Add The California Post on Google The White House has issued a scathing message to Los Angeles as it pulled the plug on funding for the city’s largest homeless agency.
The newly created Task Force to Eliminate Fraud, led by Vice President JD Vance, said “the fraud and corruption ends today” as it wiped out federal cash flow to Los Angeles Homeless Services Authority.
In a post on X, its executive director Scott Brady added: “For years American taxpayers have been sending billions to Los Angeles. The result? Fraud and corruption.”
The Trump administration accused the agency of “wanton mismanagement” after nearly $1 billion in federal money flowed to the organization since 2021.
The Department of Housing and Urban Development, which is part of the task force, informed LAHSA leadership Thursday it was immediately suspending the agency’s participation in federal programs while HUD’s inspector general investigates potential misconduct involving the agency and its leadership.
In a letter obtained by Fox News, HUD accused LAHSA of “obvious fraud” and repeated failures to protect taxpayer dollars.
The agency cited allegations involving conflicts of interest, financial mismanagement, lack of oversight and concerns about how federal homelessness funding was administered.
HUD noted LAHSA has received nearly $1 billion in federal funding since 2021 and argued that the agency’s failures have become too severe to ignore.
The letter reportedly references the resignation of former LAHSA CEO Va Lecia Adams Kellum, who stepped down last year after it was revealed that $2.1 million in federal funds overseen by LAHSA had been directed to a nonprofit organization that employed her husband.
HUD also pointed to findings by a federal judge who concluded LAHSA committed “obvious fraud” after allegedly continuing to seek funding for an 88-bed shelter despite knowing the facility was operating at roughly half capacity. The judge reportedly even considered placing the agency into receivership.
Additional concerns cited by HUD include LAHSA’s inability to verify the existence of nearly 2,300 housing sites under its oversight and findings that approximately 70% of contracts tied to those sites showed no reported expenses during the previous year.
Public audits found LAHSA routinely paid service providers late and maintained inadequate records needed to monitor contracts and spending.
HUD further cited a November 2024 City Controller audit that found LAHSA failed to spend approximately $513 million in homelessness funding budgeted for fiscal year 2024, attributing the issue to staffing shortages and outdated technology systems.
The federal action comes as local leaders have already begun moving away from LAHSA. Los Angeles County voted last year to create a new county homelessness department and shift hundreds of millions of dollars away from the agency.
LAHSA and much of the city’s homelessness spending fall under the jurisdiction of the Los Angeles City Council’s Homelessness and Housing Committee, which is chaired by mayoral candidate Councilmember Nithya Raman.
The committee is responsible for reviewing homelessness programs, contracts, funding allocations, performance reports and policy recommendations before they move through City Hall.
The California Post has reached out to Raman’s office and LAHSA for comment regarding HUD’s decision, the allegations outlined in the federal letter and what impact the funding suspension could have on homelessness programs throughout Los Angeles.
According to Fox, HUD Secretary Scott Turner said the agency would no longer allow federal funds to flow to an organization accused of failing to properly manage taxpayer money.
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