By Jose E. Navarro, MBA | LA County | September 18, 2026
LOS ANGELES — Federal prosecutors this week charged three people in a $12 million fraud scheme running through the Los Angeles Homeless Services Authority, the latest and most criminal chapter in a fiscal collapse three years in the making. LAHSA moves roughly $1 billion a year toward the region’s homelessness response. It also lost federal funding in June after auditors found it could not verify the existence of 2,300 housing sites it was responsible for, that 70 percent of those site contracts disclosed no expenses at all, and that the agency had recovered only $2.5 million of $50.8 million it had advanced to service providers years earlier. Federal prosecutors named Lakiya Malone, Michael Young and Donye Mitchell in the fraud scheme; the charges remain allegations unless proven in court. They are accused of exploiting the same contract and recordkeeping gaps the audits had already flagged, with providers paid in advance and no reliable system to confirm the services billed were actually delivered.
The scandal does not belong to a faceless bureaucracy Mayor Karen Bass merely oversees from a distance. LAHSA’s ten-member governing commission is split evenly between the city and county: five seats appointed by the mayor, five by the county Board of Supervisors. Bass’s appointees have sat on that commission through every audit that flagged the failures now culminating in federal indictments — a November 2023 county audit citing weak contract oversight and delayed provider payments, a January 2022 HUD report on spending controls, and a 2023 episode in which the commission itself voted to bar then-CEO Va Lecia Adams Kellum from signing a contract involving a company her husband helped run, only for Adams Kellum to sign it anyway months later with no consequence. The dysfunction was documented in real time, on a board Bass had the standing authority to reshape, for years before a federal prosecutor’s office had to step in.
The county moved first. In April 2025, the Board of Supervisors pulled roughly $300 million a year in funding from LAHSA and stood up its own homelessness department, which launched January 1, 2026, citing the same fiscal-transparency and contract-management failures, and reports directly to elected supervisors. The city followed more slowly and less decisively: the City Council voted 14-0 only this past August to fund a consultant and transition plan, without yet deciding whether city-funded programs will be run directly by the city, contracted to the county, or handed to a different entity altogether — a plan that, by the council’s own timeline, will not be implemented until the 2027-28 fiscal year. That is more than a year after this week’s fraud indictments, and more than five years after the first audits describing the same underlying failures. Meanwhile, the city’s own 2026 point-in-time count found homelessness rising again inside Los Angeles proper — up 3.4 percent, with the unsheltered count up 7.9 percent — reversing two years of declines, on Bass’s watch.
That is the backdrop for the choice voters face on November 3, when Bass faces City Councilmember Nithya Raman in a runoff for a second term — the first time in 21 years an incumbent LA mayor has been forced into one. Raman has made LAHSA’s dysfunction part of her case against Bass. But Raman chairs the council committee that oversees homelessness policy, and fellow councilmember Monica Rodriguez publicly accused her in August of holding up the very reform package the council eventually passed unanimously, saying hearings could have moved sooner had Raman scheduled them. Neither camp disputes that the underlying failures are real; they dispute who sat on them longer. Voters weighing who can actually fix LAHSA’s successor system are being asked to choose between an incumbent whose appointees governed the agency through its collapse and a challenger whose own committee took years to schedule the fix now underway.
Whoever wins in November inherits a homelessness bureaucracy mid-transition, a live federal fraud investigation, and a City Council fix that will not be complete for at least another year. The $1 billion question voters are actually deciding on November 3 is not just who becomes mayor — it is whether the next mayor treats a commission seat as a genuine oversight tool, or, as it functioned for the last three years, as a formality that produced neither accountability nor results until a federal prosecutor stepped in.
Human-Directed AI Journalism — reporting and analysis produced under human editorial direction with AI research and drafting assistance.