Federal Crackdown Targets L.A. Homeless Nonprofits for Millions in Fraud

Key points

• Michael Young, 46, founder of Home At Last, is charged with wire fraud for allegedly using over $7.5 million in LAHSA funds to open the Six Seven Five Lounge in Inglewood and fund personal luxuries.
• Lakiya Malone, 48, was arrested on a 21-count indictment for accepting over $180,000 in bribes from Alexander Soofer in exchange for enrolling fake homeless participants in housing programs.
• Donye Mitchell, 55, CEO of The Big Blue Umbrella, is a fugitive accused of using $1.2 million in grant funds for bail bonds, credit card debt, and other personal costs.
• The Los Angeles Homeless Services Authority canceled its contracts with Home At Last in June following the discovery of the fraud.
• HUD Secretary Scott Turner criticized LAHSA for having a 'failing record' and funding a 'homeless industrial complex' that allowed fraud to run rampant.

Background

This case follows a series of federal fraud investigations targeting social service programs in 2026. In September, prosecutors charged individuals in a scheme involving stolen voter IDs in Los Angeles. Earlier in August, a Massachusetts mayor was charged with misusing COVID relief funds. The current arrests highlight ongoing concerns about oversight in local homeless services, particularly after the L.A. County Board of Supervisors voted to remove county funds from LAHSA in 2025 following critical audits that found the agency failed to properly track its programs.

How outlets are covering it

The Los Angeles Times and Fox News both emphasize the scale of the financial misappropriation, with Fox News specifically highlighting the $118 million total public funds received by Home At Last and the specific costs of a Tahiti vacation and a vintage Chevrolet Impala. ABC7 focuses on the operational aspect of the fraud, detailing how Malone facilitated 'ghost participants' to divert funds. While all outlets agree on the charges, HUD Secretary Scott Turner’s comments, reported by the LA Times and Fox News, frame the issue as a systemic failure of LAHSA, whereas the Justice Department’s Assistant Attorney General Colin McDonald focuses on the personal enrichment of the defendants. The LA Times notes that Malone’s employer, Special Service for Groups, has since implemented new compliance protocols, a detail not emphasized by the other sources.

Why it matters

This case underscores the vulnerability of taxpayer-funded social programs to fraud and the challenges in overseeing complex nonprofit networks. The alleged misuse of millions of dollars intended for homeless housing highlights the potential for significant waste in public assistance programs and raises questions about the effectiveness of current oversight mechanisms in Los Angeles. The federal crackdown signals a broader effort to hold individuals accountable for diverting funds meant for vulnerable populations, potentially influencing future policy and funding decisions for homeless services in California.

What to watch

Michael Young and Lakiya Malone are expected to appear in court to enter pleas, though they have not yet done so. The FBI is actively searching for Donye Mitchell, who is considered a fugitive. Alexander Soofer, who was previously charged in connection with Malone’s case, has agreed to plead guilty to wire fraud and money laundering. The Los Angeles Homeless Services Authority has already canceled its contracts with Home At Last, and Special Service for Groups has stated it is strengthening its compliance practices. Further legal proceedings and potential asset seizures are likely as the federal investigation continues.