The Trump administration is pulling the plug on funding for a Los Angeles homeless service over “obvious fraud,” Fox News Digital reported Thursday.
The Department of Housing and Urban Development will be suspending the Los Angeles Homeless Services Authority’s federal funding as HUD’s internal watchdog probes potential offenses, according to a Thursday letter, reviewed by the news outlet, that was sent to LAHSA board Chair Wendy Greuel and CEO Gita O’Neill.
The letter accuses LAHSA of “wanton mismanagement,” citing conflicts of interest and a lack of oversight.
“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,” HUD wrote in the letter. “Indeed, diverting dollars from worthy programs to LAHSA merely makes the homeless crisis worse.”
Including funding at the city, county, state and federal level, LAHSA received nearly $1 billion from the federal government since 2021, according to HUD. The City Controller’s Office previously found that LAHSA failed to spend $513 million in public funds budgeted in fiscal year 2024, faulting a lack of staff and old technology.
“Suspending LAHSA’s participation in federal government programs is a necessary step in accomplishing that critical mission in Los Angeles,” HUD wrote in the letter. “LAHSA’s failures have been so severe and pervasive that Los Angeles County has withdrawn its funding for the agency, and the City of Los Angeles is considering doing so as well.”
But LAHSA is no stranger to accusations of insufficient oversight; several government entities have made moves to take over, bypass or replace it.
Citing a lack of transparency and efficiency, the Los Angeles County Board of Supervisors voted to strip over $300 million in funding from LAHSA and transition hundreds of jobs to a new internal county department. The Los Angeles City Council has moved to explore entirely bypassing LAHSA, instead choosing to contract directly with independent service providers.
In its letter, HUD cited a federal judge who described “obvious fraud” last year after LAHSA renewed its contract for an 88-bed shelter at full capacity even though the shelter was operating at roughly half-capacity and continued doing so even after the discrepancy was known.
As homelessness remains a crucial issue in Los Angeles politics, stripping funding from the agency will put many unhoused individuals in limbo as they seek services.
HUD Secretary Scott Turner told Fox News Digital that HUD will “fund results, not corrupt failure or the homeless industrial complex.”
“Year after year, hundreds of millions of taxpayer dollars were funneled to LAHSA with little accountability. Meanwhile, homelessness skyrocketed,” he said. “Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve.”
Vice President J.D. Vance, leading the White House Task Force to Eliminate Fraud, said Thursday that “the fraud and corruption ends today.”
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