LOS ANGELES — Federal authorities on Wednesday, Sept. 16, 2026, arrested two of three defendants charged in separate homelessness corruption and fraud cases tied to Los Angeles-area nonprofits, the Justice Department said, alleging misuse of millions in taxpayer dollars meant for housing the homeless. Initial appearances were expected this afternoon in U.S. District Court in downtown Los Angeles. The charges are allegations; all defendants are presumed innocent unless and until proven guilty in court.

The enforcement action is the latest by the Homelessness Fraud and Corruption Task Force in the Central District of California. Assistant Attorney General Colin M. McDonald of the National Fraud Enforcement Division said the cases target schemes that “stole millions from programs meant to house California’s homeless.” FBI Director Kash Patel said defendants are accused of “systematically diverting over $12 million in taxpayer funds for personal gain.” First Assistant U.S. Attorney Bill Essayli called the arrests “a major success” for the task force and said the alleged conduct exposed “a profound failure by the State of California and Los Angeles County to safeguard public funds.” IRS Criminal Investigation Special Agent in Charge Darren Lian and HUD Acting Inspector General Brian D. Harrison also emphasized accountability for public housing dollars.

Michael Young, 46, of Baldwin Hills — a founder of Culver City-based nonprofit Home At Last (HAL) — was arrested on a federal criminal complaint charging wire fraud. Prosecutors allege a years-long sham-vendor scheme in which Young misappropriated more than $7.5 million in taxpayer funds earmarked for homeless housing, including programs administered by the Los Angeles Homeless Services Authority (LAHSA). Among the alleged misuses: spending more than $1 million to open and operate the high-end Inglewood restaurant and nightclub Six Seven Five Lounge, plus commercial real estate and a bingo hall unrelated to housing, the DOJ said.

Through contracts with LAHSA and other public entities, Young’s organization received more than $118 million in public funds from LAHSA, the City and County of Los Angeles, and HUD; LAHSA alone paid HAL over $75 million, according to the complaint summary. Prosecutors allege Young used shell corporations, fake bids, forged signatures, and fraudulent invoices to funnel money back to himself for personal enrichment — including luxury vacations, vintage car restorations, and unrelated commercial properties. LAHSA cancelled its contracts with HAL in June 2026. Wire fraud carries a statutory maximum of 20 years in federal prison.

Lakiya Malone, 48, of South Los Angeles, an employee of Special Service for Groups (SSG), was arrested on a 21-count federal indictment accusing her of taking more than $180,000 in bribes and kickbacks from Alexander Soofer, executive director of nonprofit Abundant Blessings, in exchange for priority referrals of homeless housing participants — including “ghost” participants who never lived at the sites, prosecutors allege. Soofer has agreed to plead guilty to wire fraud and money laundering; in a plea agreement filed Wednesday he admitted obtaining $23 million in public homelessness money and pocketing at least $2 million for personal enrichment and unrelated businesses. He is expected to plead in the coming weeks and has agreed to forfeit ill-gotten gains.

Donye Mitchell, 55, also known as Danya Mitchell, of Orange — CEO of Los Angeles-based nonprofit The Big Blue Umbrella (BBU) — is charged in a separate wire-fraud complaint and is considered a fugitive. Prosecutors allege he was fraudulently awarded more than $1.2 million in grant money from County-funded Epidaurus (doing business as Amity Foundation). After Amity disbursed about $315,000, it terminated BBU’s contract in May 2025 over alleged misrepresentations of staffing and spending; the complaint alleges personal uses including inflated salary, bail-bond costs, credit-card debt, family transfers, rent, and PlayStation charges.

The FBI, IRS Criminal Investigation, and HUD-OIG are investigating. An indictment or complaint is merely an allegation. The Guardian separately reported the arrests of Young and Malone and the expected downtown Los Angeles court appearances.

Sources