Federal prosecutors charge 3 in alleged $12M homelessness aid fraud in Southern California

NEW YORK (AP) — Three people were charged by federal authorities Wednesday with stealing $12 million in federal and state homelessness aid dollars to buy real estate, go on luxury trips and buy vintage vehicles.

This is the second such arrest of people on federal fraud charges in Southern California this week, as the Trump administration tries to emphasize a crackdown on fraud and waste in government and aid programs. On Tuesday, 12 people were arrested and charged with stealing more than $10 million in federal childcare aid.

The three defendants each worked for or ran Southern California-based homelessness aid nonprofit organizations, which often contracted with city, county, state or federal agencies to provide aid or money to find housing and social services for homeless people. Federal prosecutors allege that the defendants used funds from those contracts to pay personal expenses, accepted bribes, and billed for services that were never administered.

“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 morning in Los Angeles. A third defendant charged with wire fraud, Donye Mitchell, 55, is considered a fugitive.

Young is the founder of the homelessness aid nonprofit Home At Last, an agency that took in more than $118 million in public funds since 2019 for its stated mission of providing housing and aid to the homeless.

Instead, federal prosecutors say Young created shell companies that he claimed were independent contractors but were, in fact, controlled by him. This alleged self-dealing allowed Young to be paid both at Home At Last and overbill federal and local authorities, prosecutors said. They say Young misused an estimated $7.5 million in taxpayer funds through these fake contractors and vendors.

Young used the proceeds to take luxury trips to Tahiti, and used funds to open a nightclub in Inglewood called the Six Seven Five Lounge and other commercial real estate projects, prosecutors allege.

Mitchell is the CEO of Big Blue Umbrella, which was awarded more than $1.2 million from a federally supported nonprofit for housing and mental healthcare aid. Prosecutors say Mitchell not only misstated his organization’s ability to provide such services, but also used money from the award to pay off his credit card debts, give funds to family members, buy video games and pay legal expenses for an unrelated case.

Malone was arrested and charged with accepting more than $180,000 in bribes from another homelessness-aid nonprofit. Malone allegedly not only accepted bribes but also placed people in homeless aid programs who weren’t homeless.

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 the 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 there were no participants in his programs.

Some of the Trump administration's efforts to go after fraud and abuse of government benefit programs have faced criticism and legal challenges. In December, Vice President JD Vance, who chairs the administration’s task force on the subject, amplified a YouTube video of 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 of them operating normally.

Nonetheless, the administration launched a massive immigration crackdown in Minnesota. Officials later attempted to freeze federal funds for childcare in five Democratic-led states, but were halted by a lawsuit.