Feds Hammer Three LA Homelessness Nonprofit Figures in $12M Fraud Sweep [WATCH]

Federal authorities swept across Los Angeles early Wednesday, arresting three figures tied to homelessness nonprofits in a major public corruption crackdown.

Prosecutors allege more than $12 million intended to address homelessness was systematically diverted for personal gain.

Officials said taxpayer money was steered toward private luxuries, commercial real estate, a restaurant and nightclub, and empty shell accounts.

The arrests targeted Michael Young, Lakiya Malone, and Donye “Danya” Mitchell.

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Young, 46, of Baldwin Hills, was arrested Wednesday morning for allegedly orchestrating a multiyear scheme involving his Culver City based nonprofit, Home At Last.

Prosecutors accuse him of diverting more than $7.5 million in public funds.

According to prosecutors, Young spent more than $1 million to open Six Seven Five Lounge, a high end restaurant and nightclub in Inglewood.

Authorities said money also went toward commercial real estate and a bingo hall.

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Federal agents also arrested Malone, 48, of Westmont, an employee at Special Service for Groups.

She was seen being led from a home in handcuffs while accompanied by First Assistant U.S. Attorney Bill Essayli.

Malone is accused of accepting more than $180,000 in bribes from Alexander Soofer, the former executive director of Abundant Blessings.

Prosecutors allege she submitted housing referrals for “ghost” participants who never lived at the facilities.

Soofer admitted to fraudulently obtaining $23 million in homelessness funds and pocketing $2 million for himself.

He has agreed to plead guilty to wire fraud and money laundering.

Officials announced Wednesday afternoon that Mitchell, 55, of Orange, had also been taken into custody.

Mitchell, the chief executive of The Big Blue Umbrella, initially was sought as a federal fugitive for allegedly securing $1.2 million through fraudulent grant allocations.

Mitchell applied for more than $9 million in grant funding from the county funded Amity Foundation in January 2024.

The organization received $1.2 million before the foundation severed ties in May 2025 because of questionable spending, according to officials.

“These defendants are accused of systematically diverting over $12 million in taxpayer funds for personal gain, robbing hardworking American citizens and directly hurting the people those funds are intended to support,” said FBI Director Kash Patel.

Federal agents executed arrest warrants throughout the Los Angeles area Wednesday morning.

Young and Malone appeared that afternoon in federal court in downtown Los Angeles, while Young, Malone, and Mitchell were scheduled to make initial appearances in United States District Court.

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Los Angeles Controller Kenneth Mejia said the arrests did not surprise him because his office had repeatedly warned about weak transparency, accountability, and oversight.

Mejia has endorsed Nithya Raman for LA Mayor and said he has pressed the city to provide more resources for oversight.

“What we’ve asked the mayor and city council is more auditors and fraud, waste and abuse investigators,” Mejia said.

He added that Los Angeles receives 800 fraud, waste, and abuse claims each year but has only five people to investigate them.

Mayor Karen Bass said her administration has “zero tolerance for fraud – period.”

She said any misuse of taxpayer funds intended for unhoused Angelenos should face the full force of the law and thanked the Department of Justice for protecting public money.

The Los Angeles Homeless Services Authority formally terminated its housing contracts with Young’s organization in June 2026.

Authorities have not disclosed whether additional arrests or charges will emerge from the broader investigation into local homelessness funding networks.

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The LAHSA board voted Tuesday against applying to continue as the region’s lead homelessness response agency.

The decision came as the city and county moved toward establishing separate systems amid mounting scrutiny of LAHSA.

That scrutiny includes a federal fraud investigation by HUD and a recent ruling by the 9th U.S. Circuit Court of Appeals that stayed an injunction, threatening LAHSA’s access to critical federal funding.

Bass reportedly missed more than half the meetings since appointing herself in 2023.

Bass recently announced that she would leave LAHSA’s governing commission to focus on creating a city led response team.

She cited time commitments ahead of a congressional inquiry into federal homelessness spending and her November 3 mayoral election contest against City Councilmember Nithya Raman.

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