Los Angeles homelessness fraud probe alleges $12M scheme, including $1M sent to nightclub

Los Angeles residents already pay heavily for homelessness services. 

New federal allegations now say some of that money instead flowed into a nightclub trip, luxury travel, and a vintage car restoration, LAist reported.

Here's what to know

A growing investigation into Los Angeles Homeless Services Authority's homelessness spending led to charges against three people, federal and county law enforcement officials said. One defendant has agreed to plead guilty. 

Prosecutors allege the scheme relied on "ghost" clients and involved roughly $12 million in misappropriated taxpayer money.

According to authorities, Home At Last founder Michael Young was arrested after investigators accused him of diverting $12 million in taxpayer funds through shell companies and sham bids. 

Prosecutors claim the money included about $1 million put into a ritzy nightclub, along with a nearly $50,000 trip to Tahiti and $140,000 to restore a vintage Chevy Impala.

Another defendant, Special Service for Groups employee Lakiya Malone, is accused of taking about $180,000 in bribes from Alexander Soofer. Soofer led the now-defunct nonprofit Abundant Blessings, and Malone allegedly steered fake participants to him so he could bill for them. 

Authorities said he has agreed to plead guilty to wire fraud and money laundering.

More background

LAHSA sits at the center of one of the region's biggest public-spending debates. 

Scott Turner, the U.S. Secretary of Housing and Urban Development, indicated that Home At Last alone received more than $118 million in public dollars for homeless housing since 2019, including over $75 million through LAHSA.

Because homelessness programs are funded with Measure A sales tax revenue as well as county and city general funds, any money allegedly diverted came from taxpayers who were supposed to be funding shelter beds, outreach, and housing support.

When services are billed but not delivered, residents remain unhoused, neighborhoods continue to feel the strain, and public trust erodes.

"Nobody was minding the shop," said Bill Essayli, first assistant U.S. attorney for the Central District of California.

What's being done?

Officials said they had already charged three other people and expected charges involving "many more."

In a statement, Special Service for Groups said it has been working with federal prosecutors "to ensure that any responsible individuals are held accountable," adding that it has strengthened its "protocols and compliance."

At the news conference, Essayli described a system with insufficient oversight. 

"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," he observed.

Where can I learn more?

These stories also explore how communities respond to homelessness and other housing pressures. They look at a new navigation center near Los Angeles and scams or price gouging that hit vulnerable residents.

• In Thousand Oaks, officials opened a new tiny home community to move unhoused residents toward stable housing.

• In Los Angeles, landlords were accused of egregious rental price gouging against wildfire evacuees.

• Another L.A. tenant sought legal help after a staggering increase in rent during the wildfires.

Get TCD's free newsletters for easy tips, smart advice, and a chance to earn $5,000 toward home upgrades. To see more stories like this one, change your Google preferences here.