Karen Bass told Los Angeles she had homelessness under control.
Then federal agents showed up at her homeless agency's front door this week.
The reason she quietly walked away one day earlier says everything.
Inside the LAHSA Fraud Scheme: A Nightclub, Vintage Cars, and Tahiti Trips
Michael Young ran a nonprofit called Home At Last.
The name sounds charitable. The reality was anything but.
Federal prosecutors say Young's organization took in over $118 million in public funds since 2019 – money earmarked to house homeless people on Los Angeles streets.
LAHSA alone funneled $75 million to his group.
Young allegedly used that money to build a sprawling shell company empire – fake contractors, forged signatures, fraudulent invoices – all designed to funnel taxpayer dollars back to himself.
The estimated take: $7.5 million.
What did he spend it on?
Luxury vacations to Tahiti. Vintage car restorations. A high-end nightclub in Inglewood called the Six Seven Five Lounge.
The homeless people his nonprofit was supposed to serve were sleeping on the street while Michael Young was taking trips to the South Pacific.
He's charged with wire fraud, which carries a maximum of 20 years in federal prison.
Young wasn't alone.
Donye Mitchell ran a nonprofit that pocketed $1.2 million meant for housing and mental healthcare. He allegedly spent it on personal credit card debt and video games.
Lakiya Malone took more than $180,000 in bribes – then placed people who weren't homeless into homeless aid programs.
A fourth defendant, Alexander Soofer, already pleaded guilty to working with Malone to bill for homeless participants who didn't exist. He's the same charity director federal prosecutors say earlier siphoned $10 million from a $23 million LAHSA contract – spending it on a $7 million Westwood mansion, a $125,000 Range Rover, and private jet travel.
Meanwhile, the homeless people in his program were eating Ramen noodles – when they were fed at all.
The DA for Los Angeles County, Nathan Hochman, was blunt at Wednesday's press conference: "I can assure this is the beginning of these prosecutions and we are far, far from the end."
Karen Bass and the $1 Billion Homeless Funding Scandal at LAHSA
The day before federal agents arrested her city's homeless nonprofit contractors, Bass quietly resigned her membership from LAHSA – the agency that had been handing out all this money.
That's not a coincidence. That's a politician who saw the walls closing in and ran.
LAHSA had already been suspended by HUD Secretary Scott Turner back in June, after investigators found evidence of repeated false statements, missing financial controls, and zero safeguards against conflicts of interest.
The HUD OIG had discovered LAHSA couldn't even determine whether it had paid for empty hotel rooms in 2023 – because it failed to record when people left transitional housing.
This wasn't a surprise. This was years of documented failure that Bass and Los Angeles officials ignored while the money kept flowing.
Congress noticed. Rep. Tim Burchett's House subcommittee summoned Bass to testify at a September 15 hearing about what happened to over $1 billion in federal funds LAHSA received since 2021.
Bass refused to show up.
Her lawyer told the committee she was "not available on that date." She also complained that producing the requested documents would cost money – this from a mayor overseeing a city that spent $3 billion a year on homelessness with nothing to show for it.
Turner didn't mince words at Wednesday's press conference: "HUD and the Trump administration will not tolerate the theft and abuse of taxpayers in this country."
Why HUD Is Cracking Down on Homeless Nonprofit Fraud Nationwide
Los Angeles spent over $1 billion in federal funds through LAHSA since 2021 – $220 million in 2024 alone.
The 2026 homeless count showed 45,194 people living without stable shelter in the city and 73,040 across LA County.
Homelessness is up 3.4% in the city this year, and street homelessness – people living outdoors in tents and makeshift shelters – surged 7.9%.
This is what $1 billion in federal money and $3 billion in annual city and county spending bought Los Angeles: more tents, more encampments, and a network of nonprofit executives flying to Tahiti.
This is not a failure of resources. It's not a failure of compassion. It's what happens when Democrats build bureaucracies designed to perpetuate problems rather than solve them – because the problem pays.
Every year the homeless count goes up, the pitch goes out for more funding. More money flows to nonprofits. Executives buy nightclubs. The count goes up again. Repeat.
Trump's administration just broke the cycle. HUD suspended LAHSA in June. The DOJ indicted the contractors in September. Two days of arrests this week alone – homelessness fraud on Wednesday, childcare fraud the Tuesday before – and the DA is promising more to come.
Karen Bass declared victory over Los Angeles homelessness years ago. She built a $300 million program called Inside Safe. She spent billions.
Forty percent of the people her signature program moved indoors went right back to the streets.
Now she's too busy to tell Congress where the money went.
Trump's DOJ just gave Los Angeles the accountability Karen Bass never would.
Sources:
- U.S. Department of Justice, "Two Defendants Employed by LA Area Homeless Nonprofits Arrested on Federal Charges Alleging Misuse of Funds," DOJ.gov, September 16, 2026.
- U.S. Department of Housing and Urban Development, "HUD Cuts Off Fraud-Filled Los Angeles Homelessness Funding," HUD.gov, June 11, 2026.
- House Committee on Oversight and Accountability, "Burchett Investigates Fraud-Plagued Los Angeles Homelessness Funding," Oversight.house.gov, September 3, 2026.
- Victoria Taft, "Karen Bass Feels Heat From Feds Over Millions in Stolen and Laundered 'Homeless' Funds," PJ Media, September 16, 2026.
- Bob Hoge, "Bass in the Hot Seat: House Republicans Want Answers on LA's Billion-Dollar Homelessness Bonanza," RedState, September 3, 2026.
- LAIST, "LA's Homeless Count Results Show the Numbers in the City Are Up," LAIST.com, July 2026.
