Federal Agents Charge LA-Area Nonprofit Leaders With Diverting Homeless Aid Money

Federal agents moved through Los Angeles Wednesday morning arresting nonprofit operators accused of siphoning millions of dollars meant to house homeless residents into vacations, luxury vehicles and a nightclub, according to the Justice Department.

The most prominent defendant is Michael Young, 46, a founder of Culver City-based nonprofit Home At Last. Young’s organization received more than $118 million in public funds through government contracts, including more than $75 million from the Los Angeles Homeless Services Authority, prosecutors said.

Prosecutors allege Young diverted millions of dollars, including more than $7.5 million funneled through a sham vendor scheme built on shell companies and fraudulent billing. Investigators say he spent more than $1 million to open and run Six Seven Five Lounge, a nightclub and restaurant in Inglewood, along with nearly $50,000 on a Tahiti vacation and $140,000 restoring a vintage Chevrolet Impala.

HUD Secretary Scott Turner addressed the case at a Wednesday news conference. “The days of these wire fraud experts flying on private jets, driving around Beverly Hills in Range Rovers and doing lavish things is over,” he said.

Assistant Attorney General Colin M. McDonald was blunter about the nightclub spending. “The taxpayers did not sign up to fund this nightclub,” he said.

Two more cases, one fugitive

Agents also arrested Lakiya Malone, 48, an employee of Special Service for Groups, on a 21-count indictment. Prosecutors allege she took more than $180,000 in bribes and kickbacks from Alexander Soofer, executive director of the nonprofit Abundant Blessings, in exchange for steering priority referrals — including what prosecutors described as “ghost” homeless participants who never actually lived at the housing sites in question. Investigators say the files supporting those placements were fabricated with fake welcome letters, forged sign-in sheets and falsified eligibility forms.

Soofer, who had already been charged separately, has agreed to plead guilty to wire fraud and money laundering. He has admitted to obtaining $23 million in public money intended for homelessness programs and keeping at least $2 million of it for himself and unrelated businesses.

A third defendant, Donye Mitchell, 55, chief executive of The Big Blue Umbrella, remains a fugitive. Prosecutors allege he obtained more than $1.2 million in grant funding through false representations and then spent the money on personal expenses that included bail-bond costs, credit card debt, transfers to family members and PlayStation purchases.

First Assistant U.S. Attorney Bill Essayli warned others who may have misused homelessness funding to come forward. “If you or someone you know has defrauded money allocated for the homeless, I suggest you report it to law enforcement,” he said. “If you don’t, your door may be the next one we’re hitting.”