FEDERAL HOMELESSNESS FRAUD TAKEDOWN TARGETS MILLIONS ALLEGEDLY DIVERTED FROM LOS ANGELES PROGRAMS

Federal authorities have announced a major homelessness-fraud enforcement action in Los Angeles, bringing criminal cases against individuals accused of diverting millions of dollars intended to house and support people experiencing homelessness.

HUD said the defendants and organizations involved had received more than $130 million in taxpayer funding, including more than $75 million connected to the Los Angeles Homeless Services Authority, or LAHSA. Federal officials allege that approximately $14 million was stolen or misused across the cases highlighted by HUD.

The largest allegations center on Michael Young, founder of the nonprofit Home At Last.

Federal prosecutors accuse Young of using shell companies, fake bids and related entities to divert public homelessness funding. HUD said Home At Last received more than $100 million in taxpayer funds and alleged that more than $12 million was misappropriated.

Independent reporting by CalMatters, through LAist, reported that Young's organization received more than $118 million in public funding for homeless housing since 2019, including more than $75 million through LAHSA.

Prosecutors allege that money intended for homelessness programs was instead used for expenses including real estate, a nightclub, a bingo operation, travel and other personal or unrelated spending.

Young has been charged, not convicted. The allegations against him remain allegations unless proven in court.

Federal authorities also announced allegations involving other organizations and individuals.

Prosecutors allege that Lakiya Malone, an employee of nonprofit Special Service for Groups, accepted approximately $180,000 in bribes in exchange for referring nonexistent or "ghost" participants to another homelessness provider, allowing services to allegedly be billed for people who were not actually receiving them.

Authorities also charged Donye Mitchell of nonprofit Big Blue Umbrella, alleging that he obtained grant funding after misrepresenting his experience and later used some of those funds for personal expenses.

Special Service for Groups told CalMatters that it has cooperated with federal prosecutors and strengthened its compliance protocols.

THE OVERSIGHT QUESTION

The cases raise a larger issue for organizations responsible for distributing, administering or monitoring homelessness-program funding: whether financial and contractor controls are strong enough to identify questionable transactions before significant public money is released.

According to HUD, the Los Angeles Continuum of Care led by LAHSA has received approximately $1 billion in taxpayer funding over the past five years.

Separately, CalMatters reported that prosecutors pointed to a court-ordered 2025 review that found Los Angeles officials had failed to properly track billions of dollars in homelessness spending and identified weaknesses in vendor oversight and financial accountability.

The criminal cases do not establish that every questioned payment was improper, nor do they establish wrongdoing across Los Angeles's broader homelessness-services system.

They do, however, highlight the compliance risk created when large volumes of public funding move through networks of nonprofits, contractors, subcontractors and service providers without sufficiently strong verification and payment controls.

WHAT OPERATORS SHOULD BE WATCHING

For housing agencies, Continuums of Care, nonprofit providers and organizations administering federally supported programs, the allegations highlight several areas of financial control:

• Verification that payments correspond to actual participants and documented services

• Independent review of vendors, ownership interests and related parties

• Validation of competitive bids and procurement documentation

• Detection of duplicate, unsupported or unusual invoices

• Review of subcontractors receiving public funds

• Coordination between program, finance and compliance teams

• Escalation procedures when billing or participant data does not match program records

The cases are also likely to increase attention on how homelessness-service organizations document expenditures and oversee outside contractors.

WHAT COMES NEXT

The next developments will come through federal court proceedings, potential additional charges, efforts to recover allegedly diverted funds and any resulting changes to LAHSA's contractor-review and payment-control systems.

Prosecutors have indicated that the broader investigation is continuing.

NSPIRE Wire will continue tracking developments affecting federally funded housing programs, compliance systems and organizations responsible for administering public housing dollars.

NSPIRE Wire is an independent publication and is not affiliated with or endorsed by HUD.