Three Charged in Alleged $12 Million Homelessness Aid Fraud Scheme

Federal authorities have charged three individuals with allegedly stealing $12 million in federal and state homelessness aid. The funds were reportedly diverted to purchase real estate, finance luxury travel, and acquire vintage vehicles.

This action marks the second significant federal fraud indictment in Southern California this week related to aid programs. On Tuesday, 12 people were arrested and charged with stealing over $10 million in federal childcare aid.

The three defendants charged in the latest case were associated with or led homelessness aid nonprofit organizations based in Southern California. These organizations often contract with government agencies to provide housing and social services to homeless individuals. Prosecutors allege the defendants used contract funds for personal expenses, accepted bribes, and billed for services that were never rendered.

"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," stated Brian D. Harrison, acting inspector general at the Housing and Urban Development Department.

Lakiya Malone, 48, and Michael Young, 46, were arrested in Los Angeles. A third defendant, Donye Mitchell, 55, who is charged with wire fraud, remains a fugitive.

Michael Young is identified as the founder of Home At Last, a nonprofit that received over $118 million in public funds since 2019 for its stated mission of assisting the homeless. Prosecutors claim Young created shell companies, which he controlled, to act as independent contractors. This alleged self-dealing allowed him to receive payments from Home At Last while also overbilling federal and local authorities, prosecutors said. They estimate that approximately $7.5 million in taxpayer funds were misused through these purported contractors and vendors.

Prosecutors allege Young used the misappropriated funds for personal expenditures, including luxury trips to Tahiti, opening a nightclub in Inglewood called the Six Seven Five Lounge, and investing in other commercial real estate projects.

Donye Mitchell, CEO of Big Blue Umbrella, faces charges related to more than $1.2 million awarded from a federally supported nonprofit for housing and mental healthcare aid. According to prosecutors, Mitchell not only misrepresented his organization's capacity to provide these services but also used award money to pay off personal credit card debt, provide funds to family members, purchase video games, and cover legal expenses for an unrelated case.

Lakiya Malone was arrested and charged with accepting over $180,000 in bribes from another homelessness-aid nonprofit. Allegations suggest Malone also placed individuals in homeless aid programs who were not experiencing homelessness.

In a separate but related case, Alexander Soofer, 42, pleaded guilty to wire fraud and money laundering charges for stealing at least $2 million in homeless aid. As executive director of Abundant Blessings, Soofer admitted in his plea agreement to collaborating with Malone in billing federal and state authorities for homelessness aid services that lacked actual participants.

Some efforts by the Trump administration to combat fraud and abuse in government benefit programs have drawn criticism. In December, Vice President JD Vance, who heads the administration’s task force on the subject, promoted a video alleging childcare providers in Minnesota, many of them Somali immigrants, were involved in scams. Subsequent state investigations found nearly all of the centers operating normally. The administration also initiated a large-scale immigration crackdown in Minnesota and later attempted to freeze federal childcare funds in five Democratic-led states, an action that was blocked by a lawsuit.