Trump admin suspends federal funds from Los Angeles homeless agency amid fraud probe

The Trump administration’s Department of Housing and Urban Development (HUD) has suspended federal funding to Los Angeles’ Homeless Services Authority (LAHSA) pending an investigation, alleging widespread mismanagement and fraud within the agency. 

In a letter to LAHSA interim CEO Gita O’Neill on Thursday, HUD Deputy Secretary Andrew Hughes wrote, "information has come to light demonstrating that LAHSA may have committed violations of federal law in performing its obligations under HUD grant agreements. Accordingly, HUD’s Office of Inspector General (OIG) has initiated an investigation."

"HUD has evidence that LAHSA’s repeated false statements and its irresponsible actions and failures, including its lack of financial management, internal controls, and safeguards against conflicts of interest, pose a threat to HUD, the public, and those living on the streets of Los Angeles," the letter added. 

Hughes wrote that HUD has "determined that continuing to provide additional federal funds to LAHSA is not in the public interest," and that "suspending LAHSA’s participation in federal government programs is a necessary step" in HUD’s mission to reducing homelessness in Los Angeles. 

"LAHSA’s failures have been so severe and pervasive that Los Angeles County has withdrawn its funding for the agency, and the City of Los Angeles is considering doing so as well," Hughes wrote. "A federal judge in Los Angeles stated in open court that LAHSA appeared to have committed 'obvious fraud' and appointed a monitor to oversee their financial activity." 

He said the LAHSA’s former CEO resigned "after she and LAHSA violated federal conflict-of-interest rules by committing more than $2 million in federal funds under LAHSA’s control to her husband’s employer. LAHSA and the former CEO also committed LAHSA-managed federal funds to her own former employer." 

He said the examples cited in his letter are not isolated incidents, but rather "establish a clear pattern," and that "despite all these failures," the LASHA has regularly certified to HUD "that it is in compliance with federal law, rules, and HUD program requirements. HUD has ample reason to suspect that hundreds of those certifications and other statements by LAHSA are false."