At least two people were arrested Wednesday for alleged fraud and misuse of millions of dollars in taxpayer money that was intended to combat the homelessness crisis in Los Angeles, officials announced.
ABC7 was in the Westmont area of South Los Angeles as federal agents surrounded a home on W. 98th Street and arrested one of the accused people, 48-year-old Lakiya Malone.
Federal investigators say Malone took more than $180,000 in bribes and kickbacks for signing up so-called “ghost participants.” She allegedly provided referrals for participants – who were not actually homeless- at non-profit homeless housing facilities.
“She lied and she allowed known fraudsters to get credit for taking care of homeless people they weren’t actually taking care of,” said First Assistant U.S. Attorney Bill Essayli said. “This is all just a way to divert taxpayer dollars intended to help the homeless for…
PAYROLL & HR CONTROLS (PREVENTING “GHOST” SCHEMES)
Payroll fraud is often the hardest to detect because it “looks” like a normal business expense.
- Segregation of Duties (SoD): The person who adds new employees to the system must not be the same person who approves the monthly pay run.
- Mandatory Vacation Policy: Require all financial and HR staff to take 5–10 consecutive days of leave annually. Fraud often surfaces when the perpetrator isn’t there to “hide” the trail.
- Ghost Employee Audit: Perform a quarterly “Headcount Reconciliation” where managers must physically verify every name on their payroll list exists.
- Self-Pay Blocking: Ensure the payroll software has a hard-coded block preventing administrators from editing their own salary or bank details.