Audit Chaos: Nightclub Built On Homeless Money?

Person sitting on a sidewalk with head down and hood up — Photo: Followtheflow / Shutterstock

Federal agents arrested a Culver City nonprofit founder accused of siphoning off more than $7.5 million meant for homeless housing and pouring some of it into a nightclub and bingo hall.

Story Snapshot

The Department of Justice charged three people in separate fraud and corruption cases tied to Los Angeles homelessness funding.
Culver City nonprofit founder Michael Young allegedly stole more than $7.5 million using shell companies and fake billing.
Prosecutors say Young spent taxpayer money on commercial real estate and an Inglewood nightclub called Six Seven Five Lounge.
A second defendant faces charges for allegedly taking bribes to refer fake, or “ghost,” clients so providers could bill for services never given.
The case lands on top of years of audits showing Los Angeles cannot properly track billions in homeless spending.

Nonprofit Founder Accused of Diverting Millions

Federal and county law enforcement announced charges Wednesday against three people in a growing investigation into homeless services fraud across the Los Angeles area. Officers arrested two of the three defendants that day. One of them, Michael Young, founded and ran Home At Last, a Culver City nonprofit that received more than $75 million from the Los Angeles Homeless Services Authority.

According to a criminal complaint, Young used shell corporations and fraudulent billing to misappropriate funds meant to house homeless people. The Department of Justice says he ran a sham vendor scheme that pulled more than $7.5 million away from its intended purpose. He now faces a wire fraud charge tied to the alleged scheme.

Prosecutors say Young did not just pocket the cash quietly. He allegedly used more than $1 million of the stolen funds to open and run Six Seven Five Lounge, a restaurant and nightclub in Inglewood, and put other money toward commercial real estate and an adjacent bingo hall. For families struggling to find shelter beds, that kind of spending is a gut punch.

Bribery Scheme Used ‘Ghost’ Clients to Bill Taxpayers

A separate indictment targets a defendant named Malone, who prosecutors say accepted payments for referrals that let housing providers bill the government for people who never actually qualified for services. Investigators call these fake cases “ghost” clients, a scheme that let providers collect taxpayer money for help nobody received.

The top federal prosecutor overseeing the case said the scheme reveals a much bigger hole in the system. Nobody was checking whether the money did what it was supposed to do. “There’s no vetting. There’s no auditing. There’s no accounting,” the prosecutor said, describing years of loose oversight that let fraud go unnoticed.

These arrests came from the Homelessness Fraud and Corruption Task Force, created by United States Attorney Bill Essayli to investigate fraud, waste, abuse, and corruption tied to homelessness funds across a seven-county region of Central California. Wednesday’s action marked the task force’s latest move to hold providers accountable.

Task Force Targets Years of Documented Mismanagement

This is not the first sign of trouble in Los Angeles homeless spending. A court-ordered audit released in 2025 found that city officials and the Los Angeles Homeless Services Authority could not reliably track billions of dollars, citing missing records and weak financial controls that left the system open to waste and abuse. That audit did not claim fraud had occurred, but it painted a picture of an agency flying blind with public money.

A 2024 Los Angeles County audit found the homeless services authority had advanced tens of millions of dollars to a nonprofit without properly tracking the funds. The Department of Housing and Urban Development’s inspector general later opened its own investigation into the agency over what it called repeated false statements and failed internal controls. The Trump administration has already cut off some federal funding to the agency after finding millions in taxpayer money unaccounted for.

Federal officials announced arrests and charges in separate Los Angeles-area cases involving alleged fraud and corruption in homelessness programs on Sept. 16.

DOJ says Lakiya Malone, an employee of Special Service for Groups, was indicted over alleged bribes and kickbacks tied… pic.twitter.com/BLjW8dDvzx

— California Courier (@cacourier) September 22, 2026

A member of Congress overseeing the issue said the fraud arrests are only one piece of a bigger failure. Beyond the theft, he argued, these programs still are not getting people off the streets. For conservatives who have long questioned pouring billions into homeless programs with little oversight, this case confirms what they suspected: without accountability, taxpayer generosity becomes an open invitation for con artists and grifters to cash in while the homeless crisis drags on.