Three Charged in $12M Homelessness Aid Fraud Scheme in Southern California

Federal prosecutors charged three people with stealing $12M in homelessness aid to fund luxury trips, real estate, and vintage vehicles. A fourth defendant has already pleaded guilty.

Three Southern California Nonprofit Executives Charged With Stealing $12M in Homeless Aid

Federal authorities charged three people Wednesday with misappropriating $12 million in federal and state homelessness aid, ABC News US reports. The defendants allegedly funneled public funds toward luxury travel, real estate acquisitions, and vintage vehicle purchases.

The arrests mark the second federal fraud action targeting Southern California aid programs in a single week. On Tuesday, 12 people were arrested for allegedly stealing more than $10 million in federal childcare assistance. The Trump administration has framed both cases as part of a broader crackdown on fraud and waste in government benefit programs.

All three defendants worked for or ran nonprofits contracted by city, county, state, or federal agencies to provide housing and social services to homeless individuals. Federal prosecutors allege the defendants diverted contract funds to cover personal expenses, accepted bribes, and submitted invoices for services that were never delivered.

"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 these programs," said Brian D. Harrison, acting inspector general at the Department of Housing and Urban Development, in a statement.

Arrests and Charges

Two of the defendants — Lakiya Malone, 48, and Michael Young, 46 — were arrested early Wednesday in Los Angeles. A third defendant, Donye Mitchell, 55, charged with wire fraud, is currently considered a fugitive.

Young founded the homelessness aid nonprofit Home At Last, which received more than $118 million in public funds since 2019. Prosecutors allege he created shell companies that he presented as independent contractors but in fact controlled himself. Through this alleged self-dealing, Young is said to have overbilled federal and local authorities and misused an estimated $7.5 million in taxpayer funds. Proceeds reportedly financed luxury trips to Tahiti and the opening of a nightclub in Inglewood, the Six Seven Five Lounge, along with other commercial real estate ventures.

Mitchell served as CEO of Big Blue Umbrella, which received more than $1.2 million from a federally supported nonprofit for housing and mental healthcare aid. Prosecutors allege Mitchell overstated his organization's capacity to deliver those services and used award funds to pay off credit card debt, distribute money to family members, purchase video games, and cover legal costs unrelated to the program.

Malone faces charges of accepting more than $180,000 in bribes from a separate homelessness-aid nonprofit. Prosecutors further allege she enrolled individuals in homeless aid programs who did not qualify as homeless.

Fourth Defendant Pleads Guilty

Federal prosecutors separately announced that a fourth individual pleaded guilty to wire fraud and money laundering for stealing at least $2 million in homelessness aid. Alexander Soofer, 42, former executive director of Abundant Blessings, admitted in his plea agreement to working with Malone to bill state and federal authorities for services when no program participants were enrolled.

Broader Context

The administration's anti-fraud push has not been without controversy. Some enforcement actions have drawn criticism and legal challenges. In December, Vice President JD Vance, who chairs the administration's task force on government benefit fraud, amplified a YouTube video by a right-wing commentator alleging that childcare providers in Minnesota — many of them Somali immigrants — were running scams. State investigators subsequently visited the centers and found nearly all operating within normal parameters.

The administration nonetheless launched a large-scale immigration enforcement operation in Minnesota. Federal officials also attempted to freeze childcare funding in five Democratic-led states, a move halted by a court-ordered injunction.

Source: ABC News US