Taxpayer dollars intended to put roofs over the heads of Los Angeles’ homeless allegedly paid instead for a Tahiti vacation, a high-end nightclub, luxury vehicles and other personal expenses, federal authorities said Wednesday as agents fanned out across the city in an early-morning fraud crackdown.
At the center of the crackdown is Michael Young, 46, a founder of Culver City-based nonprofit Home At Last, who received more than $118 million in public funds through government contracts, including more than $75 million from the Los Angeles Homeless Services Authority, according to the Justice Department.
Prosecutors allege Young misappropriated millions, including more than $7.5 million 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 said.
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Young was one of three defendants charged Wednesday in separate federal cases targeting alleged fraud and corruption involving money intended to house and provide services to homeless Californians. Two were arrested Wednesday, while a third was considered a fugitive.
Prosecutors allege Young used shell companies and fraudulent billing practices to divert taxpayer money, spending more than $1 million to open and operate Six Seven Five Lounge, a high-end Inglewood restaurant and nightclub.
At Wednesday’s news conference, federal officials also accused Young of spending nearly $50,000 on a luxury Tahiti vacation and $140,000 restoring a vintage Chevrolet Impala.
“The taxpayers did not sign up to fund this nightclub,” Assistant Attorney General Colin M. McDonald said.
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Authorities also arrested Lakiya Malone, 48, an employee of Special Service for Groups, on a 21-count indictment alleging she accepted more than $180,000 in bribes and kickbacks from Alexander Soofer, executive director of nonprofit Abundant Blessings.
In exchange, Malone allegedly provided priority referrals, including “ghost” homeless participants who never lived at the housing sites. Prosecutors allege their files were fabricated using fake welcome letters, 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 admitted obtaining $23 million in public money intended to combat homelessness and pocketing at least $2 million for himself and unrelated businesses.
A third defendant, Donye Mitchell, 55, CEO of The Big Blue Umbrella, is considered a fugitive. Prosecutors allege he obtained more than $1.2 million in grant funding after making false representations and later used grant money for personal expenses including bail-bond costs, credit card debt, 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 said. “If you don’t, your door may be the next one we’re hitting.”
