title: “Arrests made in crackdown of fraud, misuse of funds meant to combat Los Angeles homeless crisis” url: “https://abc7.com/post/arrests-made-crackdown-involving-fraud-misuse-taxpayer-money-meant-combat-los-angeles-homeless-crisis/19839380/” author: “Kevin Ozebek, ABC7.com staff”
At least two people were arrested for allegedly misusing millions of dollars in taxpayer money that was intended to combat L.A.'s homeless crisis.
KABC
Two people were arrested Wednesday for alleged fraud and misuse of millions of dollars in taxpayer money that was intended to combat the homelessness crisis in Los Angeles, officials announced.
ABC7 was in the Westmont area of South Los Angeles as federal agents surrounded a home on W. 98th Street and arrested one of the accused people, 48-year-old Lakiya Malone.
Federal investigators say Malone, who works at a non-profit called Special Service for Groups, Inc., took 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.
Malone allegedly would sign up so-called “ghost participants” for homeless services that they never used.
“She lied and she allowed known fraudsters to get credit for taking care of homeless people they weren’t actually taking care of,” said First Assistant U.S. Attorney Bill Essayli said. “This is all just a way to divert taxpayer dollars intended to help the homeless for the personal benefit of these fraudsters, and she was the enabler.”
Meanwhile, the founder of the Culver City-based nonprofit Home At Last (HAL) was also arrested for alleged wire fraud. Michael Young, 46, is accused of creating shell companies to pocket millions in taxpayer funds earmarked for homeless housing, including through programs administered by the Los Angeles Homeless Services Authority (LAHSA).
According to the criminal complaint, Young spent more than $1 million in misappropriated funds to open and operate a nightclub in Inglewood called Six Seven Five Lounge and an adjacent bingo hall. Young also allegedly used millions in taxpayer funds for private vacations and luxury car restorations.
“Through numerous contracts with LAHSA and other public entities, Young received more than $118 million in public funds from LAHSA, the City of Los Angeles, the County of Los Angeles, and the United States Department of Housing and Urban Development. LAHSA alone paid HAL over $75 million for homeless housing services. Young allegedly used a sham vendor fraud to misappropriate more than $7.5 million of these funds,” the U.S. Department of Justice said in a press release.
Authorities also announced that law enforcement is searching for 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 and is considered a fugitive.
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 over $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 the 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 were expected to make their initial court appearances Wednesday afternoon.
“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.”
City News Service contributed to this report.
related
The board of the Los Angeles Homeless Services Authority has voted not to submit an application to continue its role as the region’s lead agency on homelessness services, as the city, county and other organizations seek to take on those responsibilities.
Both the county and city are applying to take on LAHSA’s leadership roles. The county is seeking to take on all four of those roles, while the city is seeking to take on at least two of them.
Los Angeles County has already created a new homeless department and moved $300 million away from LAHSA. The city of Los Angeles is taking similar action.