By Jose Navarro, MBA | Financial Controller & Public Policy Analyst | San Diego, CA
September 21, 2026
LOS ANGELES — Federal prosecutors had a blunt answer this week when asked how a single Culver City nonprofit was able to divert millions of taxpayer dollars meant to house the homeless into a nightclub, a bingo hall, and a restored vintage Chevy Impala. “Nobody was minding the shop,” First Assistant U.S. Attorney Bill Essayli told reporters. “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.”
That admission, from the region’s top federal prosecutor, is the real story behind this week’s arrests.
THE NIGHTCLUB, THE BINGO HALL, AND THE VINTAGE IMPALA
On September 17, federal and county law enforcement charged three people as part of the Homelessness Fraud and Corruption Task Force’s widening investigation into homeless-services spending across Los Angeles and six surrounding counties. Michael Young, founder of the Culver City nonprofit Home At Last, is accused of using shell companies and fabricated vendor bids to misappropriate more than $7.5 million of the $118 million his organization collected in public funds since 2019 — over $75 million of it through the Los Angeles Homeless Services Authority alone. Prosecutors allege he spent more than $1 million of that money opening and running a high-end restaurant and nightclub in Inglewood, plus an adjacent bingo hall, on top of a nearly $50,000 trip to Tahiti and a $140,000 restoration of a vintage Chevy Impala.
Two co-defendants filled out the picture of an oversight vacuum operating at every level. Lakiya Malone, an employee of the nonprofit Special Service for Groups responsible for referring homeless people into LAHSA-funded housing, allegedly took roughly $180,000 in bribes to fabricate “ghost” clients — complete with forged sign-in sheets and fake eligibility forms — so a since-defunct nonprofit called Abundant Blessings could bill for services it never provided. That nonprofit’s head allegedly collected more than $17 million through the scheme. A third defendant, Donye Mitchell, is accused of lying about his organization’s track record to obtain more than $1.2 million in grant funding, then spending it on personal expenses that prosecutors itemized down to PlayStation charges and his own bail bond.
THE $2.3 BILLION LAHSA COULDN’T TRACK
None of this is happening in a vacuum. L.A. County District Attorney Nathan Hochman, appearing alongside Essayli, pointed to a court-ordered 2025 audit that found city officials had failed to properly track $2.3 billion in homeless spending — largely because the work of accounting for it had been outsourced to LAHSA, which the audit found could not produce reliable data on its own vendors or hold them accountable for results. “We have not seen the results you would expect for billions of dollars being spent,” Hochman said, adding flatly that the week’s arrests were “the beginning of these prosecutions” and that “many more” are coming.
It is the same structural failure this publication has tracked in California’s high-speed rail program: an agency handing off the accounting for public money to the same parties whose spending was supposed to be checked, then discovering years later that nobody was actually checking.
LAHSA ANSWERS BY WALKING AWAY
The day after the new charges were announced, LAHSA’s governing commission voted to give up its responsibility for roughly $240 million a year in direct federal homelessness funding and for running the region’s annual homeless count — handing that work to the county instead. LAHSA’s interim CEO, Gita O’Neill, said the agency has “zero tolerance for fraud, waste, or the exploitation of public resources,” noted that it terminated its contracts with Young’s nonprofit back in June once evidence of wrongdoing surfaced, and said no LAHSA staff are implicated, only “external provider executives and outside contractors.”
That may all be true. It is also beside the point. An agency can have zero tolerance for fraud it never had the systems to detect. The $75 million LAHSA paid Home At Last did not disappear because a single caseworker looked away — it moved through years of contracts, invoices, and renewal decisions that a $2.3 billion audit gap says nobody was actually reconciling. Essayli promised his task force will “follow the money.” For the agencies that were supposed to be following it first, that promise is an indictment of its own.
The task force’s jurisdiction spans seven counties — Los Angeles, Orange, Riverside, San Bernardino, San Luis Obispo, Santa Barbara, and Ventura — which means the same question now hangs over every homeless-services contract in Southern California: who is actually reconciling the invoices, and against what standard? LAHSA handing off its federal grant and count duties to the county is a start, but it answers only who holds the checkbook next, not whether the next holder will audit the checks any better than the last one did. Taxpayers who have watched billions committed to the region’s homelessness crisis with visibly little to show for it now have a documented reason for the gap: the accounting was never built to catch it.
Jose Navarro, MBA, is a financial controller and public affairs analyst based in San Diego with more than two decades of experience in public finance, nonprofit management, and government contract compliance.
Contact: jose@navarro-report.com
Human-Directed AI Journalism