Three charged in $12M Southern California homelessness aid fraud

Federal authorities on Wednesday charged three people with stealing $12 million in federal and state homelessness aid funds in Southern California, alleging the money was spent on real estate, luxury travel and vintage vehicles.

The case is the second set of federal fraud charges brought in the region this week. On Tuesday, 12 people were arrested and accused of stealing more than $10 million in federal childcare aid.

According to prosecutors, each of the three defendants worked for or ran homelessness aid nonprofits based in Southern California. Such organizations commonly contract with city, county, state or federal agencies to provide housing and social services for homeless people. Prosecutors allege the defendants used contract funds for personal expenses, accepted bribes and billed for services that were never delivered.

"Stealing from programs meant to feed, shelter, and support people experiencing homelessness isn't just a financial crime – it's 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 defendants, Lakiya Malone, 48, and Michael Young, 46, were arrested early Wednesday in Los Angeles. A third, Donye Mitchell, 55, faces wire fraud charges and is considered a fugitive.

Young founded the homelessness aid nonprofit Home At Last, which prosecutors say received more than $118 million in public funds since 2019 for its stated mission of housing and aiding homeless people. Prosecutors allege Young created shell companies that he described as independent contractors but that were in fact controlled by him. That arrangement, they say, allowed him to be paid by Home At Last while overbilling federal and local authorities, and to misuse an estimated $7.5 million in taxpayer funds through the fake contractors and vendors. Young allegedly used the proceeds for luxury trips to Tahiti and to open a nightclub in Inglewood called the Six Seven Five Lounge, along with other commercial real estate projects.

Mitchell is the CEO of Big Blue Umbrella, which prosecutors say was awarded more than $1.2 million from a federally supported nonprofit for housing and mental healthcare aid. Prosecutors allege Mitchell misstated his organization's ability to provide those services and used award money to pay off credit card debts, give funds to family members, buy video games and cover legal expenses in an unrelated case.

Malone was charged with accepting more than $180,000 in bribes from another homelessness aid nonprofit. Prosecutors also allege she placed people who were not homeless into homeless aid programs.

Separately, federal prosecutors announced that a fourth person pleaded guilty to wire fraud and money laundering charges for stealing at least $2 million in homeless aid. Alexander Soofer, 42, was executive director of Abundant Blessings. As part of his plea agreement, Soofer admitted working with Malone to bill federal and state authorities for homelessness aid services when his programs had no participants.

The arrests come as the Trump administration seeks to emphasize a crackdown on fraud and waste in government and aid programs. Some of those efforts have drawn criticism and legal challenges. In December, Vice President JD Vance, who chairs the administration's task force on the issue, amplified a YouTube video by a popular right-wing influencer accusing childcare providers in Minnesota, many of them immigrants from Somalia, of running scams. State authorities visited the centers and found nearly all operating normally. The administration nonetheless launched a large immigration crackdown in Minnesota, and officials later attempted to freeze federal childcare funds in five Democratic-led states, a move halted by a lawsuit.