Stop LA City Fraud: Inside the latest LA County probe
Los Angeles is watching another round of public money vanish into private pockets. The newest federal and county investigations focus on LA City Fraud that allegedly siphoned millions from homeless services, victim compensation, and pandemic relief. These probes arrive as taxpayers already question where billions in emergency funds have gone, and they raise the same question in every sector: who was watching the books?
Homelessness dollars rerouted
Federal prosecutors say Michael Young, who ran Home At Last in Culver City, turned more than $118 million in LAHSA contracts into personal spending. Court papers claim he moved roughly $7.5 million through shell companies, then spent over $1 million on a nightclub in Inglewood, vintage cars, and trips to Tahiti.
Young’s case is only one part of a larger Homelessness Fraud and Corruption Task Force that launched earlier this year. Another defendant, Alexander Soofer of Abundant Blessings, has already agreed to plead guilty to wire fraud and money laundering after prosecutors say he pocketed at least $2 million from fake clients.
Investigators also arrested Lakiya Malone and Donye Mitchell, nonprofit employees accused of accepting bribes and listing “ghost” participants to keep the contracts flowing. The combined losses in these four cases top $12 million, but prosecutors warn more indictments are on the way.
LAHSA oversight gaps exposed
LAHSA, the joint City-County agency that distributes more than $1 billion in federal homelessness funds, is now under fresh scrutiny. Records show the agency awarded contracts without competitive bids and performed little follow-up auditing once the checks cleared.
One city controller report noted that program managers often approved invoices in bulk, with no verification that beds or services ever existed. The rush to spend post-pandemic relief dollars left little room for standard checks, according to officials quoted in recent coverage.
City and county leaders have since agreed to form an external review panel, but the panel has yet to release findings. Meanwhile, federal agents continue to subpoena emails and bank records tied to the same nonprofits.
Recruiters and fabricated claims
Separate from the homelessness cases, the Los Angeles County District Attorney is examining the $4 billion sex-abuse settlement approved last year. District Attorney Nathan Hochman says “fraud indicators” appear in roughly four out of five claims filed under the 2020 claims window.
Times reporters found multiple plaintiffs who admitted they were never in county custody and others who said recruiters paid them small cash sums to sign paperwork. The county has budgeted $2.7 million for ten new investigators and opened a dedicated hotline for tips.
A judge denied the DA’s request to pause payments while the probe continues, so settlement checks keep going out even as criminal cases move forward. Hochman has pledged to prosecute anyone who manufactured false claims, arguing that real survivors deserve the full amount set aside for them.
Inside the county payroll
Another set of indictments hit closer to home. Twenty-four LA County employees were charged last year with filing false unemployment claims during the pandemic, collecting more than $741,000 while still drawing full county salaries. Each defendant allegedly reported zero income for months while their paychecks continued without interruption.
Prosecutors say the scheme was simple: file for benefits online, ignore the county email address on file, and hope the system did not cross-check. Several defendants have already entered guilty pleas and agreed to repay the state.
The county’s auditor-controller has since tightened direct-deposit verification, but the case stands as a reminder that internal controls failed at multiple levels during the emergency period.
Healthcare billing takedowns
Federal agents also announced charges in two large-scale medical fraud schemes that touched Los Angeles patients. One involved $270 million in false Medi-Cal billings for prescription drugs that were never dispensed; another used stolen identities to create fake hospice patients and billed Medicare for $27 million in nonexistent care.
Both operations allegedly relied on recruiters who signed up beneficiaries at street fairs and clinics, then used their information to file claims. The U.S. Attorney’s Office says the schemes were part of a national health-care fraud sweep that produced more than 300 indictments across the country.
Local health plans have started random audits of high-volume providers, but industry analysts note that claims processing still outpaces verification in many programs.
Pattern of weak controls
Across every sector, investigators describe the same workflow: large sums moved quickly, minimal documentation required, and little follow-up once funds left county accounts. The phrase “rush to push money out the door” appears in both federal filings and local reporting.
City Controller Kenneth Mejia has issued repeated warnings about LAHSA’s contract management, yet those warnings rarely altered the approval process. Similar gaps appear in the settlement claims portal and the unemployment system used by county staff.
Advocates argue that speed was necessary during overlapping crises, but they also say the absence of basic safeguards invited abuse at a scale that now threatens public support for the underlying programs.
Political fallout building
Mayor Karen Bass and the Board of Supervisors face growing pressure to explain how contracts were awarded and monitored. Council members have scheduled oversight hearings for next month, and several candidates in upcoming supervisorial races have already made LA City Fraud a centerpiece of their platforms.
State legislators are drafting a bill that would require annual performance audits of any nonprofit receiving more than $5 million in local funds. The measure is expected to face resistance from service providers who say added paperwork will slow already strained programs.
Meanwhile, the county’s communications office has begun publishing monthly dashboards that track contract spending, though the data currently lacks independent verification.
What prosecutors signal next
The Homelessness Fraud and Corruption Task Force has expanded its subpoena list to include banks and real-estate firms tied to the original defendants. Sources close to the investigation say additional arrests are likely before the end of the year.
On the settlement side, the DA’s new unit is cross-referencing claim files against county custody records dating back to the 1950s. The work is slow, but investigators expect to present evidence to a grand jury within six months.
Both efforts rely on whistleblowers and document reviewers who have come forward since the first indictments became public. Their cooperation remains the fastest route to identifying further targets.
Looking ahead for taxpayers
Los Angeles residents will ultimately decide whether these prosecutions restore confidence or simply confirm long-held suspicions about government spending. The immediate test is whether new oversight structures can prevent the next round of LA City Fraud before another billion dollars leaves the county’s accounts.
