$1 million in homeless funds for a nightclub? New LA fraud cases allege bribery and theft

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.”