Trump Admin Pulls Funding Amid Disturbing Fraud Probe
The federal government is moving to cut off funding to one of the nation's largest homelessness agencies, accusing the Los Angeles Homeless Services Authority of widespread mismanagement, inadequate oversight, and potential fraud involving taxpayer dollars.
According to a letter obtained by Fox News Digital, the Department of Housing and Urban Development is immediately suspending LAHSA’s participation in federal programs while HUD’s inspector general investigates the agency and its leadership. The action places the organization, which oversees billions of dollars in homelessness spending across Los Angeles, under intensified federal scrutiny.
HUD's letter to LAHSA Board Chair Wendy Greuel and CEO Gita O’Neill outlines a series of concerns, including alleged conflicts of interest, financial irregularities, poor record keeping, and failures to properly monitor federal funds. The agency said those issues have become so severe that local governments have already begun distancing themselves from LAHSA.
“Suspending LAHSA’s participation in federal government programs is a necessary step in accomplishing that critical mission in Los Angeles,” HUD wrote. “LAHSA’s failures have been so severe and pervasive that Los Angeles County has withdrawn its funding for the agency, and the City of Los Angeles is considering doing so as well.”
LAHSA has received nearly $1 billion in federal funding since 2021, according to HUD, while also receiving substantial support from city, county, and state sources. The agency sits at the center of Los Angeles’ homelessness response system, coordinating services, housing placements, and outreach efforts.
Among the issues cited by HUD was a controversy involving former LAHSA chief executive Va Lecia Adams Kellum, who resigned after it was discovered that $2.1 million in federal funds under LAHSA’s control had been directed to a nonprofit organization employing her husband.
HUD also referenced findings from a federal judge who reportedly concluded that LAHSA engaged in “obvious fraud” by continuing to seek funding for an 88-bed shelter while allegedly knowing that the facility was operating at roughly half its intended capacity. According to HUD, the judge even considered placing the organization into receivership.
Additional concerns involve LAHSA’s inability to verify nearly 2,300 housing sites under its responsibility. HUD stated that approximately 70 percent of contracts associated with those sites failed to disclose any expenses during the prior year.
Audits have repeatedly highlighted administrative problems as well. Investigators found patterns of delayed payments to service providers, inadequate contract oversight, and poor documentation practices. One city audit determined that LAHSA failed to spend approximately $513 million that had been budgeted for homelessness programs during fiscal year 2024, citing staffing shortages and outdated technology systems.
HUD Secretary Scott Turner said the administration is no longer willing to continue funding organizations that fail to demonstrate results.
“Under President Trump’s leadership, HUD will fund results, not corrupt failure or the homeless industrial complex,” Turner said. “Year after year, hundreds of millions of taxpayer dollars were funneled to LAHSA with little accountability. Meanwhile, homelessness skyrocketed.”
Federal Trade Commission Chairman Andrew Ferguson, who serves as vice chair of the White House Task Force to Eliminate Fraud, echoed those criticisms, arguing that homelessness spending in Los Angeles has failed to produce sufficient outcomes despite years of funding.
The action comes even as local officials point to recent improvements. Los Angeles Mayor Karen Bass and LAHSA have highlighted data showing homelessness declined across Los Angeles County for a second consecutive year in 2025. Still, more than 72,000 people remain homeless countywide, and critics argue that years of massive spending have not produced results commensurate with the resources invested.
The federal intervention follows moves by both Los Angeles city and county leaders to reduce their reliance on LAHSA. The city council has explored contracting directly with service providers, while county officials have begun shifting hundreds of millions of dollars in homelessness funding to a newly created county department focused on accountability and oversight.
“HUD cannot ignore LAHSA’s wanton mismanagement of public funds,” the agency wrote in its letter. “Turning over billions of dollars from American taxpayers to an organization under investigation and suspected of gross misuse of federal funding and ‘obvious fraud’ does nothing to reduce homelessness.”
The investigation now places one of the country's most influential homelessness agencies at the center of a major federal probe, with potentially significant consequences for how homelessness programs are funded and managed in Los Angeles moving forward.