Federal officials have uncovered an alleged multimillion-dollar fraud scheme involving money allocated to combat homelessness in Los Angeles, according to information obtained by NewsNation. Authorities allege that funds meant for vulnerable residents instead financed luxury purchases and personal expenses.

U.S. Attorney Bill Essayli said taxpayer money supplied to nonprofit organizations and developers was diverted from its intended purpose. The funds allegedly paid for luxury vacations, vehicles, homes, and nightclub expenses rather than programs addressing homelessness in the city.

“One guy opened a nightclub in Inglewood,” Essayli told NewsNation’s Brian Entin. “Yeah, the nightclub.”

The allegations include a costly real estate deal in the Cheviot Hills neighborhood of Los Angeles. Real estate developer Steven Taylor purchased a property for $11 million, then quickly resold it to the City of Los Angeles for $27 million.

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The property was intended to become housing for homeless residents. Instead, it remains empty and under construction despite the substantially higher price paid by the city.

Federal prosecutors also said Alexander Soofer pleaded guilty after allegedly making more than $20 million through the scheme. Authorities said Soofer was living in an upscale home in Westwood while benefiting from the alleged misuse of money.

Prosecutors said Soofer also purchased a house in Greece and traveled aboard a private jet. His purchases allegedly included expensive watches, among them Rolexes.

Michael Young, identified as a nonprofit founder, was also indicted in connection with the scheme, according to federal authorities. The reported cases center on money that was supposed to help address the persistent homelessness problem in Los Angeles.

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The allegations arrive after California committed an enormous sum to homelessness programs. Since 2019, Gov. Gavin Newsom’s administration and the California Legislature have directed roughly $24 billion toward those efforts.

A state auditor’s report found that California failed to maintain reliable data needed to determine whether those expenditures were delivering their intended results. That means the state could not reliably measure the effectiveness of the programs receiving the money.

The alleged luxury spending outlined by prosecutors presents a stark contrast with the stated purpose of the funding. Money intended for homeless services and housing allegedly flowed toward vacations, real estate, vehicles, private travel, luxury watches, and even nightclub expenses.

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Essayli said fraud repeatedly emerges wherever large amounts of government money are available. His comments pointed to both health care-related schemes and alleged fraud involving homelessness funding.

“There is never a shortage of fraud, whether it is in the healthcare space with the hospice or the stuff you have been seeing on the homeless front,” Essayli added. “If there is a pot of government money somewhere, you can be sure that fraudsters are figuring out how to get it.”

The investigation became public one day after President Donald Trump and Vice President JD Vance announced a $25 million Fraud Whistleblower Incentive Program, known as WHIP. The initiative is aimed at encouraging Americans to report fraud to federal authorities.

Under WHIP, anyone who submits a tip through fraud.gov that results in a fraud conviction or a significant federal enforcement action may qualify for a reward. The White House said eligible whistleblowers can receive up to $30,000.

The Justice Department will administer the new incentive program. The announcement provides a formal financial reward for information that produces a conviction or major federal enforcement action.

The Los Angeles allegations now place renewed attention on how taxpayer funds for homelessness were distributed and used. Federal authorities are pursuing cases involving a guilty plea, an indictment and allegations of millions of dollars being redirected toward lavish personal benefits.

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