The Brief

Ask Logan Sudeith how many bets he places in a week and he'll laugh. It's a comical line of questioning for the 25-year-old former financial risk analyst, who estimates he clocks about 100 hours a week on prediction markets Kalshi and Polymarket. After a while, understandably, some of the bets blur together. What are his net profits, though? That's a number he's got at the ready.

"Last month, I made $100,000," said Sudeith, who does most of his trading from his laptop while bed-lounging in his Atlanta apartment. He's executing so many orders on the sites, he says, that he has no time to cook. So he DoorDashes every meal.

"My last salary was $75,000 a year, so I left my job to trade full time," he said

Some of his biggest hauls in recent months include lucrative stakes on Time Magazine's person of the year ($40,236), the most-searched person on Google last year ($11,083) and a wager on the New York City mayoral race ($7,448). And of course, a couple thousand here, a couple thousand there on questions like, how many times will a sports announcer say "air ball"? And will President Donald Trump use the phrase "drill baby drill" at an upcoming press conference? (Traders had $500,000 on the line on this market.)

"I'm not a fan of Trump, though I do spend most of my day listening to him and tracking what he is doing," said Sudeith, noting that whatever candidate in the next presidential race is the most friendly to prediction markets has his vote. "I could be a single-issue voter. If they're super-super heavy anti-prediction markets, it would be hard for me to vote for them."

The boom of online prediction markets is being driven by the Sudeiths of the world. He's one of millions of traders logging on every day to services like Kalshi and Polymarket to place high-dollar and incredibly risky bets on the outcome of the world in real time, whether it's an award host's turn of phrase to the number of migrants the U.S. will deport this year.

Much like previous financial crazes around meme stocks and NFTs, true believers view prediction markets through a stick-it-to-the-man prism. It's a movement against the elite establishment, they say, whether it's the mainstream media, pollsters or government agencies. This growing group of renegade traders maintain that core truths emerge only after thousands of people express their opinions with their pocketbooks.

"Markets are the most efficient way to get to real information," Sudeith said. "If you're watching on election night, I think you'll know who the winners are before the news can report it."

While the industry may position itself an alternative to the mainstream, the mainstream is embracing it.

CNN and CNBC have struck deals to incorporate Kalshi prediction markets into coverage. The Wall Street Journal's owner, Dow Jones, is partnering with Polymarket, as did the Golden Globe awards this year, with announcers updating viewers on Polymarket odds before every commercial break.

Founders of the prediction markets apps say they enable people to turn their opinion into a financial hedge against things like inflation or a government shutdown, yet skeptics say that is twisty and self-serving logic.

"They are gambling sites no different than FanDuel or DraftKings, a corner bookie or a casino in Las Vegas," said Dennis Kelleher, chief executive of Better Markets, a nonprofit that pushes for Wall Street reform.

Kalshi says 'there's no house'; not all agree

Traditional gambling often means wagering against "the house," where the casino acts like the banker, extracting fees and maintaining a competitive edge.

Prediction markets like Kalshi say they're different.

Here's how they work: A staff member creates "a market," often after one has been suggested by a user, like what will President Trump say at his next Oval Office briefing?

Then anyone can propose a "strike," the lingo for a term that's being bet on, whether, for instance, Trump will say "Greenland," or "Minnesota," or some other word or phrase.

Kalshi staff pick what terms will be bet on for both sides of that "yes" and "no" wager.

In order to work, however, there needs to be money on both the "yes" and the "no" side of the market, so Kalshi relies on institutional partners, like the hedge fund Susquehanna International, or everyday users with large enough portfolios to front the cash. This is called being a "market maker." Kalshi provides financial perks and data access to traders who do this.

But because traders are competing with other traders, Kalshi argues there is no house involved in these transactions.

Several federal lawsuits against Kalshi have challenged this notion, claiming that the Wall Street firms that Kalshi taps are indistinguishable from a traditional "house."

One suit filed this month in the Northern District of Illinois highlights that the company itself has a separate entity, Kalshi Trading, that supplies cash on the opposite side of trades.

"Thus, Kalshi users are betting against the house exactly the same way it would in a brick-and-mortar casino," wrote lawyer Russell Busch in the complaint.

Kalshi denies this. Company spokeswoman Elisabeth Diana told NPR that market makers merely price bids and asks and do not have a competitive advantage.

"Market making is completely different from being a house because a house has monopoly pricing power, whereas market makers compete with thousands of other market makers to take bids," she said.

The Trump family invests in prediction markets. The administration is taking a friendly policy stance

While the Biden administration sought to rein in this industry, Trump's regulators are breaking down barriers to allow it to flourish.

More than $2 billion is now traded every week on Kalshi, an amount the company says is 1,000% higher compared to the Biden years.

Polymaket, which was forced in 2022 to shut down in the U.S. for operating as an unlicensed betting site, recently won the Trump administration's blessing to re-launch in the U.S.

The Trump family is also getting in on the action. The president's son, Donald Trump Jr., is on the board of Polymarket, and his venture capital firm invests in the company. He is also a "strategic adviser" to Kalshi. Truth Social, the president's social media site, is planning to launch its own prediction market called Truth Predict.

The explosive growth and permissive regulatory environment has ignited a debate about the underbelly of an industry that essentially turns many features of modern life into potential monetary wins and losses. Fears persist that when elections, politics and foreign invasions become a gamble that insiders could abuse their access for profit and market odds could influence what actually happens.

Donald Trump Jr. speaks during The Bitcoin Conference in Las Vegas on May 27, 2025.

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Ian Maule

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Getty Images

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Then there's the most prosaic, but perhaps more immediate worry: That the prediction markets gamify trading with slickly designed apps, one-click checking account deposits and constant push alerts, catering to compulsive online bettors. They're not unlike other app-based trading platforms, but now almost anything is a potential betting opportunity, which economists and other financial experts say can enable a new generation of gambling addicts.

While individual bets on Kalshi are not public, the app has a leaderboard showcasing top profit winners.

That offers hope to some traders who turn to Discord and Reddit to discuss how losses have set them back.

"I'm down 2000 this week when I was up 1200 last week," wrote a Kalshi trader who goes by Educational_Pain_407 on Reddit. "Lost it all and keep trying to claw it back. So I don't know what to tell you but right now I don't have enough to pay my bills in my bank account so I can't bet even if I wanted to."

There are three federal lawsuits against Kalshi seeking class action status alleging the apps have sucked young traders into gambling addiction.

Officials at Kalshi have said if traders "lose their shirt that's on them," and even the Reddit user behind on his bills concedes it's a matter of personal responsibility: "Live and learn and pay for your mistakes. The consequences of being an adult," he wrote recently.

While online sportsbooks and gambling are nothing new, the rapid speed, volume of cash and ease at which transactions flow across prediction market apps set them apart from other forms of betting, according to legal and financial experts.

"Like sports betting, these platforms can be addictive. It is the adrenaline rush that the target demographic is chasing," said Melinda Roth, a visiting professor at Washington and Lee University's School of Law who studies prediction markets. "I do believe this is a looming public health crisis."

Decoding the lingo: 'Mogged,' 'Fudded,' 'PMT'

Evan Semet, 26, is another diehard prediction markets trader who left his salaried position in finance as a quantitative researcher after he started raking in six figures a month on Kalshi."I don't feel the need for another job at the moment," he said.

His first golden ticket came via bets on the number of Transportation Security Agency screenings that happen across a certain period on Polymarket.

Semet said he set up a dedicated server through Amazon Web Services to host statistical models that he runs to help him decide where to place bets.

"It was pretty modelable," he said, noting that he leans on the finance savvy he gleaned at a trading firm to make money on predictions. "Most day traders draw some shapes on a chart and think it has some statistical significance but it's really just astrology," he said. "They're old-school gamblers going off of intuition. I try to be driven by statistics."

To stay tapped in, he's often toggling between multiple live trades on one screen and following a discussion among other traders on the social network Discord.

Keeping up on what's happening there requires understanding a hyper-specific type of lingo that's a blend of Generation Alpha and Gen Z slang, repurposed finance terminology and a grab-bag of other cultural influences from gaming to crypto to the gutter humor of fringe sites like 4chan.

If you've been out-maneuvered by another trader, you've been "mogged."

Advertisements by the company Kalshi predict a victory for Zohran Mamdani in the New York City mayoral election before the polls closed Nov. 4, 2025.

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Olga Fedorova

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AP

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If a market has "fudded," people are selling their positions out of fear, uncertainty and doubt. A "rulescuck" is someone who is a stickler for the rules of a betting market and will try to win on a technicality.

A "bondsharp" is a well-known community member who frequently puts up money on the other side of a bet.

These are just a handful of the terms required to stay apace of the chats on Discord, where PMTs are often discussing their full port (prediction market trader, and full portfolio, of course).

"It is a good amount of terminology. It's borrowing lingo and terms from stuff I've heard at real trading firms mixed with online pop culture," Semet said.

Prediction market trading can be a compulsive sport for many of them, who admit they can be dopamine junkies. Others prefer to avoid the pressure-cooker feeling of watching a bet win or lose live.

"It's an antsy, gambling-like feeling watching it all happen live," Semet said. "It's intense, almost feels like the fog of war, trying to decide what to do," he said. "Sometimes I prefer to not look at all and see how I did later."

How predictions markets got into politics

Kalshi's big day came, as it were, on Election Day in November 2020.

That's when they got word that Trump's Commodity Futures Trading Commission, which regulates futures contracts, greenlit it as a "designated contract market," a blessing that essentially gave the platform a license to operate as a financial exchange.

It was a long time coming.

For years before that, Kalshi's co-founders Tarek Mansour and Luana Lopes Lara, former Wall Street traders who met at MIT, had been battling a skeptical CFTC, which had long rejected similar applications over concerns that an events contract platform would operate a type of gambling outside the purview of state gambling commissions. Regulators also feared the bets invited insiders to rig the outcomes of events from sports to elections.

As Kalshi hired lawyers and lobbyists leading up to their CFTC approval, another prediction market, where most are betting with cryptocurrencies, Polymarket, was exploding in growth. It, however, had not bothered to even try to receive federal buy-in. The Biden administration shut down the exchange for operating without a license. Now, Polymarket has the CFTC on its side, and is staging a U.S. comeback.

Two developments helped Polymarket's return: the company acquired a little-known derivatives exchange QCX, which had already obtained CFTC approval. And the Trump administration's CTFC and Justice Department abandoned investigations into Polymarket.

States, however, are on the attack. Massachusetts has sued to push Kalshi out of the state. Eight other states, including New York, New Jersey and Maryland, have sent the company cease and desist letters alleging that it is operating as an illegal and unlicensed sports gambling site. The motivation is clear: Gambling brings in serious tax revenue for states, while prediction markets bring in none.

For both Kalshi and Polymarket, one of the most controversial areas of prediction market trading is elections, an issue Biden-era regulators took Kalshi to court over.

Under the 1936 Commodity Exchange Act, which was updated in 2008 after the financial crisis, future event contracts cannot involve terrorism, assassinations or "games," but political betting is not explicitly banned.

Biden administration lawyers argued that placing wagers on races amounted to a game, a word that is not defined at all in the law. Election bets, the regulators contended, could turbocharge the spread of political misinformation and create financial incentives for voters to cast a ballot even when it's contrary to a voter's political views.

It also puts the CFTC in the awkward position of having to investigate news, whether real or fabricated, that moves a prediction market. Former CFTC officials told NPR that the agency has never been equipped to be "an election cop."

The federal appeals court in Washington, D.C. rejected that framing and handed Kalshi a major victory. The court also pointed out that the harm these markets would cause the government was not "concrete" enough.

The Trump administration dropped the appeal, unleashing what is expected to be an unprecedented torrent of prediction market cash into this year's midterm elections, which is raising alarms among those pushing for stricter regulations on this industry.

"AI, deepfakes, and other nefarious activities to attack candidates could easily impact the betting activity and odds, as well as the actual outcome of elections," said Kelleher of Better Markets. "They don't really care who wins or loses. They only care about the volume of bets and driving that volume as high as possible."

Regulators appear unprepared. The CFTC usually has five commissioners but currently only has one. Meanwhile, Kalshi's board includes former CFTC Commissioner Brian Quintenz, who was among the officials who gave the platform its federal approval in 2020.

Former CFTC Commissioner Kristin Johnson, who left the agency in 2025, said that lack of commissioners comes on top of high levels of turnover among the most senior staff lawyers.

"We're essentially asking the CFTC to get involved in engaging and policing an element of our democratic process that we really haven't thought carefully enough about," Johnson said.

Insider trading scrutiny grows

Before a U.S. operation ousted Venezuelan leader Nicolás Maduro, one trader on Polymarket banked a nearly half-million-dollar profit on a bet Maduro would not remain president for long.

While the trader's identity remains a mystery, speculation continues to rattle around the internet about whether the person had insider information. The episode has renewed scrutiny on how the companies ensure bets aren't rigged.

On Discord, when traders see a large bet placed that immediately stands out as an outlier, cries of "the market is insidered" are common. Proving it is another matter.

As is often the case on the platforms, open-shut evidence of insider trading is elusive. Kalshi requires a government-issued ID to sign up in order to trace any possible market manipulation back to a real person. Polymarket does not, but it has yet to publicly re-launch its U.S. app. Internal and third-party surveillance tools, the companies say, are on the lookout for unusual activity.

Congress has begun to take notice. Following the Maduro trade, Rep. Ritchie Torres, D-NY, and 30 other Democrats, sponsored legislation banning federal officials from using prediction markets to trade on policies or political outcomes using non-public information.

Being up against an insider is always a risk, said full-time prediction markets trader Semet.

"There's always going to be someone who has more information than you, unless you're the insider," he said. "There are certain accounts that miraculously have every single Google and OpenAI release date nailed perfectly, and it's like, all right, just don't fade those people," he said using the slang word for voting against another trader.

When asked if he thinks Kalshi and Polymarket are doing enough to combat insider trading, he gave a blunt assessment: "F*** no," Semet said. "I really don't think they care."

"Tailing," or making a bet joining in on a suspiciously large bet is common on the platforms. Bloomberg on Monday reported on a new tool that allows traders to get alerts when anomalous transactions occur so they can potentially cash in on what could be a winning wager.

From the vantage point of these traders, nearly everything has a trading implication.

And that kind of thinking can fuel conspiratorial theories about why something did or did not happen.

Take, for instance, a recent White House press briefing in which press secretary Karoline Leavitt left the room seconds before hitting 65 minutes. To most, that was unremarkable.

Yet on Kalshi, that looked like a secret message, because many thousands of dollars in bets were at stake that she would cross the 65-minute mark.

The chatter about Leavitt was mentioned on CNBC, which got the attention of traders on Discord, who wondered if this or another incident will ever lead to a PMT, prediction market trader, testifying in Washington about rigging the markets.

"PMT getting called before Congress," wrote a Discord user, whose handle is "permanent resident of hell," they added: "Let's get a market on it."

The legal tug-of-war centers on a two-panel work called “Adam” and “Eve.” The life-size paintings depicting the biblical characters were created around 1530 by German artist Lucas Cranach the Elder.

The Nazis stole the two paintings, and many others, from Jewish art dealer Jacques Goudstikker in Holland in 1940. After the war, the Dutch government sold these two works to a Russian aristocrat, who sold them to the Norton Simon in Pasadena in 1971.

“By pursuing the recovery of the Cranachs, we are seeking to reverse a great injustice perpetrated by the Nazi theft of a Jewish family’s property,” Rabbi Noah Farkas, president and CEO of Jewish Federation Los Angeles, said in a written statement.

The Federation is plaintiff in a lawsuit filed on Monday in L.A. Superior Court that names the museum and two related foundations as defendants. Cranach the Elder’s work has sold for millions of dollars.

Goudstikker’s only living heir, Marei von Saher, gave the Federation the authority to file the lawsuit. If the lawsuit is successful, the Federation pledges to use the majority of the net proceeds to care for impoverished Holocaust survivors living in the L.A. area.

Adam and Eve, painted around 1530 by German artist Lucas Cranach the Elder.

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Courtesy Norton Simon Art Foundation

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Von Saher has spent years trying, unsuccessfully, to get these paintings back. But this lawsuit is different. It’s filed under a 2024 California law that gives people the ability to petition to recover cultural property “that was taken or otherwise lost as a result of political persecution,” according to the law.

Stolen painting

Responding to the lawsuit, the Norton Simon Museum did not challenge that the painting was looted by the Nazis.

“After decades of litigation, court after court including the United States Supreme Court has confirmed that the Norton Simon Art Foundation has proper title to 'Adam' and 'Eve,'" the museum said in a written statement.

The museum is referring to a 2018 ruling by the U.S. Ninth Circuit Court of Appeals, which said that since a foreign government sold the artwork, the court could not declare that sale illegal. The U.S. Supreme Court let that decision stand without reviewing it.

The Norton Simon has been pressured to negotiate with the heirs to return the work, even from the founder’s grandson.

“In my opinion, it's immoral and unethical because they don't have good title,” said Joel Greenberg, founder of the nonprofit Art Ashes, which helps families of Holocaust survivors recover art looted from their ancestors.

It’s not the only high-profile case of Nazi-looted art in the region. The late Los Angeles resident Maria Altman recovered a work by Gustav Klimt that was looted from her family by the Nazis in Austria.

LOS ANGELES (AP) — A motorist was arrested on murder charges after authorities say she slammed her SUV into a city bus in Los Angeles, killing at least two people and injuring six others in a prelude to a second deadly tragedy: the fiery crash of a TV news helicopter that was covering the collision.

Bailee Lynn Rios, 36, of Simi Valley, was arrested Tuesday night and is being held at a Los Angeles jail with bail set at $4 million, police said Wednesday. The case is being forwarded to the district attorney’s office, which will decide whether to file the charges in court or pursue different ones. Information on a lawyer who could speak on her behalf was not immediately available.

The helicopter, which was used by NBC and Telemundo, crashed about two hours after police say Rios drove her 2004 Ford Expedition the wrong way down a busy avenue, ran a red light and struck a vehicle before hitting the bus. One passenger was fully ejected from the bus and another was partially ejected, police said.

Rios’ mother, Cindy Rios, said she was shocked and saddened by the string of events. She said she had not spoken to Bailee Lynn since her arrest and had not been contacted by law enforcement.

“It’s just horrible,” Cindy Rios told The Associated Press in a phone interview Wednesday. “The fact that my daughter was involved and was the cause of it is just extremely disturbing.”

“If anything, I’m sorry for the other families,” she added. “My daughter’s alive. People lost their lives.”

Chopper crash killed a reporter, a pilot and a man on the ground

NBC4 Los Angeles reported that two people aboard the helicopter — reporter Eliana Moreno and pilot George Marciniw — were killed when the chopper went down Tuesday in the Chatsworth neighborhood in the San Fernando Valley north of downtown.

A person on the ground, identified as 29-year-old Edy Gutierrez Mejia, died in a parking lot, the Los Angeles County Medical Examiner’s Office said. He was from Guatemala, the country’s consulate confirmed.

The crash happened as news crews were reporting on the collision involving the SUV that slammed into the bus.

There were no immediate details on what caused the helicopter crash, but an alarm could be heard sounding inside the helicopter’s cockpit as it lost altitude in the final seconds of video the crew broadcast before the crash.

Just after the beeping noise starts, a woman’s voice says “uh oh.” The helicopter moves quickly away from the bus crash site and starts losing altitude. The woman says “You can’t pull up?” before the video stops as the chopper nears the ground.

“That video is probably the most important evidence that we have discovered so far,” National Transportation Safety Board investigator Fabian Salazar said Wednesday at a news briefing.

Salazar said the sounds were consistent with the helicopter’s engine changing speed, as well as what he said were likely advisory tones for the pilot. The NTSB said it is also investigating the bus collision.

The helicopter, a Eurocopter AS350, went down near a large storage facility. At least four cars and two storage containers burned after the helicopter caught fire. NBC4 reporter Robert Kovacik was at the bus scene and saw black smoke and rushed to the helicopter crash site.

Anchor and reporters pay tearful tributes to deceased colleagues

Moreno was a familiar voice for NBC4 and Telemundo 52 during the station’s aerial coverage. She and Marciniw were both were employees of Angel City Air, which operated the chopper for the station.

Moreno, born in Orange County, joined Angel City Air in 2010, the same year she earned a broadcast journalism and political science degree from Chapman University. She reported for several news outlets and began flying with Marciniw in 2023, the NBC4 website said.

Marciniw grew up in Southern California and graduated from Burbank High School in 1974.

“I think a lot of us are still trying to process what happened, this terrible loss,” NBC4 reporter Lauren Coronado told viewers early Wednesday as she stood near the crash site. A hazmat crew was cleaning up jet fuel, she said.

In a tribute to Moreno and Marciniw, the newscast referred to them as “the team in the sky,” saying Moreno would often post videos from her job and was in awe of the view. Anchor Lynette Romero held a colleague’s hand and wiped away tears after hearing Moreno’s voice when one of her posts was played.

In an interview with the station, Esteban Jimenez, a pilot, said he had known Marciniw since the 1990s. He said Marciniw had been his instructor.

“I just talked to him on Sunday. We were talking about the aviation business and retiring,” he said.

Expert talks about what may have caused the crash

Aviation safety expert Jeff Guzzetti said the alarm sounding in the helicopter’s final video sounds like the low rotor RPM warning horn that signals the main rotor is no longer spinning enough to keep the helicopter in the air.

“It just has all the earmarks of a potential loss of engine power and a dangerous decrease in the main rotor speed,” said Guzzetti who used to investigate crashes for both the NTSB and FAA.

Guzzetti said the pilot appeared to be trying to perform an emergency maneuver to use the wind to force the rotor to spin again much like a breeze turns a windmill. Doing that can create a bit of lift that could help cushion the impact, but Guzzetti said there would have been little opportunity to do that because the helicopter had been hovering at a low altitude beforehand.

There are risks to news helicopters particularly in a major city like Los Angeles where multiple helicopters respond to an incident, but the pilots all coordinate closely over the radio to ensure they maintain a safe distance from each other. The industry also shares best practices to help keep these news flights safe.

“It’s a very unique form of flying. And the community is very good about lessons learned,” Guzzetti said. “And so because of that, you don’t hear about too many of those accidents. So they’re rare, but they do occur, just because the mission is a risky one.”

Other crashes involving news helicopters

The station said this is the second aviation tragedy in its history.

In 1977, a KNBC news helicopter crashed when it ran out of fuel while returning to the station after covering a wildfire in Santa Barbara, killing the pilot and camera operator. The pilot, former U.S. Air Force officer Francis Gary Powers, had been in the news years earlier when he was shot down and captured while flying a U-2 spy plane over the Soviet Union for the CIA, an ordeal portrayed in the movie “Bridge of Spies.”

There have been at least eight fatal crashes involving news helicopters in the U.S. since 2000, killing 16 people, according to a review of federal accident records and news accounts.

They include a 2023 crash in a New Jersey forest that killed the pilot and a photographer aboard a helicopter used by Philadelphia station WPVI and a 2022 crash beside a Charlotte, North Carolina, interstate that killed a pilot and meteorologist during a training flight for WBTV.

A 2007 midair collision in Phoenix of two TV news helicopters that were covering a police chase led the NTSB to recommend that news helicopters have at least two people in the cockpit so the pilot can focus on flying while the reporter focuses on the story.

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Golden reported from Seattle, and Collins from Hartford, Connecticut. Associated Press writers Josh Funk in Omaha, Nebraska; Olga Rodriguez in San Francisco; Kathy McCormack in Concord, New Hampshire; and Allen Breed in Raleigh, North Carolina, contributed.

Federal and county law enforcement announced charges Wednesday against three people in a widening investigation of homelessness services fraud in the L.A. area. Prosecutors previously charged three other people and said they plan to bring “many more” cases.

In Wednesday’s announcement at a news conference, authorities alleged a bribery scheme built on "ghost" clients illustrates a yearslong problem.

"Nobody was minding the shop," the region’s top federal prosecutor, Bill Essayli, told reporters in response to a question from LAist. "There's no vetting. There's no auditing. There's no accounting. It was just a rush to push as much money out the door."

What are the charges?

Authorities arrested Michael Young — founder of the Culver City nonprofit Home At Last — and accused him of using shell companies and fake bids to misappropriate $12 million in taxpayer funds. The allegations include siphoning $1 million into a high-end nightclub, a nearly $50,000 trip to Tahiti and a $140,000 restoration of a vintage Chevy Impala.

Michael Young, 46, of Baldwin Hills

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Courtesy Department of Justice

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A headshot of Alex Soofer shared by a federal prosecutor on X.

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First Assistant U.S. Attorney Bill Essayli via X

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Scott Turner, the U.S. secretary for Housing and Urban Development, said Young's group received more than $118 million in public dollars for homeless housing since 2019 — over $75 million of it through the Los Angeles Homeless Services Authority, or LAHSA.

The new cases allege about $12 million in misappropriated funds — almost all of it by Young.

The bribery charges are against Lakiya Malone, an employee of the nonprofit Special Service for Groups, or SSG, who was responsible for referring homeless people to LAHSA-funded housing. Prosecutors say Malone took roughly $180,000 in bribes from Alexander Soofer, head of the now-defunct nonprofit Abundant Blessings, and in exchange steered him "ghost" participants — so he could bill for services never rendered.

Lakiya Malone, 48, of South Los Angeles

Donye Mitchell, 55, of Orange

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Courtesy Department of Justice

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“She was supposed to guard the money, and instead she took bribes,” Essayli, the first assistant U.S. attorney for the Central District of California, said.

In a statement, SSG said it has been working with federal prosecutors “to ensure that any responsible individuals are held accountable” and has strengthened its “protocols and compliance.”

Charges against Soofer were announced in January. Authorities announced Wednesday that he has agreed to plead guilty to wire fraud and money laundering. Soofer admitted in his plea agreement to the alleged bribery scheme.

According to prosecutors, Soofer also admitted to "pocketing at least $2 million in taxpayer money for his own personal enrichment and for businesses unrelated to homeless housing," and that he has agreed to forfeit the money to the U.S. government. Prosecutors previously alleged he diverted a much larger amount: at least $10 million.

An LAist investigation found LAHSA kept awarding millions in contract renewals to Soofer’s group even after LAHSA’s own compliance team labeled it "high-risk" for, among other things, billing for services while reporting no enrolled participants.

The third defendant announced Wednesday is Donye Mitchell of the nonprofit Big Blue Umbrella. Mitchell is accused of lying about his experience to land a $1.2 million county-funded grant, receiving $315,000 and using those funds for personal expenses, including bail for a domestic violence arrest and video games. Officials said he's believed to be in Las Vegas and hadn’t been arrested as of Wednesday morning.

Mitchell is “a convicted fraudster, by the way,” Essayli said. He was convicted in 2011 of defrauding California unemployment benefits, according to the criminal complaint in the new case, and was ordered in 2012 to compensate the state $6 million.

The county funds he’s accused of stealing were awarded by a county vendor in 2024 — well after his fraud conviction.

LAist has left phone messages for Young's and Malone’s lawyers inviting their response to the charges and will update this article if they respond. It is unknown if Mitchell, who has not yet been arrested, has a lawyer.

Prosecutors' critique 

Essayli and L.A. County District Attorney Nathan Hochman criticized what they called a glaring lack of oversight of massive spending on homeless services. Hochman cited a court-ordered 2025 report that found L.A. city officials failed to properly track $2.3 billion in homeless funds, largely by outsourcing to LAHSA — which the review found failed to collect accurate data on its vendors and hold them accountable.

"We have not seen the results you would expect for billions of dollars being spent," Hochman said.

“This is the beginning of these prosecutions,” he added.  ”Many more” are expected in the coming months, he said.

Continuing trouble for LAHSA 

The new charges were announced the day after LAHSA's governing commission decided to give up its responsibility for federal dollars, including applying for roughly $240 million a year in federal homelessness funding and running the annual homeless count.

Also on Tuesday, Mayor Karen Bass skipped a congressional hearing on LAHSA's fraud problems, calling it a "politically motivated" attack.

LAHSA, now led by Interim CEO Gita O'Neill, said in a statement Wednesday that it has "zero tolerance for fraud, waste, or the exploitation of public resources" and commended prosecutors’ action.

The agency said it terminated its contracts with Young’s nonprofit in June after evidence of wrongdoing emerged, and is pursuing recovery of cash seized from Young. The statement added that LAHSA fully cooperated with the federal task force and that no LAHSA staff are implicated — only "external provider executives and outside contractors.”

Essayli was asked Wednesday whether LAHSA's past or current leadership has been culpable.

"That's actually a very difficult question to answer," he said.

"It is not against federal law to be incompetent, unfortunately. I wish it were,” Essayli said. “So just because the people at the helm did not do a good job, that does not give us the authority to arrest them."

“ I assure you, if anyone in power engaged in violation of federal law, we will not hesitate to charge them.”