LA City Fraud: What Everyone’s Talking About
LA County prosecutors are moving aggressively against multiple schemes that allegedly drained public money meant for schools, homeless services, and victim compensation. The phrase LA City Fraud now pops up whenever residents open the paper or scroll their feeds. The cases share a pattern: large sums rushed out the door, weak checks, and sudden arrests that feel both inevitable and overdue.
Charter school funds vanish
Derrick Devaul Spiva ran an Antelope Valley charter school approved in April 2023. By October the same year the county had shuttered it and charged him with embezzling more than $150,000. Prosecutors say he paid himself, his business, and his partner within weeks of taking the job.
Spiva faces counts of misappropriation, embezzlement, grand theft, money laundering, and conflict of interest. The district attorney called the theft of education dollars “unconscionable.” Parents who expected classrooms now watch a criminal case instead.
The timeline is short enough to read like a warning. Approval in spring, hiring in May, cash moving by June. Oversight never caught up with the money that left in summer.
Homelessness contracts under fire
Nonprofits that won LAHSA grants now sit at the center of federal and county indictments. Michael Young’s Home At Last group allegedly steered more than $7 million through shell companies and into a nightclub, a vintage car, and a Tahiti trip. The total contracts exceeded $118 million.
A second provider, Alexander Soofer, pleaded guilty to wire fraud and laundering after prosecutors traced millions to a $7 million home, a Range Rover, and property in Greece. Lakiya Malone and Donye Mitchell face separate charges tied to fake referrals and personal expenses paid from grants.
Combined losses top $17 million. First Assistant U.S. Attorney Bill Essayli summed up the problem: “There’s no vetting, no auditing, no accounting.” The remark has circulated widely on local podcasts and city council feeds.
Settlement claims draw scrutiny
LA County approved a $4 billion payout for more than 11,000 sex-abuse claims filed under AB 218. A district attorney review found that up to 81 percent carried fraud markers such as duplicate filings and identical medical language. Some plaintiffs admitted they had never been in county custody.
District Attorney Nathan Hochman secured funding for ten new investigators and asked the court to pause payments. A public hotline now fields tips. Legitimate survivors wait while the backlog grows.
Recruiters reportedly paid small sums to people willing to file false claims. The scale of the original settlement made the incentive obvious. Hochman called the conduct “greedy and heinous.”
Pandemic relief double-dipping
Twenty-four county employees collected full salaries and unemployment benefits between 2020 and 2023. The total came to roughly $741,000. Charges landed after routine audits flagged the overlap.
Each case involves straightforward paperwork mismatches rather than elaborate shell companies. Still, the pattern shows how quickly relief rules bent under volume.
Taxpayers who funded both programs now see repayment orders and plea deals. The episode feeds a larger conversation about controls that were loosened and never fully restored.
Healthcare billing schemes expand
Investigators uncovered $270 million in false Medi-Cal claims for drugs that were never dispensed. A separate hospice fraud case reached $27 million in Medicare billings. County estimates place questionable hospice claims as high as $3.5 billion.
The numbers dwarf the individual nonprofit cases yet receive less daily coverage. Providers remain under active federal review.
Officials note that the same rushed rollout that sped pandemic funds also accelerated medical reimbursements. The result is a second front in the same enforcement wave.
Fire recovery scams surface
After the Eaton Fire in January 2025, contractors began targeting recovery funds. The district attorney’s office reports more than fifty prosecutions tied to inflated invoices and work never performed.
Residents who lost homes now face calls from firms promising quick rebuilds at county expense. Some contractors collected deposits and disappeared.
Local neighborhood apps fill with warnings and license numbers. The pattern mirrors earlier disaster fraud cases but moves faster because digital solicitations reach displaced families within days.
Oversight gaps become political
City council members and state legislators have scheduled hearings on LAHSA contracting. Proposals range from stricter pre-qualification rules to shifting oversight to county auditors.
Advocates for the homeless worry that tighter controls will slow real services. Prosecutors counter that the current system already failed the people it was meant to help.
Voters tracking property-tax statements see the same agencies listed on both sides of the ledger. The tension now plays out in budget season rather than campaign sound bites.
Public money and public trust
Each case involves taxpayer dollars that residents approved for specific purposes. When those dollars fund nightclubs or duplicate claims, the breach feels personal to people who waited months for shelter beds or school supplies.
Social media threads mix outrage with resignation. Many users note that similar stories surface after every budget cycle and fade before reforms stick.
Local reporters have begun cross-referencing contract awards against campaign donors. The practice keeps pressure on agencies even when official updates slow.
What happens next
The district attorney’s office says additional indictments are under seal. Federal prosecutors continue to review LAHSA records. Settlement payments remain paused while investigators sort legitimate claims from fabricated ones.
City budget talks this winter will test whether new controls survive committee votes. Residents who follow the dockets will learn whether the current enforcement wave produces lasting changes or another round of headlines.
Accountability in real time
LA City Fraud now functions as shorthand for a cluster of cases that reached the public at once. The details differ, yet each one shows how quickly public funds move when oversight lags. The coming months will show whether the arrests translate into rules that actually slow the next scheme.
