Federal authorities arrested two individuals tied to Los Angeles-area homeless services on Wednesday, including a nonprofit founder accused of misappropriating more than $7.5 million in taxpayer money to fund a nightclub, according to the U.S. Department of Justice. Michael Young, 46, and Lakiya Malone, 48, were taken into custody during a federal sweep targeting corruption within homeless housing programs.
Federal Charges Target Culver City and South L.A. Nonprofit Workers
Michael Young, the founder of the Culver City-based nonprofit Home At Last, faces wire fraud charges for allegedly diverting millions in public funds, according to federal filings. Investigators state Young used shell companies and fraudulent billing to siphon money intended for the Los Angeles Homeless Services Authority. Assistant Atty. Gen. Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division stated at a Wednesday news conference that taxpayers did not fund the operation for private entertainment. Federal prosecutors claim Young spent over $1 million of those public funds to open and operate the Six Seven Five Lounge, a high-end restaurant and nightclub located in Inglewood. The criminal complaint alleges he also used the money for private vacations, commercial properties, and vintage car restorations.
Separately, FBI agents arrested Lakiya Malone at her South Los Angeles home on a 21-count indictment. Prosecutors state Malone accepted over $180,000 in bribes and kickbacks from Alexander Soofer, the executive director of the nonprofit Abundant Blessings. According to the indictment, Malone provided priority referrals for homeless housing participants, which included nonexistent “ghost participants” who never received services at the Abundant Blessings sites. Soofer was charged earlier this year and agreed to plead guilty to wire fraud and money laundering.
Did You Know? The Los Angeles Homeless Services Authority previously paid Home At Last more than $75 million for homeless housing services before canceling its contracts with the nonprofit in June, according to federal court documents.
Scrutiny Mounts Over Los Angeles Homeless Services Oversight
The Wednesday arrests highlight intense scrutiny surrounding the handling of public funds by local homelessness agencies. Department of Housing and Urban Development Secretary Scott Turner criticized the Los Angeles Homeless Services Authority during the news conference, stating the agency has a failing record. Last year, the L.A. County Board of Supervisors voted to pull county funds from the joint city-county agency to establish its own department. That vote followed two critical audits revealing that the agency failed to properly track funds, leaving programs vulnerable to fraud and waste.
Special Service for Groups, the separate nonprofit organization that employed Malone, released a statement noting it has implemented compliance practices and strengthened prevention protocols. Meanwhile, federal authorities continue searching for Donye Mitchell, 55, the CEO and director of The Big Blue Umbrella. Mitchell is charged with wire fraud for allegedly receiving more than $1.2 million in grant money from a Los Angeles County-funded nonprofit and using it for personal expenses, including rent, family transfers, credit card debt, and his own bail bond costs following a 2024 domestic violence and assault arrest.
Frequently Asked Questions
Who was arrested in the federal crackdown?
Federal authorities arrested Michael Young, founder of Home At Last, and Lakiya Malone, an employee of Special Service for Groups, on Wednesday.
What are the specific allegations against Michael Young?
Young is charged with wire fraud for allegedly misappropriating more than $7.5 million in public funds to finance a nightclub, luxury vacations, commercial properties, and vintage car restorations.
Is the FBI looking for any other suspects?
Yes, the FBI is searching for Donye Mitchell, the CEO and director of The Big Blue Umbrella, who faces wire fraud charges for allegedly misusing more than $1.2 million in grant money.
How will these arrests impact accountability measures for local taxpayer-funded housing programs moving forward?
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