Federal prosecutors charged three nonprofit operators with stealing $12 million in taxpayer-funded homelessness aid, using the money for luxury vacations, real estate ventures, and personal expenses while tens of thousands remained on Los Angeles streets.

Massive Fraud Uncovered in Homeless Programs

Authorities arrested Lakiya Malone, 48, and Michael Young, 46, early Wednesday in Los Angeles, while Donye Mitchell, 55, remains a fugitive. Each defendant worked for or operated Southern California nonprofits contracted to provide housing and services for homeless individuals. Instead, prosecutors allege they diverted millions intended for the vulnerable into their own pockets through fake billing, shell companies, and outright bribery.

Young founded Home At Last, a nonprofit that collected over $118 million in public funds since 2019. Federal prosecutors say he created shell companies disguised as independent contractors but actually controlled by him. This scheme allegedly allowed Young to double-bill authorities and pocket an estimated $7.5 million. He used the stolen funds for luxury trips to Tahiti and to open a nightclub in Inglewood called the Six Seven Five Lounge, according to the indictment.

Bribery and Ghost Services

Mitchell, CEO of Big Blue Umbrella, received more than $1.2 million from a federally supported nonprofit for housing and mental healthcare services. Prosecutors say he misrepresented his organization’s capabilities and used award money to pay credit card debts, fund family members, purchase video games, and cover legal expenses for an unrelated case. Malone allegedly accepted over $180,000 in bribes from another homelessness nonprofit and placed people in aid programs who were not actually homeless.

Separately, Alexander Soofer, executive director of Abundant Blessings, pleaded guilty to wire fraud and money laundering for stealing at least $2 million in homeless aid. He admitted working with Malone to bill authorities for services when no participants existed in his programs.

Systemic Failures in Oversight

Housing and Urban Development Secretary Scott Turner declared that the Trump administration will not tolerate theft of taxpayer dollars, using the indictments to criticize the Los Angeles Homeless Services Authority for negligence. Between 72,000 and 75,000 people live in shelters or encampments across Los Angeles and Los Angeles County, one of the nation’s largest homeless populations. City and county governments spend roughly $1 billion annually addressing homelessness, yet audits repeatedly find programs lack proper recordkeeping and documentation.

This marks the second major fraud arrest in Southern California this week. On Tuesday, twelve people faced charges for stealing over $10 million in federal childcare aid, as federal authorities intensify scrutiny of government assistance programs.