DOJ Arrests LA Nonprofit Employees in Connection to Multimillion-Dollar Homeless Fraud Schemes
Two individuals involved in homeless nonprofit organizations in Los Angeles have been arrested on federal charges, with a third remaining at large. Prosecutors allege that over $118 million in taxpayer funds, intended for tents and beds, were misused for personal expenses such as luxury travel, a nightclub, vintage cars, and other unrelated projects, including the construction of a nightclub called Six Seven Five Lounge. Michael Young and Lakiya Malone were taken into custody, while Donye Mitchell is a fugitive. The examination uncovered schemes involving fake vendors, bribe-taking, and misappropriation of funds, with some executives living far better than thier clients. The case highlights ongoing issues with fraud and waste in homelessness services funding, despite significant public spending aimed at reducing homelessness in Los angeles. Court proceedings are upcoming, and these arrests are part of a broader federal crackdown on such financial misconduct.
Federal agents arrested two Los Angeles-area homeless nonprofit workers Wednesday and charged a third who remains at large.
Prosecutors said taxpayer money meant for tents and beds bought a nightclub, trips, and kickbacks instead.
Michael Young, 46, a founder of Culver City-based Home At Last, and Lakiya Malone, 48, who worked at Special Service for Groups, were taken into custody, the U.S. Attorney’s Office for the Central District of California said.
Donye Mitchell, 55, CEO of The Big Blue Umbrella, is a fugitive.
Young’s nonprofit took in more than $118 million in public funds since 2019, according to charging papers summarized by the Los Angeles Times and the Associated Press.
Prosecutors alleged that he diverted about $7.5 million through fake vendors. They said the money went to luxury travel, vintage cars, and commercial projects, including construction of a nightclub and bingo hall in Inglewood called the Six Seven Five Lounge.
Malone faces a 21-count indictment. Officials say she took more than $180,000 in bribes and kickbacks to enroll “ghost participants” in homelessness programs.
The alleged payoffs came from Alexander Soofer, executive director of Abundant Blessings. Soofer was charged earlier this year and has agreed to plead guilty to wire fraud and money laundering.
In a separate case, prosecutors said he steered tens of millions in LAHSA housing money toward a Westwood house, a Range Rover, and private-jet travel.
Mitchell allegedly won more than $1.2 million from a county-funded nonprofit by misstating what his group could deliver. Prosecutors said he used award money for credit-card debt, relatives, video games, and unrelated legal bills.
Young and Malone have not entered pleas. The charges are allegations.
Los Angeles has spent billions on decreasing street homelessness while encampments remained. Federal prosecutors now describe a contractor class that billed the crisis.
First Assistant U.S. Attorney Bill Essayli has called California a “poster child” of waste in prior homelessness fraud cases.
White House rapid response and local news circulated the arrests as part of a wider crackdown.
.@AAGMcDonald announces arrests made in a multi-million dollar fraud bust. Fraudsters spent millions of taxpayer dollars meant for housing the homeless on trips to Tahiti and a nightclub.
The days of ripping off American taxpayers are OVER. https://t.co/K9DxMn2zYG
— Rapid Response 47 (@RapidResponse47) September 16, 2026
The pattern in the paperwork is consistent: invoices for people who were not housed, properties that were not shelters, and executives who lived far better than the clients on the sidewalk.
A nightclub built with homeless money is the exhibit, not the footnote.
Court dates come next. And through all of it, the tents are still there.
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