Federal law enforcement officers have arrested two employees of California-based homelessness non-profits on corruption charges, alleging that they misappropriated millions in taxpayer dollars.

The US justice department has arrested Michael Young, a founder of the Culver City-based nonprofit Home At Last, and Lakiya Malone, an employee of the Los Angeles-based Special Service for Groups. The two are expected to appear in court on Wednesday.

Young is charged with wire fraud in a scheme to embezzle more than $7.5m from contracts with Los Angeles county and other publicly funded agencies, which he used to open a high-end restaurant, nightclub and bingo hall.

Malone is charged with taking more than $180,000 in bribes and kickbacks from the director of another homelessness non-profit, Alexander Soofer, who has agreed to plead guilty in a separate case.

The justice department is also seeking to arrest Donye Mitchell, the CEO of the Los Angeles-based nonprofit The Big Blue Umbrella. Mitchell is charged with wire fraud in a case that alleges he fraudulently obtained $1.2m in public grant funding, which he allegedly used for personal expenses, including his own bail bonds, credit card debt and PlayStation charges

“My message to every fraudster who steals from the vulnerable is clear: we will track you down, bring charges where the evidence leads, and work relentlessly to reclaim every taxpayer dollar you stole,” said assistant attorney general Colin M McDonald of the National Fraud Enforcement Division.

The investigation was led by the homeless fraud and corruption taskforce, which US attorney Bill Essayli formed last year to “investigate fraud, waste, abuse, and corruption involving funds allocated toward the eradication of homelessness within the seven-county jurisdiction of the central district of California”.

The arrests come amid growing Trump administration-backed efforts to root out “fraud” in blue states, such as California.

In April, Donald Trump named JD Vance his “fraud czar”, with a focus on investigating “those blue states where crooked Democrat politicians … have had a ‘free for all’ in the unprecedented theft of taxpayer money”. Months prior, he froze federal childcare funding to Minnesota over accusations of such fraud, and halted more than a quarter-billion dollars in Medicaid funds to the state as part of efforts to ensure it was a “good steward of the American people’s tax money”.

This summer, the Trump administration suspended federal funding to Los Angeles’s homelessness agency, Lahsa, pending an investigation citing allegations of fraud. At the time, about 8% of Lahsa’s budget came from federal funding.

And earlier this week, 12 people in southern California were charged with fraudulently collecting $10m in government childcare payments, despite allegedly caring for few or no children.

“If you fail the taxpayer, if you fail our cities, if you fail our shared mission of ending homelessness, there will be consequences and we will cut you off,” housing and urban development secretary Scott Turner said at a press conference.