Summary
Two defendants have been arrested in separate federal cases involving alleged fraud and misuse of public funds intended to address homelessness in California, the U.S. Department of Justice said.
One of the defendants, Michael Young, 46, of Baldwin Hills, California, is a founder of the Culver City-based nonprofit Home At Last (HAL). Federal prosecutors allege that Young diverted more than $7.5 million in taxpayer funds intended for homeless housing through shell companies and fraudulent vendor arrangements.
According to the DOJ, Young and Home At Last received more than $118 million in public funds through contracts with the Los Angeles Homeless Services Authority (LAHSA), the City of Los Angeles, Los Angeles County and the U.S. Department of Housing and Urban Development (HUD).
Prosecutors allege that more than $1 million of the diverted money was used to open and operate a high-end restaurant and nightclub in Inglewood called Six Seven Five Lounge.
Key facts at a glance
| Detail | Information |
|---|---|
| Main defendant | Michael Young |
| Age | 46 |
| Location | Baldwin Hills, California |
| Nonprofit | Home At Last (HAL) |
| Nonprofit location | Culver City, California |
| Public funds received | More than $118 million |
| Alleged misappropriation | More than $7.5 million |
| LAHSA payments to HAL | More than $75 million |
| Alleged offense | Wire fraud |
| Maximum statutory penalty | Up to 20 years in federal prison |
| Other alleged use of funds | Restaurant/nightclub and other businesses |
| Investigating agencies | DOJ, FBI, IRS Criminal Investigation and HUD-OIG |
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DOJ announces homelessness fraud enforcement action
The arrests are part of the work of the Homelessness Fraud and Corruption Task Force, which investigates alleged fraud, waste, abuse and corruption involving funds allocated to address homelessness.
The task force’s jurisdiction covers seven California counties within the Central District of California:
- Los Angeles
- Orange
- Riverside
- San Bernardino
- San Luis Obispo
- Santa Barbara
- Ventura
The DOJ said the latest enforcement action includes three new criminal cases involving alleged misuse of funds intended for homelessness programs, along with a guilty plea in a previously charged case.
Assistant Attorney General Colin M. McDonald of the National Fraud Enforcement Division said the cases involve alleged schemes that diverted millions of dollars from programs intended to house people experiencing homelessness.
Michael Young accused of diverting homeless housing funds
According to a federal criminal complaint, Young allegedly operated a years-long scheme involving Home At Last and a network of shell companies.
Federal prosecutors allege that Young used fraudulent billing practices and sham vendors to redirect public money away from its intended purpose.
The complaint alleges that Young repeatedly represented that funds would be used for homeless housing or services connected to homeless housing. Prosecutors instead allege that portions of the money were diverted for personal use and unrelated businesses.
Young has been charged with wire fraud, which carries a statutory maximum sentence of 20 years in federal prison.
The charge is an allegation, and Young is presumed innocent unless proven guilty in court.
Alleged sham vendor scheme
The DOJ complaint alleges that Young created sham vendors to conceal self-dealing transactions.
According to the allegations, the purported vendors:
- Had no employees.
- Had no legitimate business locations.
- Had no genuine business operations.
- Were allegedly used to funnel public money back to Young.
- Submitted or were associated with allegedly fraudulent invoices and bids.
- Used forged signatures to make transactions appear legitimate.
Prosecutors allege that these arrangements resulted in more than $7.5 million in misappropriated taxpayer funds.
Alleged spending on nightclub and real estate
The federal complaint also alleges that public funds intended for homeless housing were used for unrelated commercial activities.
Among the alleged expenditures was more than $1 million used to open and operate Six Seven Five Lounge, a restaurant and nightclub in Inglewood.
The broader allegations also involve commercial real estate and other business interests.
The DOJ said the alleged misuse involved funds received through contracts with LAHSA and other public entities.
Home At Last received more than $118 million
According to the complaint, Home At Last received more than $118 million in public funds from:
- Los Angeles Homeless Services Authority.
- City of Los Angeles.
- County of Los Angeles.
- U.S. Department of Housing and Urban Development (HUD).
LAHSA alone allegedly paid Home At Last more than $75 million for homeless housing services.
The DOJ said some of the programs involved in the investigation were administered by LAHSA, the lead agency coordinating housing and social services for people experiencing homelessness in Los Angeles County.
Federal agencies involved in investigation
Several federal agencies are involved in the investigation and enforcement action.
The Federal Bureau of Investigation (FBI), IRS Criminal Investigation and HUD Office of Inspector General (HUD-OIG) are among the agencies cited by the DOJ.
FBI Director Kash Patel said the defendants are accused of diverting more than $12 million in taxpayer funds for personal gain across the cases announced as part of the enforcement action.
IRS Criminal Investigation’s Los Angeles Field Office said its investigation identified what authorities described as a deliberate scheme involving government programs intended to support people experiencing homelessness.
HUD-OIG also said the agency would continue investigating alleged exploitation of federal housing programs.
Officials emphasize protection of taxpayer funds
Central District of California First Assistant U.S. Attorney Bill Essayli said the cases highlight alleged failures to safeguard public funds intended for homelessness programs.
Officials said the investigation will continue to trace the movement of funds and pursue potential fraud involving federal and local homelessness programs.
The statements from federal officials describe allegations contained in criminal complaints and related enforcement proceedings. The allegations have not been established as facts through a criminal conviction.
What happens next
The two defendants arrested in the latest enforcement action were expected to make their initial appearances in U.S. District Court in downtown Los Angeles.
The federal case against Young will proceed through the criminal justice system, where prosecutors must prove the allegations beyond a reasonable doubt.
The broader Homelessness Fraud and Corruption Task Force investigation covers alleged fraud, waste, abuse and corruption involving homelessness-related funding across the seven-county Central District of California jurisdiction.
To read the original order please visit Department of Justice (DOJ) website