Feds arrest 3 LA homelessness nonprofit executives in $12M fraud takedown
New arrests linked to LA homeless fraud, corruption
Federal agents raided a home and made an arrest in the Westmont area near South Los Angeles Wednesday as part of an investigation into fraud tied to the alleged misuse of funds for the homeless.
LOS ANGELES - Federal authorities conducted an early morning sweep across Los Angeles on Wednesday, taking three key homelessness nonprofit figures into custody as part of a high-profile public corruption crackdown.
Officials announced that millions of dollars allocated to solve Southern California's homelessness crisis were instead diverted into private luxuries, real estate ventures, and empty shell accounts.
What we know:
Federal agents arrested 46-year-old Michael Young of Baldwin Hills early Wednesday morning for allegedly orchestrating a multi-year scheme to divert over $7.5 million in public funds from his Culver City-based nonprofit, Home At Last. Prosecutors allege Young spent more than $1 million to open Six Seven Five Lounge, a high-end restaurant and nightclub in Inglewood, alongside commercial real estate and a bingo hall.
Also arrested Wednesday was 48-year-old Lakiya Malone of Westmont, an employee at Special Service for Groups who was seen being led out of a home in handcuffs accompanied by First Assistant U.S. Attorney Bill Essayli.
3 arrested in LA homeless service fraud
Federal agents arrested Michael Young, Lakiya Malone, and Donye Mitchell following a massive public corruption crackdown on homelessness nonprofit fraud in Los Angeles.
Malone is charged with accepting over $180,000 in bribes from Alexander Soofer, the former executive director of Abundant Blessings, in exchange for submitting housing referrals for "ghost" participants who never lived at the facilities.
Soofer admitted to fraudulently obtaining $23 million in homelessness funds, pocketing $2 million for himself, and has agreed to plead guilty to wire fraud and money laundering.
In an afternoon update, officials announced that 55-year-old Donye "Danya" Mitchell of Orange, the chief executive of The Big Blue Umbrella, was taken into custody. Mitchell had initially been sought by law enforcement officers as a federal fugitive for his role in allegedly securing $1.2 million in fraudulent grant allocations.
"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.
What we don't know:
Authorities have also not revealed whether further arrests or charges will stem from the broader investigation into local homelessness funding networks.
Timeline:
Donye Mitchell applied for over $9 million in grant funding from the county-funded Amity Foundation in January 2024, ultimately receiving $1.2 million before the foundation severed ties in May 2025 over questionable spending, according to officials.
The Los Angeles Homeless Services Authority (LAHSA) formally terminated its housing contracts with Michael Young's organization in June 2026.
On Wednesday morning, federal agents executed arrest warrants across the Los Angeles area, leading to an afternoon court appearance for Young and Malone in downtown Los Angeles federal court.
What they're saying:
"I am not surprised, my office has been sounding the alarm about the lack of transparency and accountability and oversight, not only in homelessness spending, but spending in general," Los Angeles Controller Kenneth Mejia said Wednesday.
Mejia, who has endorsed Nithya Raman for LA Mayor, says he's long pushed the city to fund more oversight to root out this kind of alleged fraud.
"What we've asked the mayor and city council is more auditors and fraud, waste and abuse investigators," he said. Mejia also added, "We get 800 fraud, waste and abuse claims every year in the City of LA and we only have 5 people to investigate it, so we are not even scratching the service."
Mayor Karen Bass released the following statement related to the homeless corruption arrests on Wednesday. "My administration has zero tolerance for fraud – period. Today, we learned that two 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."
Dig deeper:
The LAHSA board voted on Tuesday against applying to maintain its role as the region’s lead homelessness response agency, marking a dramatic shift as both the city and county move to separate from the agency and establish independent systems.
LAHSA’s decision follows escalating criticism, a federal fraud investigation by HUD, and a recent 9th U.S. Circuit Court of Appeals ruling that stayed an injunction, threatening LAHSA's access to critical federal funding.
Mayor Bass steps down from LAHSA commission
Bass reportedly missed more than half of the meetings since appointing herself in 2023.
Most recently, Mayor Karen Bass announced she is stepping down from LAHSA’s governing commission to focus on establishing a city-led response team, citing time commitments ahead of a congressional inquiry into federal homelessness spending and her upcoming November 3 mayoral election matchup against City Councilmember Nithya Raman.
What's next:
Michael Young, Lakiya Malone, and Donye Mitchell are scheduled to make their initial court appearances in United States District Court in downtown Los Angeles.
The Source: This report is based on official announcements, charging documents, and press statements released by the United States Attorney's Office for the Central District of California and federal law enforcement agencies during a downtown Los Angeles press conference. Further context relies on public meeting records and formal administrative statements from the Los Angeles Homeless Services Authority (LAHSA) and local executive officials. City News Service contributed.