4 Charged With Fraud Involving Millions of Taxpayer Dollars for Homelessness Aid

Federal prosecutors in California on Sept. 16 announced charges against four people who are accused of diverting millions of taxpayer dollars meant for homeless housing and services to fund lavish lifestyles, including a new nightclub and bingo hall.

The defendants accused in the separate schemes include nonprofit Home At Last founder Michael Young, CEO and executive director of The Big Blue Umbrella Donye Mitchell, and Special Service for Groups employee Lakiya Malone.

The fourth defendant, executive director of the nonprofit Abundant Blessings Alexander Soofer, agreed to plead guilty to one count of wire fraud and one count of money laundering for taking at least $2 million in taxpayer funds for personal gain.

Attorneys for the defendants could not be reached. Home At Last did not immediately return a request for comment.

The U.S. Attorney’s Office for the Central District of California said on Wednesday that Young, a founder of the Culver City-based nonprofit, was arrested and charged with “sham vendor fraud.”

He allegedly committed fraud to misappropriate more than $7.5 million in taxpayer funds to open and operate personal projects, such as a high-end restaurant and nightclub in Inglewood and an adjacent bingo hall.

The money he received from Los Angeles Homeless Services Authority was supposed to be used toward providing housing and services to homeless people. Instead, prosecutors allege, he made a web of shell corporations and fraudulent billing practices to boost his real estate portfolio, which included $1 million in taxpayer dollars to open the Six Seven Five Lounge restaurant and nightclub.

“Taxpayer money also allegedly paid for a liquor license for that business, in addition to the architect, developer, and high-end finishes for this nightclub,” Assistant Attorney General for the Justice Department’s National Fraud Enforcement Division Colin McDonald said during a press conference on Wednesday.

“The taxpayers did not sign up to fund this nightclub.”

Young is charged with wire fraud, a felony that carries a maximum sentence of 20 years in federal prison if convicted.

In a separate case, Donye Mitchell, the CEO of The Big Blue Umbrella, was awarded more than $1.2 million in Los Angeles County-funded grant money from Amity Foundation after allegedly claiming his nonprofit was a major homeless-housing provider, which prosecutors say was false.

Mitchell is accused of using grant funds on inflated salary payments, paying his bail for domestic violence and assault charges, paying off credit card debt, transferring money to family, paying rent, and paying charges associated with his PlayStation.

Amity allegedly canceled the contract with The Big Blue Umbrella in May 2025 after it already sent $315,000. Amity’s decision to cut ties was over concerns that Mitchell misrepresented his spending and failed to meet agreed-upon milestones.

Mitchell, who is not in custody and considered a fugitive on Sept. 16, is also charged with wire fraud.

“L.A. is called, they say, the City of Angels, but there’s nothing angelic about bribery, about stealing money from taxpayers, about lying, about serving our nation’s most vulnerable citizens, and while these fraudsters have lined their pockets, American people have been dying in our streets,” Housing and Urban Development Secretary Scott Turner said.

In the third case, Malone, an employee of the nonprofit Special Service for Groups, was arrested on a 21-count indictment that accused her of taking more than $180,000 in bribes and kickbacks from Alexander Soofer in exchange for priority housing referrals, including “ghost” clients who never lived at the sites.

Prosecutors say the scheme included making fake welcome letters, sign-in sheets, and eligibility forms that helped inflate more than $17 million that Soofer received from Special Service for Groups.

Malone faces up to 20 years per wire fraud count, 10 years per bribery count, and five years on the conspiracy charge if convicted.

“The scale and brazenness of these fraudsters expose a profound failure by the State of California and Los Angeles County to safeguard public funds,” First Assistant United States Attorney Bill Essayli said.

“Millions [of dollars] intended to house the homeless allegedly financed private real estate, a nightclub, a bingo hall, and personal expenses. Taxpayers deserve accountability.

“We will follow the money, expose the corruption, and prosecute those who exploit the American people for personal gain.”