Federal agents in Los Angeles Wednesday arrested three people accused of homelessness corruption and fraud, including a founder of a Culver City-based nonprofit who allegedly misappropriated more than $7.5 million in taxpayer funds and used the money for commercial real estate and the construction of a nightclub and bingo hall.
Michael Young, 46, of Baldwin Hills, a founder of the nonprofit, who allegedly engaged in a years-long scheme to defraud taxpayers and public entities providing funding for homeless housing, was arrested early Wednesday. Some of the affected programs were administered by the Los Angeles Homeless Services Authority, the troubled agency that coordinates housing and social services for the homeless in Los Angeles County.
Young was charged with wire fraud, a felony carrying a possible sentence of up to 20 years in federal prison.
According to the complaint, filed in Los Angeles federal court, Young used a web of shell corporations and fraudulent billing practices to misappropriate millions of dollars in taxpayer funds earmarked for homeless housing, including through programs administered by LAHSA.
The U.S. Attorney’s Office contends that among other misuses of taxpayer money, Young spent more than $1 million to open and operate a high-end restaurant and nightclub in Inglewood called Six Seven Five Lounge.
Also taken into custody was Lakiya Malone, 48, of Westmont, near South Los Angeles, an employee of a nonprofit tied to LAHSA funds who faces federal charges accusing her of taking more than $180,000 in bribes and kickbacks from Alexander Soofer, the former executive director of the nonprofit Abundant Blessings, who is separately charged and has agreed to plead guilty.
In exchange for the bribes and kickbacks, Malone allegedly provided priority referrals of homeless housing participants, including “ghost” participants who never lived at the sites.
First Assistant U.S. Attorney Bill Essayli was on hand as agents led the handcuffed woman out of a home.
On Wednesday afternoon, authorities arrested Donye “Danya” Mitchell, 55, of Orange, the chief executive of a Los Angeles-based homelessness nonprofit. Mitchell is charged in a federal complaint alleging he was fraudulently awarded more than $1.2 million in grant money from a county-funded nonprofit.
Mitchell is charged with wire fraud. He was initially designated a fugitive, but Essayli later posted on X that Mitchell had been arrested by FBI agents.
According to the complaint, Mitchell is the chief executive and executive director of The Big Blue Umbrella, a Los Angeles-based nonprofit. In January 2024, Mitchell allegedly applied for over $9 million in grant money — and several months later was awarded more than $1.2 million — from a separate nonprofit funded by the county called Epidaurus, which does business as Amity Foundation, to provide housing and mental health services to vulnerable people.
The charges were announced by officials at a news conference Wednesday in downtown Los Angeles.
“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 HUD programs,” Brian Harrison, acting inspector general of the U.S. Department of Housing and Urban Development Office of Inspector General, said in a statement. “HUD-OIG is steadfast in pursuing those who exploit federal housing programs, and this case underscores the strength of our partnerships with law enforcement and prosecutors. Together, we protect taxpayer dollars and deliver justice for victims.”
In a related case, Soofer has agreed to plead guilty to one count of wire fraud and one count of money laundering. Soofer admitted in a plea agreement to his role in the bribery scheme with Malone. He further acknowledged obtaining $23 million in public money intended to combat homelessness, at least some of which he admits he obtained through fraud, pocketing at least $2 million in taxpayer money for his own personal enrichment and for businesses unrelated to homeless housing, according to he U.S. Attorney’s Office.
Soofer has agreed to forfeit his ill-gotten gains to the U.S. government and is expected to plead guilty in the coming weeks.
Young and Malone made their initial court appearances Wednesday afternoon. Young was granted release on $500,000 bond with arraignment scheduled for Oct. 22. Malone was arraigned and released on $50,000 bond. Her trial is tentatively scheduled for Nov. 10.
“When taxpayer-funded programs are exploited for personal gain, it undermines public trust and diverts critical resources away from the people who need them most,” said Robert Molvar, acting assistant director in charge of the FBI’s Los Angeles bureau. “Our work does not stop with these arrests. We remain committed to identifying fraud, protecting taxpayer dollars and safeguarding programs designed to help those experiencing homelessness.”
Essayli said the arrests Wednesday were a success for the district’s Homelessness Fraud and Corruption Task Force.
“The scale and brazenness of these fraudsters expose a profound failure by the state of California and Los Angeles County to safeguard public funds,” he said. “Millions intended to house the homeless allegedly financed private real estate, a nightclub, a bingo hall, and personal expenses. Taxpayers deserve accountability. We will follow the money, expose the corruption, and prosecute those who exploit the American people for personal gain.”
Los Angeles Mayor Karen Bass applauded the efforts of law enforcement to crack down on abuse of public funds.
“My administration has zero tolerance for fraud — period,” Bass said. “Today, we learned that (three) individuals have been arrested for separate homelessness corruption and fraud cases. Any misuse of tax-payer funds meant to help unhoused Angelenos should be met with the full force of the law. We appreciate the efforts of the Department of Justice in protecting public funds and working towards recovering dollars meant to serve Angelenos experiencing homelessness.”
LAHSA also commended DOJ for the arrests, emphasizing that the charges involve external provider executives and outside contractors and no LAHSA personnel were implicated in any wrongdoing.
“LAHSA has zero tolerance for fraud, waste, or the exploitation of public resources dedicated to housing our most vulnerable neighbors,” according to a statement from the agency. “LAHSA commends the U.S. Department of Justice for taking decisive action regarding alleged fraud perpetrated by individuals working in homeless services in the Los Angeles area, including the founder of former LAHSA-contracted provider Home At Last. Diverting resources meant to house vulnerable neighbors undermines the entire safety net and cannot be tolerated.”
The agency added that it has actively cooperated with federal investigators and the Homelessness Fraud and Corruption Task Force during the investigation and terminated its contracts with Home At Last in June “after strong evidence of wrongdoing emerged and HAL failed to meet its contractual obligations.”
LAHSA said that following a May 2026 letter from the IRS notifying LAHSA that it may be entitled to claim cash seized from Young, the agency began pursuing recovery of the stolen dollars.