LOS ANGELES, CA – Federal authorities have charged three Los Angeles-area homelessness nonprofit figures in separate cases alleging that millions of dollars intended for housing and services for people experiencing homelessness were diverted through fraudulent billing, sham companies, improper referrals and personal spending.
The federal crackdown announced September 16, 2026, resulted in the arrests of Michael Young, 46, of Baldwin Hills, and Lakiya Malone, 48, of South Los Angeles. A third defendant, Donye Mitchell, 55, of Orange, was charged separately and was listed by the U.S. Department of Justice as a fugitive in its announcement.
The cases involve nonprofit organizations that received public money through programs connected to the Los Angeles Homeless Services Authority, the City and County of Los Angeles, the U.S. Department of Housing and Urban Development and other publicly funded programs.
Federal prosecutors say the cases collectively illustrate several different alleged ways homelessness funds were misused, including money routed through purported vendors controlled by a nonprofit founder, grants allegedly spent on personal expenses and alleged bribes tied to housing referrals.
The Justice Department said the cases are part of the federal Homelessness Fraud and Corruption Task Force, created in 2025 to investigate fraud, waste, abuse and corruption involving money allocated to address homelessness across the seven counties within the Central District of California.
Michael Young and the Home At Last allegations
Young, a founder of the Culver City-based nonprofit Home At Last, faces a federal wire-fraud charge in a criminal complaint alleging a years-long scheme involving public money intended for homeless housing.
According to federal prosecutors, Home At Last received more than $118 million in public funds through contracts with LAHSA, the City of Los Angeles, Los Angeles County and HUD. LAHSA alone paid the organization more than $75 million for homeless housing services, according to the Justice Department.
Prosecutors allege Young created a network of sham vendors to conceal self-dealing transactions. The purported vendors allegedly submitted bids and invoices that made them appear to be independent companies, while prosecutors contend they had no legitimate employees, locations or operations and instead existed to funnel public money back to Young.
The complaint specifically alleges that the sham-vendor scheme diverted more than $7.5 million in taxpayer funds.
Federal officials separately described Young’s broader alleged misappropriation as exceeding $12 million, which includes money prosecutors say was diverted through the wider scheme. That distinction is important because the $7.5 million figure refers specifically to the alleged sham-vendor fraud described in the complaint.
Alleged spending on nightclub, real estate and luxury expenses
Prosecutors allege that some of the money Young obtained through the scheme was used for businesses and purchases unrelated to homeless housing.
Among the allegations is that Young spent more than $1 million to open and operate Six Seven Five Lounge, a restaurant and nightclub in Inglewood. Federal authorities also allege that money was used for commercial properties, luxury vacations and vintage automobile restorations.
The complaint alleges Young controlled the bank accounts of the sham vendors and used the money for personal enrichment and unrelated businesses.
Federal prosecutors said Young repeatedly represented that money would be used for homeless housing or legitimate third-party vendors, while allegedly diverting portions of those funds elsewhere.
Young is charged with wire fraud, which carries a statutory maximum sentence of 20 years in federal prison if convicted.
An important part of the case is that these are allegations contained in a federal criminal complaint. Young is presumed innocent unless and until the government proves the charge beyond a reasonable doubt in court.
LAHSA had already terminated Home At Last contracts
The federal allegations came after LAHSA had already taken action involving Home At Last.
In June, LAHSA announced that its Commission had voted unanimously to terminate, for cause, interim-housing contracts involving two Home At Last locations after the organization notified the agency that it planned to stop operating the sites. LAHSA said the termination would become effective July 22 and that the provider would be ineligible for LAHSA funding opportunities for five years.
LAHSA also said it was withholding payments while requesting documentation concerning the organization’s expenditures and contract compliance.
In a September 16 statement following the federal enforcement action, LAHSA said it had cooperated with federal investigators and confirmed that it had terminated its contracts with Home At Last in June after evidence of wrongdoing emerged and the organization failed to meet contractual obligations. The agency also said it was pursuing recovery of cash seized from an address linked to Young after receiving a May 2026 IRS notification.
LAHSA said no employees of the agency were implicated in the federal charges announced September 16.
Donye Mitchell accused of misusing a $1.2 million grant
The second federal complaint involves Donye “Danya” Mitchell, the chief executive and executive director of The Big Blue Umbrella, a Los Angeles-area homelessness nonprofit.
Federal prosecutors allege Mitchell applied in January 2024 for more than $9 million in grant funding from Epidaurus, doing business as the Amity Foundation, a nonprofit funded by Los Angeles County.
Several months later, prosecutors say, Mitchell was awarded more than $1.2 million to provide housing and mental-health services to vulnerable people.
The complaint alleges Mitchell falsely represented the scale and nature of Big Blue Umbrella’s homelessness work and misrepresented its relationship with Special Service for Groups and its HOPICS division. Prosecutors say the organization did not have the contract with SSG that Mitchell represented.
After receiving the grant, Mitchell allegedly misrepresented staffing and spending and used money for expenses that included what prosecutors described as inflated salary payments, his own bail-bond costs, credit-card debt, family transfers, rent and PlayStation charges.
Amity terminated Big Blue Umbrella’s contract in May 2025, after approximately $315,000 had been distributed, citing concerns that Mitchell was misrepresenting spending and failing to meet agreed-upon milestones, according to the federal complaint.
Mitchell faces a federal wire-fraud charge carrying a statutory maximum of 20 years in prison if convicted. The Justice Department’s September 16 announcement listed him as a fugitive.
Lakiya Malone accused of taking more than $180,000
The third new case involves Lakiya Malone, an employee of Special Service for Groups, or SSG.
Malone was arrested and charged in a 21-count federal indictment alleging that she accepted more than $180,000 in bribes and kickbacks from Alexander Soofer, the former executive director of the nonprofit Abundant Blessings.
Federal prosecutors allege that Malone provided priority referrals of people seeking homeless housing in exchange for payments.
The indictment alleges that some of those referrals involved so-called “ghost” participants who never lived at the housing facilities. Prosecutors further allege that files for some of those participants were fabricated using fake welcome letters, forged sign-in sheets and falsified eligibility documents.
According to the indictment, Soofer made payments through checks issued to Malone and an entity she controlled, Grateful Hearts Realty & Consulting, while describing them as consulting payments.
Prosecutors allege the payments instead were connected to the number of housing referrals Malone provided and to the purported ghost participants.
Malone faces potential maximum penalties of up to 20 years for each wire-fraud count, 10 years for each bribery count and five years for the conspiracy charge, according to the Justice Department. Those are statutory maximums, not sentences imposed in the case.
Alexander Soofer agrees to plead guilty
Malone’s case is connected to a previously announced federal investigation involving Alexander Soofer, the former executive director of Abundant Blessings.
Soofer was initially arrested in January after federal prosecutors accused him of fraudulently obtaining $23 million in public money intended to combat homelessness.
At the time, prosecutors alleged that he used at least $10 million for personal purposes, including a Westwood home, luxury travel, private schooling and other expenses.
On September 16, federal prosecutors announced that Soofer had agreed to plead guilty to one count of wire fraud and one count of money laundering.
In his plea agreement, prosecutors said, Soofer admitted that he obtained $23 million in public funds intended to combat homelessness and that he pocketed at least $2 million for personal enrichment and businesses unrelated to homeless housing.
He also agreed to forfeit his ill-gotten gains to the federal government.
The Justice Department said Soofer is expected to formally enter his guilty pleas in the coming weeks.
Federal task force began investigating homelessness funding in 2025
The September arrests did not emerge from a new investigation created this week.
The federal Homelessness Fraud and Corruption Task Force was established in April 2025 by the U.S. Attorney’s Office for the Central District of California.
The task force brings together federal prosecutors with the FBI, HUD Office of Inspector General and IRS Criminal Investigation to investigate potential fraud and corruption involving homelessness funding.
Its jurisdiction covers Los Angeles, Orange, Riverside, San Bernardino, San Luis Obispo, Santa Barbara and Ventura counties.
The task force was announced after federal officials pointed to concerns about oversight of large homelessness programs and said they intended to investigate whether federal dollars were being misused.
The September 2026 cases represent another stage of that broader federal enforcement effort.
LAHSA is also undergoing a major structural transition
The arrests come during a period of significant change in the way homelessness programs are administered across Los Angeles County.
LAHSA announced September 15 that its Commission voted not to submit an application to continue its Continuum of Care leadership roles under the current regional request-for-qualifications process.
The agency said the decision does not immediately end its existing responsibilities. LAHSA said it will continue fulfilling its current Continuum of Care duties until those responsibilities transition to a new entity or entities. Its existing agreements with the City of Los Angeles extend through June 30, 2027.
The decision followed a federal court dispute involving HUD and uncertainty over the agency’s eligibility for future federal homelessness funding.
In August, a federal district court issued a preliminary injunction restoring LAHSA as the Collaborative Applicant for the Los Angeles Continuum of Care and allowing the regional system to continue pursuing federal funding while the broader legal issues proceeded.
The latest LAHSA decision means the City and County are now preparing their own applications for roles that have historically been handled by LAHSA.
County has already shifted major homelessness responsibilities
Los Angeles County has been moving in a similar direction.
The Los Angeles County Department of Homeless Services and Housing began assuming direct responsibility for County-funded homelessness programs as part of a restructuring that reduced the County’s reliance on LAHSA for program administration.
Effective July 1, 2026, the County said its Department of Homeless Services and Housing began directly managing hundreds of work orders with service providers. Those contracts cover thousands of interim-housing beds and other housing and supportive services.
The County’s transition plan had been established before the September arrests. County officials had previously announced plans to move specified County-funded programs and services from LAHSA into the new department while maintaining the regional functions required under the federal Continuum of Care system.
That means the federal fraud cases are unfolding at the same time the underlying funding and contracting structure is being reorganized.
LAHSA has also announced financial reforms
LAHSA has acknowledged operational problems separate from the criminal allegations.
An independent KPMG operational review released in August identified interconnected issues involving contracting workflows, manual processes, cash management, payment delays and financial systems.
LAHSA said it was implementing changes that include improved financial reporting tools, stronger invoice monitoring, faster reconciliation, additional visibility into provider payments and modernization of financial systems.
The review itself did not establish that the problems identified by KPMG constituted criminal fraud. Rather, LAHSA described the review as an operational assessment and a roadmap for improving financial management.
That distinction matters as the criminal cases proceed: the federal complaints and indictment allege specific conduct by individual defendants, while the separate operational review addressed broader agency processes.
Homelessness remains a major public spending and service issue
The cases also arrive as Los Angeles continues to manage one of the largest homelessness-response systems in the country.
LAHSA’s 2026 Greater Los Angeles Homeless Count estimated 73,040 people experiencing homelessness in Los Angeles County and 45,194 in the City of Los Angeles. LAHSA reported that the County figure represented a 1.2% increase and the city figure a 3.4% increase from the previous year, although the agency said neither change was statistically significant.
The agency attributed the regional increase primarily to a pause in new enrollments and permanent housing placements using Time Limited Subsidies, rather than to the failure of one particular program.
The numbers provide context for why the federal cases involve programs carrying substantial public resources. They do not, however, establish a connection between the reported homelessness-count changes and the alleged conduct in the criminal cases.
What happens next
Young and Malone were arrested September 16 and were expected to make initial appearances in U.S. District Court in downtown Los Angeles. Mitchell was charged but was listed by federal prosecutors as a fugitive in the Justice Department’s announcement.
Federal prosecutors said the FBI, IRS Criminal Investigation and HUD Office of Inspector General are investigating the cases.
Authorities have not said whether additional defendants will ultimately be charged in connection with the broader investigation.
For now, the three new cases involve different alleged schemes: Young is accused of diverting homelessness funds through sham vendors and using money for personal and unrelated business purposes; Mitchell is accused of obtaining and misusing a $1.2 million grant; and Malone is accused of accepting more than $180,000 in bribes and kickbacks connected to housing referrals.
The complaints and indictment contain allegations, and the defendants are presumed innocent unless and until proven guilty in federal court.
