The announcement builds on charges filed earlier this year against three other defendants, and officials warned that more indictments are likely as the investigation continues.

Speaking at a news conference, First Assistant U.S. Attorney Bill Essayli said the latest case centers on a bribery scheme involving fabricated “ghost” clients — a scam he described as evidence of systemic failure rather than an isolated incident.

“Nobody was minding the shop,” Essayli told reporters when asked about the pattern of fraud. “There’s no vetting. There’s no auditing. There’s no accounting. It was just a rush to push as much money out the door.”

Among those arrested was Michael Young, founder of the Culver City-based nonprofit Home At Last. Prosecutors allege Young used shell companies and rigged bidding processes to misappropriate roughly $12 million in public funds. According to the charges, the misused money helped bankroll a $1 million investment in an upscale nightclub, a nearly $50,000 vacation to Tahiti, and a $140,000 restoration of a classic Chevrolet Impala.

U.S. Housing and Urban Development Secretary Scott Turner said Young’s organization has received more than $118 million in public funding for homeless housing programs since 2019, with over $75 million of that flowing through the Los Angeles Homeless Services Authority, commonly known as LAHSA.

A second defendant, Lakiya Malone, worked for the nonprofit Special Service for Groups and was responsible for referring homeless individuals into LAHSA-funded housing programs. Prosecutors say she accepted about $180,000 in bribes from Alexander Soofer, former head of the now-defunct nonprofit Abundant Blessings, in exchange for funneling fake, or “ghost,” clients his way so he could bill for services that were never actually provided.

“She was supposed to guard the money, and instead she took bribes,” Essayli said.

In response, Special Service for Groups issued a statement saying it has cooperated with federal investigators “to ensure that any responsible individuals are held accountable” and has since tightened its internal compliance procedures.

Soofer, whose arrest was first announced in January, has agreed to plead guilty to wire fraud and money laundering charges. In his plea agreement, he admitted to orchestrating the bribery arrangement and confessed to pocketing at least $2 million in public funds for personal use and for businesses unrelated to homeless services. He has agreed to forfeit that money to the federal government. Investigators had initially alleged Soofer diverted a far larger sum — upward of $10 million.

An earlier investigation revealed that LAHSA continued renewing multimillion-dollar contracts with Soofer’s organization even after its own internal compliance reviewers had flagged the nonprofit as “high-risk,” citing irregularities such as billing for services despite reporting zero enrolled clients.

The third person charged, Donye Mitchell, led the nonprofit Big Blue Umbrella. Prosecutors say Mitchell misrepresented his qualifications to secure a $1.2 million county grant, then used a portion of the roughly $315,000 he received for personal expenses — including bail following a domestic violence arrest and purchases of video games.

Essayli noted that Mitchell is “a convicted fraudster, by the way.” Court records show he was previously convicted in 2011 of defrauding California’s unemployment insurance system and was ordered in 2012 to repay the state $6 million. Despite that history, a county vendor awarded him the grant in question in 2024 — more than a decade after his fraud conviction.

Attorneys for Young and Malone did not immediately respond to requests for comment. It was not immediately clear who is representing Mitchell, whose arrest was disclosed after Wednesday’s press briefing.

Los Angeles County District Attorney Nathan Hochman joined Essayli in criticizing what both described as a systemic breakdown in financial oversight of homeless services spending. Hochman pointed to a court-ordered audit released in 2025 that found city officials failed to adequately track $2.3 billion in homelessness funding, largely because the city outsourced much of that responsibility to LAHSA — an agency the audit found had failed to collect reliable data on its vendors or hold them accountable for performance.

“We have not seen the results you would expect for billions of dollars being spent,” Hochman said.

He added that Wednesday’s announcement marks only the start of a broader crackdown, telling reporters that prosecutors expect to bring “many more” cases in the months ahead.

Original source: CalMatters

The post $1 Million in Homeless Aid Diverted to Nightclub, New LA Fraud Charges Allege appeared first on The Hemet & San Jacinto Chronicle.

The U.S. Department of Housing and Urban Development notified the Los Angeles Homeless Services Authority on Thursday that the agency is barred from participating in federal funding competitions until HUD’s Office of Inspector General completes its investigation.

In its letter, HUD accused the agency, known as LAHSA, of mishandling public money and failing to make progress in reducing homelessness. Federal officials alleged the agency did not properly document when people left motel housing, used government funds to pay for services covered by a separate contract, and could not provide records verifying the existence of housing units it was responsible for.

“Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve,” HUD Secretary Scott Turner said in a statement announcing the action.

LAHSA, a joint city-county agency created in the 1990s, has long served as the central coordinator for homelessness services across the Los Angeles region, which has the largest unhoused population in California. The agency receives federal homelessness funds on behalf of the city, county and nonprofit providers.

Last year, LAHSA received nearly $200 million through HUD’s Continuum of Care program, the largest federal funding stream for homelessness services.

The suspension comes after months of scrutiny and upheaval at the agency. Two critical audits found LAHSA had not adequately tracked spending or program outcomes. The Los Angeles County Board of Supervisors later pulled county funding from LAHSA and shifted it to a newly created county agency. LAHSA’s former chief executive resigned after criticism over contracts signed with a nonprofit connected to her husband. In April, the agency laid off 284 employees.

Despite those problems, LAHSA remains the designated lead homelessness agency for the region, making the federal suspension potentially far-reaching for programs that serve people living on the streets, in shelters and in supportive housing.

In a statement, LAHSA warned that blocking the funding could undermine existing efforts and put thousands of formerly homeless residents at risk of returning to homelessness.

“This appears to be a blatant attempt to pull yet more resources from Los Angeles, a city they have targeted time and again, when it is clear that LAHSA has either corrected or is in the process of correcting nearly all of the issues raised,” spokesperson Ahmad Chapman said.

Chapman said the agency is strengthening internal controls, updating its financial systems and improving how it tracks its programs. He said LAHSA’s immediate focus is to “explore all available options” to keep federal homelessness dollars flowing to the region.

Los Angeles Mayor Karen Bass said she shares concerns about LAHSA’s performance but argued that cutting off funding would worsen the crisis rather than solve it.

“Ultimately people will lose their lives,” Bass said in a statement. “We urge HUD to work with the City of Los Angeles to provide the necessary funding to reduce homelessness.”

The action comes as homelessness in Los Angeles County has shown signs of decline. According to the point-in-time count, the number of unhoused people dropped in both 2024 and 2025. Last year, the county had an estimated 72,000 unhoused residents.

The Trump administration has also been pushing broader changes to how Los Angeles and other California communities address homelessness. Federal officials are seeking to shift money away from permanent housing programs and toward temporary shelters, while giving preference to housing programs that require sobriety.

Earlier this month, HUD opened the latest application period for Continuum of Care funding and included those policy changes. The National Alliance to End Homelessness has estimated the changes could cost California nearly $238 million in funding for permanent housing and could put close to 15,000 people at risk of losing their homes.

California has sued over an earlier Trump administration attempt to impose similar changes. That case remains pending.

Original source: CalMatters

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