The White House has sent a sharp message to Los Angeles following the city’s decision to cut funding for its largest homeless advocacy organization.
A newly established Task Force to Combat Fraud, led by Vice President J.D. Vance, declared that “fraud and corruption end today” as federal money to the Los Angeles Homeless Services Authority ceases.
Scott Brady, the organization’s executive director, expressed in a post on X, “For years, American taxpayers have sent billions to Los Angeles. And what have we seen? Fraud and corruption.”
During the Trump era, accusations of “mismanagement” surfaced, as nearly $1 billion in federal funding had been allocated to the agency since 2021.
The Department of Housing and Urban Development (HUD), part of the task force, informed LAHSA officials on Thursday that its involvement in federal programs is being suspended while investigations are conducted into possible misconduct concerning the agency’s operations.
According to a letter obtained, HUD accused LAHSA of “blatant fraud” and noted ongoing failures to safeguard taxpayer money.
Allegations cited in the letter included conflicts of interest, poor financial management, insufficient oversight, and worries about how federal homeless assistance funds are being utilized.
HUD highlighted that since 2021, LAHSA has received close to $1 billion in federal support, arguing that the agency’s missteps have grown too significant to overlook.
The letter reportedly mentions the resignation of former LAHSA CEO Va. Lesia Adams Kellum, who left her position after revelations that $2.1 million in federal funds managed by LAHSA had been directed to a nonprofit linked to her husband.
Moreover, HUD recalled a federal judge’s observations, which concluded that LAHSA had committed “clear fraud” by seeking funding even when a shelter was operating at only about half its capacity. The judge was considering placing the agency under receivership at one point.
Additional concerns raised by HUD included LAHSA’s inability to verify the existence of around 2,300 residential lots it managed, finding that about 70% of contracts related to these properties reported no expenditures in the previous year.
A public audit indicated that LAHSA regularly delayed payments to service providers and did not maintain adequate records necessary for contract and spending oversight.
HUD’s letter also referred to a November 2024 audit from a City Commissioner, revealing that LAHSA had failed to distribute about $513 million in homelessness funds from the 2024 budget, attributing this issue to staffing shortages and outdated technology.
This action by the federal government coincides with local leaders distancing themselves from LAHSA as, last year, Los Angeles County opted to create a new homelessness division and reallocate hundreds of millions from the agency or so.
Much of the funding and programs regarding homelessness in LA fall under the Los Angeles City Council’s Homelessness and Housing Committee, chaired by City Councilor Nithya Raman, who is also a mayoral candidate.
This committee is tasked with reviewing programs, contracts, funding decisions, performance evaluations, and policy recommendations before they’re sent to City Hall.
The California Post tried reaching out to Raman’s office and LAHSA for their thoughts on HUD’s actions and the outlined allegations in the letter, as well as the implications of reduced funding on homelessness initiatives in Los Angeles.
HUD Secretary Scott Turner stated that the agency will no longer allow federal funds to flow to organizations accused of mismanaging taxpayer resources.
