Taxpayer funds that were supposed to go toward providing housing for homeless people in Los Angeles allegedly paid for a ritzy vacation in Tahiti, a high-end nightclub, luxury vehicles, and other personal expenses, according to federal authorities who fanned out across the City of Angels in an early-morning crack down on fraud.
The central focus of the crackdown is Michael Young, 46, who founded the Culver City-based nonprofit organization Home At Last, who received over $118 million in public funds through government contracts, including more than $75 million from the Los Angeles Homeless Services Authority, according to information from the Justice Department.
Prosecutors say Young misappropriated millions, including more than $7.5 million that was funneled through a sham vendor scheme. “The days of these wire fraud experts flying on private jets, driving around Beverly Hills in Range Rovers and doing lavish things is over,” HUD Secretary Scott Turner stated. Young was one of three defendants charged on September 16 in separate federal cases targeting alleged fraud and corruption involving taxpayer money that was supposed to provide services to homeless individuals in the Golden State.
According to a report from Fox News, two individuals were arrested on Wednesday, with the third being considered a fugitive. Prosecutors allege that Young used a number of shell companies and fraudulent billing practices to divert taxpayer money, spending over a million dollars to open and operate Six Seven Five Lounge, which is described as a high-end Inglewood restaurant and nightclub.
Federal officials held a news conference on September 16 where they also accused Young of spending $50,000 on a luxury vacation to Tahiti and $140,000 restoring a vintage Chevy Impala. “The taxpayers did not sign up to fund this nightclub,” Assistant Attorney General Colin M. McDonald stated matter-of-factly. Law enforcement officials also arrested Lakiya Malone, 48, who worked for Special Service for Groups.
Malone was indicted on 21 counts alleging she accepted more than $180,000 in bribes and kickbacks from Alexander Soofer, who served as the executive director of nonprofit Abundant Blessings. Malone would allegedly provide priority referrals to Soofer, which included “ghost” homeless participants who never lived at the housing sites.
Prosecutors allege that the files for these individuals were completely fabricated and included fake welcome letters, several forged sign-in sheets, and falsified eligibility forms. Soofer, who was previously charged, has agreed to plead guilty to wire fraud and money laundering. He confessed to taking $23 million in public money that was supposed to help the homeless and slipping $2 million of that into his own pocket and for unrelated businesses.
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Donye Mitchell, 55, a third defendant in the case, who is the CEO of The Big Blue Umbrella, is considered a fugitive. Prosecutors allege that Mitchell obtained over $1.2 million in grant funding after making a number of false representations and then later using the grant money for his own personal purchases, including bail-bond costs, credit card debit, family transfers, and PlayStation charges.
“If you or someone you know has defrauded money allocated for the homeless, I suggest you report it to law enforcement,” First Assistant U.S. Attorney Bill Essayli stated during the press conference. “If you don’t, your door may be the next one we’re hitting.” President Donald Trump and his administration have made cracking down on fraud a top priority during his second term.
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