Feds arrest three for massive homelessness aid fraud scheme in Los Angeles
Federal authorities charged three individuals Wednesday with stealing $12 million in federal and state homelessness aid dollars to buy real estate, go on luxury trips, and purchase vintage vehicles.
This marks the second such federal fraud arrest in Southern California this week, as the Trump administration seeks to highlight a crackdown on government program waste.
On Tuesday, 12 people were arrested for allegedly stealing over $10 million in federal childcare aid.
The three defendants worked for or ran Southern California homelessness nonprofits that contracted with public agencies to provide shelter and services.
Prosecutors allege they used contract funds to cover personal expenses, accepted kickbacks, and billed for services that were never provided.
"Stealing from programs meant to feed, shelter, and support people experiencing homelessness isnβt just a financial crime β itβs an attack on the most vulnerable communities provided for by (these) programs," said Brian D. Harrison, acting inspector general at the Housing and Urban Development Department, in a statement.
Two suspects, Lakiya Malone, 48, and Michael Young, 46, were arrested early Wednesday in Los Angeles. A third defendant charged with wire fraud, 55-year-old Donye Mitchell, remains a fugitive.
Young founded the homelessness aid nonprofit Home At Last, an organization taking in over $118 million in public money since 2019 for its stated mission to aid unhoused residents.
Federal prosecutors say Young formed shell companies disguised as independent contractors to enable self-dealing and overbilling of government authorities. Through these fake vendors, Young allegedly misappropriated an estimated $7.5 million in taxpayer money.
Young used those funds to take luxury vacations to Tahiti, finance commercial real estate, and open an Inglewood nightclub called the Six Seven Five Lounge.
Mitchell, CEO of Big Blue Umbrella, received over $1.2 million from a federally supported nonprofit. Prosecutors claim he misstated his organization's operational capacity and used award funds to pay credit card debt, give money to relatives, buy video games, and cover unrelated legal fees.
Malone was charged with accepting more than $180,000 in bribes from another homelessness nonprofit and placing non-homeless individuals into homeless aid programs.
Separately, a fourth person, Alexander Soofer, 42, executive director of Abundant Blessings, pleaded guilty to wire fraud and money laundering for stealing at least $2 million. Soofer admitted working with Malone to bill authorities for homelessness services without actual participants.
Some Trump administration efforts against government benefit fraud have drawn backlash and legal resistance. In December, Vice President JD Vance, chairing the administration's anti-fraud task force, amplified a video by a right-wing influencer accusing Somali immigrant childcare providers in Minnesota of fraud. State checks found nearly all operating normally.
Nonetheless, the administration launched a major immigration crackdown in Minnesota and attempted to freeze childcare funds across five Democratic-led states, an effort blocked by a lawsuit.
