrested yet, is accused of misrepresenting his experience as a homeless service provider to obtain public grant funding, which he then spent on personal expenses, including his own bail costs for a domestic violence arrest.
"The scale and brazenness of these fraudsters expose a profound failure by the State of California and Los Angeles County to safeguard public funds," said First Assistant U.S. Attorney Bill Essayli for the Central District of California in a statement.
The charges against Malone, Mitchell, and Young come several months after the Trump administration suspended federal funding to LAHSA, citing the authority's poor financial management and conflicts of interest with vendors.
In August, LAist published a detailed report on how LAHSA continued to sign contracts with Soofer's charities after internal auditors flagged it as "high-risk." LAist had previously reported that hundreds of apartments rented by the authority to serve as housing for the homeless sat empty.
LAHSA's mismanagement has become a focal point in Los Angeles' mayoral election. Mayor Karen Bass, who appointed herself to the authority's governing commission in 2023, has been criticized for its failures and for her own absence at LAHSA commission meetings.
Bass' opponent, Councilmember Nithya Raman, who until recently chaired the committee overseeing the city's homelessness spending, has been criticized by Bass allies for slow-walking efforts to redirect city homeless funds from LAHSA to city-controlled programs.
Los Angeles County has already removed $300 million of its own money from LAHSA to support homeless programs run by its new homelessness department.
In July, LAHSA reported that homelessness across all of Los Angeles County had risen 1.2 percent.
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