Federal Cases Allege Millions Meant for LA Homelessness Programs Were Diverted

LOS ANGELES — Federal prosecutors have charged three people in separate Southern California cases that allege millions of dollars intended to help unhoused residents were diverted into private businesses, real estate, luxury travel and other personal expenses. Two defendants were arrested Wednesday, while a third was described by authorities as a fugitive. The accusations are allegations, not convictions, and each defendant is presumed innocent unless proved guilty in court.

The largest case centers on Michael Young, founder of the Culver City nonprofit Home at Last. Prosecutors allege that Young misappropriated more than $12 million after the organization received over $100 million in public funding. The government says some of the money moved through companies he controlled and helped finance commercial property, including a nightclub and an adjacent bingo hall. Young faces a wire-fraud charge carrying a potential maximum sentence of 20 years.

Photo: Russ Allison Loar · CC BY-SA 4.0

A second complaint charges Lakiya Malone, who worked for a Los Angeles-area nonprofit, with allegedly accepting bribes and steering publicly funded services toward favored vendors. Donye Mitchell, the third defendant named in the broader enforcement announcement, is accused in a separate wire-fraud case and had not been arrested when prosecutors disclosed the charges. The cases are not one combined conspiracy, and the evidence against each person must be evaluated separately.

The Justice Department also announced that another individual, Robert Soofer, had agreed to plead guilty to wire fraud and money laundering in a related homelessness-funding matter. Prosecutors said Soofer admitted obtaining $23 million in public money and diverting at least $2 million for personal enrichment and ventures unrelated to housing. That guilty plea is distinct from the pending allegations against Young, Malone and Mitchell.

The cases were developed through the federal Homelessness Fraud and Corruption Task Force, created to examine spending across the Central District of California. The FBI, IRS Criminal Investigation and the Department of Housing and Urban Development's inspector general are involved. Their work reflects a central problem for Los Angeles: huge sums move through a network of agencies, contractors and nonprofits, while the public expects both urgency and traceable results.

That tension is especially sharp because homelessness remains visible across the region and every diverted dollar can mean fewer placements, services or safeguards. Oversight is not an argument against funding. It is a condition for making funding effective. Contracts need clear deliverables, invoice testing, conflict checks and enough staffing to examine irregular transactions before they grow into multimillion-dollar losses.

CityLA has followed the West Los Angeles veterans-housing order, where courts have focused on whether promised units will actually be delivered. California's retail-theft enforcement campaign raised a different accountability question about how government measures results. The new federal cases bring the same principle to homelessness programs: success cannot be judged only by the amount appropriated; it also depends on whether money reaches the people and purposes named in the contract.

The most important next steps will occur in court. Complaints and indictments describe the government's theory, but prosecutors still must prove the charged conduct beyond a reasonable doubt. Defense lawyers can challenge records, witnesses and interpretations of transactions. Initial appearances, arraignments and future filings may clarify the timelines and the specific public contracts involved. Until then, headlines should not turn allegations into settled facts.

Los Angeles agencies also face a policy test separate from criminal liability. They can review whether warning signs were missed, whether one contractor accumulated too much funding without adequate scrutiny and whether audit findings were shared across jurisdictions. A system that depends on after-the-fact prosecutions is not enough. Prevention requires real-time financial controls, transparent performance data and consequences for vendors that resist documentation.

The public anger surrounding these cases is understandable because the alleged spending choices are so far removed from the stated mission. The professional response is neither to minimize that anger nor to declare guilt before trial. It is to follow the evidence, protect due process and insist on stronger stewardship. Los Angeles needs homelessness programs capable of moving quickly, but speed and accountability cannot be treated as opposing goals when the people waiting for help bear the cost of failure.