News

Feds Arrest 2 in Homeless Aid Fraud Case

September 17, 2026
editor

September 17, 2026 09:00 AM PST

(PenniesToSave.com) – Federal agents arrested two Los Angeles homelessness nonprofit workers at their homes early Wednesday, Sept. 16, 2026, in a case prosecutors say involves millions of taxpayer dollars meant to house people living on the streets [1]. Michael Young, 46, and Lakiya Malone, 48, were taken into custody, while a third defendant, Donye Mitchell, 55, is considered a fugitive [3].

Prosecutors allege that money intended for homeless housing instead paid for a nightclub, a Tahiti vacation, and the restoration of a vintage Chevrolet Impala [2]. The stakes are large. City and county authorities spend roughly $1 billion a year on homelessness in Los Angeles, often coordinating the effort through the Los Angeles Homeless Services Authority, known as LAHSA [1].

The contracts at the center of the case drew on city, county, and federal budgets, so the questions they raise reach well beyond California [3]. All three defendants are presumed innocent unless proven guilty in court.

Who Was Charged in the Los Angeles Homelessness Fraud Case?

Michael Young, a Baldwin Hills resident, is a founder of Home At Last, a Culver City-based nonprofit that provided homeless housing services [2][3]. He is charged by criminal complaint with felony wire fraud, which carries a maximum sentence of 20 years in federal prison [3]. Agents took him into custody without incident, according to the California Post [5].

Lakiya Malone, who lives in South Los Angeles, works for Special Service for Groups (SSG), a nonprofit health and human services organization [3]. She faces a 21-count federal indictment that includes wire fraud, bribery, and one conspiracy count [3]. Each wire fraud count carries up to 20 years, each bribery count up to 10 years, and the conspiracy count up to five years [3].

Donye Mitchell, of Orange, is the CEO and executive director of The Big Blue Umbrella (BBU), a Los Angeles-based nonprofit, and also goes by the name Danya Mitchell [3]. He is charged with wire fraud and was not at his home when agents arrived [5]. A fourth figure, Alexander Soofer, 42, executive director of the nonprofit Abundant Blessings, was charged separately and has agreed to plead guilty to wire fraud and money laundering, with a formal plea expected in the coming weeks [4][5].

The cases were brought by the Homelessness Fraud and Corruption Task Force, which First Assistant U.S. Attorney Bill Essayli formed last year to cover the seven counties of the Central District of California [3][4]. Reports differ on the total at stake. The AP put the combined amount at $12 million across the three defendants [1], while the California Post attributed $12 million to Young alone [5]. Earlier the same week, 12 people in Southern California were charged in a separate case involving more than $10 million in childcare aid, the AP reported [1].

How Did Homeless Housing Money Allegedly Fund a Nightclub and a Tahiti Trip?

Home At Last was a major provider of homeless housing in Los Angeles. The nonprofit took in more than $118 million in public funds since 2019 through contracts with LAHSA, the city and county of Los Angeles, and the U.S. Department of Housing and Urban Development (HUD) [1][3]. LAHSA alone paid Home At Last more than $75 million, according to the Justice Department [2][3].

Home At Last took in more than $118 million in public funds since 2019.

Justice Department figures [3]

According to a federal affidavit, Young set up housekeeping and catering companies that were presented as independent but that he actually controlled, then used them to bill LAHSA for services that never took place [5]. The Justice Department says those vendors had no employees, no locations, and no legitimate operations [3]. Prosecutors also accuse Young of submitting fake bids, forging signatures, and supplying fraudulent invoices to steer contracts to his own companies [3][5].

Prosecutors allege Young misappropriated more than $7.5 million through the sham vendor scheme alone [2][3][4]. Charges for work that was never performed are the same red flag careful households catch by applying the best ways to track your expenses.

Federal officials say Young spent more than $1 million to open and run the Six Seven Five Lounge, an Inglewood restaurant and nightclub, along with an adjacent bingo hall called House Bingo [3][5]. Officials also allege he spent roughly $48,000 on a luxury Tahiti trip, a figure Fox News reported as nearly $50,000, and more than $140,000 restoring a vintage Chevrolet Impala [2][5]. Another $500,000 allegedly went into commercial real estate, according to federal officials [5]. LAHSA canceled its contracts with Home At Last earlier this year [3].

What Role Did Bribes and Fake Clients Allegedly Play?

Malone’s job at SSG involved referring homeless individuals to housing sites funded by HUD, LAHSA, and the city and county of Los Angeles [3]. Prosecutors allege she accepted more than $180,000 in bribes and kickbacks from Soofer in exchange for sending priority referrals to his organization [2][3].

According to the indictment, Soofer paid Malone through checks written to her and to Grateful Hearts Realty & Consulting, an entity she controlled, and labeled the payments as consulting fees [3][5]. Prosecutors say the payments actually tracked the number of referrals Malone sent, including so-called ghost clients who never lived at the housing sites [3]. Those files were allegedly built with fake welcome letters, forged sign-in sheets, and falsified eligibility forms [2][3].

The Justice Department says Soofer received more than $17 million from SSG during the scheme, an amount it says the fraudulent referrals substantially inflated [3]. In his plea agreement, Soofer admitted obtaining $23 million in public money meant to fight homelessness, some of it through fraud, and keeping at least $2 million for himself and unrelated businesses [2][5].

The U.S. Attorney’s Office goes further, alleging Soofer took at least $10 million and used it on a $7 million mansion in Westwood, a $125,000 Range Rover, private school tuition, private jet travel, and luxury resort stays, according to the California Post [5]. Soofer has agreed to forfeit his gains to the federal government [3]. If the allegations are proven, each fabricated placement would represent a housing slot that someone actually sleeping outside could have used.

What Happened to the $1.2 Million Grant Awarded to The Big Blue Umbrella?

Mitchell’s case centers on a grant from Epidaurus, a nonprofit that does business as Amity Foundation and provides housing and mental health services [3]. The AP described Amity as federally supported, while KTLA described it as funded by Los Angeles County [1][3]. Prosecutors allege Mitchell applied for more than $9 million in grant money and was later awarded $1.2 million [3].

To win the award, prosecutors say, Mitchell falsely presented BBU as a major homeless housing provider and misrepresented its work with SSG’s HOPICS division, even though BBU had no contract with SSG [3]. KTLA reported that BBU had previously displaced SSG clients by failing to pay rent [3].

Only part of the award was paid. Amity disbursed $315,000 before terminating the contract in May 2025, citing concerns about misrepresentation and missed milestones, according to the Justice Department [3]. The California Post reported that Mitchell kept that $315,000 for himself [5].

Prosecutors allege the money covered inflated salary payments, his own bail bond costs, credit card debt, transfers to family members, rent, and PlayStation charges [3][4]. If those allegations hold up, none of that spending would have gone toward the purpose the grant was created for, which was housing and care for vulnerable people. Mitchell remains at large, and authorities are searching for him [5].

Who Is Watching How Homelessness Money Gets Spent?

Los Angeles has one of the largest homeless populations in the country, with roughly 72,000 to 75,000 people living in shelters or encampments across the city and county, according to the AP [1]. City and county reviews have repeatedly found that local programs lacked proper recordkeeping, audit trails, and documentation [1].

Estimates of total spending vary depending on who is counting and over what period. The AP reported roughly $1 billion a year from city and county authorities [1]. The California Post reported that the federal government has provided more than $1 billion for Los Angeles homeless services since 2021 [5]. Essayli claimed at Wednesday’s press conference that about $24 billion has been spent in recent years with little to show for it, and he said homelessness has gone up rather than down [3].

“Many taxpayers have been asking ‘Where did the money go?’”

Bill Essayli, First Assistant U.S. Attorney [3]

HUD Secretary Scott Turner said the defendants received more than $130 million combined, with more than $75 million moving through LAHSA, and he accused the agency of widespread fraud, waste, and abuse [3]. That figure reflects money received, not money prosecutors say was stolen. This summer, the administration suspended federal funding to LAHSA pending a fraud investigation, and at the time about 8% of the agency’s budget came from federal sources [4]. A House panel held a hearing on LAHSA on Tuesday, and Los Angeles Mayor Karen Bass did not appear, according to the California Post [5].

The administration’s broader fraud effort has also drawn criticism. The AP noted that some of those actions have faced legal challenges, and that when Minnesota state authorities checked childcare centers accused of fraud in an online video amplified by Vice President JD Vance, they found nearly all of them operating normally [1].

What Does This Case Mean for Taxpayers Nationwide?

The HUD dollars that flowed into these contracts come from federal taxpayers in every state, not only from Californians [3]. When a program meant to shelter vulnerable people allegedly pays for nightclubs and mansions, the loss lands twice: once on the people who fund the program and again on the people it was supposed to serve.

Officials say the investigation is far from finished. Essayli told the California Post that the task force is working its way up the chain to reach those who enable fraud, not only those who commit it [5]. The Justice Department has also signaled that it intends to recover lost funds, as reflected in Soofer’s forfeiture agreement [3][4]. Los Angeles County District Attorney Nathan Hochman, whose office investigated Soofer, told reporters the public should expect more investigations and indictments [1].

“the beginning of these prosecutions and we are far, far from the end”

Nathan Hochman, Los Angeles County District Attorney [1]

For everyday households, the case is a reminder that public money deserves the same scrutiny a family gives its own. Anyone who knows how to create a budget understands that a line item without receipts would never survive review, and taxpayers can reasonably expect the same discipline from agencies spending public funds.

Essayli urged anyone who knows of fraud involving homeless funds to report it to law enforcement [2]. Residents can also follow court filings, attend local budget hearings, and review public contract records for homelessness programs in their own communities before those dollars are committed.

Residents can also follow court filings, attend local budget hearings, review public contract records for homelessness programs in their own communities, and watch state proposals that could limit citizen fraud videos.

Final Thoughts

Wednesday’s arrests put names and dollar figures on long-running concerns about how Los Angeles spends its homelessness money. Prosecutors allege Young diverted more than $7.5 million, Malone accepted more than $180,000 in bribes, and Mitchell was awarded a $1.2 million grant under false pretenses, of which $315,000 was paid out [3]. Soofer has agreed to plead guilty and to forfeit his gains [3][5].

Young, Malone, and Mitchell are presumed innocent unless proven guilty, and their cases will move through federal court in the months ahead. Soofer’s formal plea is expected in the coming weeks [5].

The larger issue is stewardship. Federal officials say enormous sums have gone toward homelessness while the problem has grown, and taxpayers have fair reason to want every dollar accounted for [3]. With local prosecutors signaling more cases to come, the outcome of these prosecutions may shape how closely public programs track their spending going forward [1].

Works Cited

[1] Sweet, Ken. “Federal Prosecutors Charge 3 with Stealing $12M in Homelessness Aid in Southern California.” AP News, 16 Sept. 2026, apnews.com/article/fraud-trump-homelessness-california-8848e96f919fa18e6958c5f2d2180bde.

[2] Sorace, Stephen. “Taxpayer Funds Meant for LA Homeless Allegedly Spent on Tahiti Trip, Nightclub, Luxury Cars: Feds.” Fox News, 16 Sept. 2026, www.foxnews.com/us/taxpayer-funds-meant-la-homeless-allegedly-spent-tahiti-trip-nightclub-luxury-cars-feds.

[3] Conybeare, Will. “Feds Open Up about Massive Los Angeles Homeless Services Fraud, Corruption Investigation.” KTLA, 16 Sept. 2026, ktla.com/news/local-news/feds-open-up-about-massive-los-angeles-homeless-services-fraud-corruption-investigation/.

[4] Nowell, Cecilia. “LA Homelessness Non-profit Workers Arrested over Alleged Corruption and Bribes.” The Guardian, 16 Sept. 2026, www.theguardian.com/us-news/2026/sep/16/los-angeles-homelessness-nonprofit-arrests.

[5] Chapman, Ben. “Feds Smash Multi-Million Dollar LA Homeless Scheme as Bigwig and ‘Charity’ Worker Dragged from Their Homes.” California Post, 16 Sept. 2026, nypost.com/2026/09/16/us-news/fbi-smash-homeless-scheme-as-charity-worker-with-shady-list-of-ghost-clients-dragged-from-her-home/.