Federal authorities arrested two people September 16 as part of a widening investigation into alleged misuse of taxpayer money intended to support people experiencing homelessness in Los Angeles.
Michael Young, 46, a founder of Culver City-based Home At Last, and Lakiya Malone, 48, an employee of Special Service for Groups, were taken into custody in separate cases. ABC7 Los Angeles reported that federal agents arrested Malone at her South Los Angeles home.
Prosecutors accuse Young of diverting homelessness services funding to personal expenses and unrelated businesses. Malone is charged in a separate indictment involving payments she allegedly accepted for referrals that allowed housing providers to bill for people who did not qualify for the services.
Federal authorities are also seeking Donye Mitchell, 55, CEO and director of The Big Blue Umbrella, in another case involving Los Angeles County-funded homelessness programs. The allegations against Young, Malone and Mitchell have not resulted in convictions.
Young Is Accused of Diverting More Than $7.5 Million
Federal prosecutors accuse Young of misappropriating more than $7.5 million that Home At Last received for housing and services. He faces a federal wire fraud charge.
More than $1 million allegedly went toward opening and operating Six Seven Five Lounge, an upscale restaurant and nightclub in Inglewood, according to the Los Angeles Times. Authorities also linked taxpayer funds to an adjacent bingo hall.
Other expenditures identified by prosecutors included luxury vacations, restoration work on vintage cars and commercial properties unrelated to homeless housing.
LAHSA Had Already Terminated Home At Last Contracts
Home At Last had come under financial scrutiny months before Young’s arrest. In June, the Los Angeles Homeless Services Authority voted to terminate two interim housing contracts after the nonprofit announced plans to stop operating the sites.
LAHSA said it had advanced Home At Last nearly $2.8 million during the fiscal year. As of May 15, $602,507 in advances remained outstanding, including $533,082 tied to the two affected housing sites.
The closures affected 181 participants. LAHSA said most were moved to other interim housing or provided another placement, including family reunification.
The agency also disclosed that the IRS had notified it in May that cash had been seized from an address linked to Young. The money was subject to criminal forfeiture, and LAHSA said it could potentially seek recovery of some of the funds.
Malone Is Accused of Taking More Than $180,000 in Kickbacks
Malone faces a 21-count federal indictment accusing her of accepting more than $180,000 in bribes and kickbacks while working within the homelessness services system.
Investigators say she provided referrals for people who were not eligible for homelessness services, allowing nonprofit housing providers to submit claims as though those individuals were legitimate program participants.
Prosecutors linked the payments to Alexander Soofer, executive director of Abundant Blessings. Soofer was charged earlier in a separate federal case and has agreed to plead guilty to wire fraud and money laundering.
Authorities previously accused Soofer of using millions in nonprofit funding for personal expenses that included a $7 million Westwood home, private school tuition, private jet travel, luxury vacations and a Range Rover.
Authorities Are Also Looking for Donye Mitchell
Federal investigators are seeking Mitchell in a third case involving The Big Blue Umbrella, a Los Angeles-based nonprofit.
Prosecutors accuse Mitchell of fraudulently obtaining more than $1.2 million in grant funding from another nonprofit supported by Los Angeles County money. The alleged personal spending included bail bond costs, inflated salary payments, credit card bills, transfers to relatives, rent and PlayStation charges.
Mitchell had previously appeared in reporting involving Los Angeles homelessness providers. The allegations in the current federal case remain pending.
Suspected Misuse of County Funds Can Be Reported Anonymously
People who encounter suspected fraud involving Los Angeles County employees, contractors or vendors can report it through the Los Angeles County Fraud Hotline, operated by the Auditor-Controller’s Office of County Investigations.
The hotline accepts complaints involving theft, bribery, contractor misconduct and other misuse of County resources. Reports can be submitted anonymously, although investigators note that providing contact information can make it easier to ask follow-up questions.
A useful report should identify the people or organizations involved, describe what happened and provide relevant dates, locations and funding information when known. Contracts, invoices, emails, payment records and other original documents can also help investigators trace how public money was spent.
Concerns involving Los Angeles City resources can instead be reported to the City Controller’s Fraud, Waste and Abuse Unit at 866-428-1514 or through its online reporting system.