HUD Suspends Funding for LA Homeless Services Authority Over Fraud Allegations

EXCLUSIVE: The Department of Housing and Urban Development (HUD) has made the dramatic decision to cut off funding to the Los Angeles Homeless Services Authority (LAHSA), a critical agency that has overseen billions in homelessness expenditures. This decision, prompted by accusations of “obvious fraud,” “wanton mismanagement,” and a grievous failure to safeguard taxpayer dollars, has sent shockwaves through local governance in Los Angeles.

Immediate Action by HUD

In a letter obtained by Fox News Digital, HUD announced it is suspending LAHSA’s federal funding effective immediately as the agency’s inspector general embarks on an investigation into potential wrongdoing within LAHSA and its leadership. The letter was addressed to LAHSA’s board chair, Wendy Greuel, and CEO, Gita O’Neill.

The correspondence outlined grave issues, including conflicts of interest, financial mismanagement, and lack of oversight that have plagued the agency, raising critical questions about its operations amid the ongoing homeless crisis in the area.

Ongoing Homelessness Crisis

Los Angeles remains one of the U.S. cities most affected by homelessness, despite billions of dollars poured into homeless programs. LAHSA has received nearly $1 billion from federal sources alone since 2021. While the agency should be working to alleviate the crisis, HUD’s findings suggest that funds have been poorly allocated, leading to continued suffering on the streets.

The decision to cut funding comes after LAHSA has been scrutinized by both city and county officials, with calls for a substantial restructuring to ensure more effective management of homeless services.

Key Failures and Allegations

HUD’s letter made clear that LAHSA’s mismanagement is so severe that it has prompted Los Angeles County to withdraw its funding for the agency, and the City of Los Angeles is contemplating a similar move. Last year, LAHSA’s former top executive, Va Lecia Adams Kellum, resigned after her involvement in steering $2.1 million in federal funds to a nonprofit linked to her husband came to light.

Furthermore, a federal judge concluded that LAHSA committed “obvious fraud” by continually seeking funding for shelters that were not operating at full capacity. One such shelter, which housed just 88 beds, was found to be operating at roughly half of its capacity, raising alarms over LAHSA’s accountability and resource management.

More Issues: Housing and Funding Mismanagement

HUD indicated that LAHSA is also failing to verify the existence of nearly 2,300 housing sites it is responsible for, with 70% of contracts for those sites lacking any recorded expenses over the previous year. Public audits have repeatedly highlighted a trend of late payments to service providers and poor record-keeping practices that inhibit effective contract oversight.

In a November 2024 audit, LAHSA was reported to have failed to expend $513 million in public funds allocated for the fiscal year, attributing its failures to inadequate staffing and obsolete technology.

Response from HUD Leadership

HUD Secretary Scott Turner stated, “Under President Trump’s leadership, HUD will fund results, not corrupt failure or the homeless industrial complex.” He criticized the previous allocation of taxpayer dollars to LAHSA, asserting that these funds failed to yield tangible results in combating homelessness.

Turner’s remarks reflect a broader frustration within the current administration concerning LAHSA’s function and efficacy. The sentiment is echoed by Federal Trade Commission Chairman Andrew Ferguson, who described the waste of taxpayer resources as “unconscionable” and characterized previous efforts to aid the homeless as inadequate.

Los Angeles Officials React

In response to the funding suspension, Los Angeles Mayor Karen Bass and city officials have pointed to declining homeless count data as progress in addressing the crisis. In 2025, LAHSA reported a decrease in countywide homelessness for the second consecutive year, a claim that the mayor highlighted as a significant achievement.

Yet, critics argue that despite these modest declines, over 72,000 individuals remain homeless across Los Angeles County, indicating that systemic issues persist. Audits and ongoing scrutiny of LAHSA reinforce concerns that prior spending and management practices have not adequately addressed the needs of the homeless population.

A Shift in Approach

As calls for greater accountability grow louder, city and county officials are exploring options to bypass LAHSA and engage directly with service providers. The County is particularly concerned with redirecting hundreds of millions of dollars in annual homelessness funding into a newly established department, signaling a potential overhaul in how homelessness is managed in Los Angeles.

HUD’s letter concluded, “Turning over billions of dollars from American taxpayers to an organization under investigation…does nothing to reduce homelessness.” With the suspension of funding, HUD intends for taxpayers’ money to be allocated in a manner that guarantees tangible improvements for those most in need.

Conclusion: A Path Forward?

As HUD’s investigation unfolds, LAHSA’s future remains uncertain. The agency’s ability to recover from these allegations and re-establish trust with both funding sources and the homeless community is now more critical than ever. The developments signify a watershed moment in the struggle against homelessness and the oversight of public funds, with both immediate and long-term implications for Los Angeles and potentially the nation.