EXCLUSIVE: A top Trump agency is cutting off funding to the Los Angeles agency responsible for coordinating billions in homelessness spending after accusing it of “obvious fraud,” “wanton mismanagement” and repeated failures to safeguard taxpayer dollars, Fox News Digital has learned.<\/p>\n\n\n\n
The Department of Housing and Urban Development (HUD), part of the White House fraud task force led by Vice President JD Vance, is immediately suspending the Los Angeles Homeless Services Authority’s (LAHSA) federal funding while HUD\u2019s inspector general investigates potential offenses by the agency and its leadership, according to a letter sent to LAHSA’s board Chair Wendy Greuel and CEO Gita O’Neill, which was obtained and reviewed by Fox News Digital.<\/p>\n\n\n\n
The letter detailed conflicts of interest, financial mismanagement, fraud, lack of oversight and more from the homelessness agency, which has faced efforts by the city and county to take it over.<\/p>\n\n\n\n
The move puts one of the country\u2019s biggest homelessness bureaucracies under direct federal scrutiny after years of criticism that billions have gone into homelessness programs in Los Angeles while the crisis remains entrenched on the streets.<\/p>\n\n\n\n
LAHSA receives funding at the city, county, state and federal level, with the group getting nearly $1 billion from just the federal government since 2021, according to HUD.<\/p>\n\n\n\n
“Suspending LAHSA\u2019s participation in federal government programs is a necessary step in accomplishing that critical mission in Los Angeles,” HUD wrote in the letter. “LAHSA\u2019s failures have been so severe and pervasive that Los Angeles County has withdrawn its funding for the agency, and the City of Los Angeles is considering doing so as well.”<\/p>\n\n\n\n
LAHSA’s former top executive, Va Lecia Adams Kellum, resigned last year after she was found to have been a party to directing $2.1 million in federal funds under LAHSA’s control to her husband’s Santa Monica-based nonprofit employer.<\/p>\n\n\n\n
HUD says a federal judge last year also concluded that LAHSA had committed “obvious fraud” after it allegedly kept requesting funding for an 88-bed shelter even though it knew the shelter was operating at roughly half capacity.<\/p>\n\n\n\n
HUD noted in its letter that the judge considered placing LAHSA into receivership as well.<\/p>\n\n\n\n
In a statement, the office of Los Angeles Mayor Karen Bass said she has “grave concerns about LAHSA and zero tolerance for mismanagement and negligence, which is why she previously directed the city to evaluate how to move away from the agency.”<\/p>\n\n\n\n
“Threatening federal funds does nothing to house people and jeopardizes the progress Mayor Bass has led to reduce homelessness for two years in a row, after it only went up in Los Angeles for years,” her office said.<\/p>\n\n\n\n
“Ultimately, people will lose their lives. We urge HUD to work with the City of Los Angeles to provide the necessary funding to reduce homelessness.”<\/p>\n\n\n\n
LAHSA’s inability to verify the existence of nearly 2,300 housing sites for which it was responsible is another recent issue that has plagued the homelessness provider, according to HUD, which said 70% of the contracts for those sites did not disclose any expenses over the prior year.<\/p>\n\n\n\n
Public audits of LAHSA, meanwhile, found a pattern of routinely paying service providers late and poor record keeping preventing it from monitoring contracts, including $5 million in cash advances sent to five different service providers, according to The Associated Press. In November 2024, the City Controller\u2019s Office found that LAHSA failed to spend $513 million in public funds budgeted in fiscal year 2024, blaming a lack of staff and old technology, according to HUD.<\/p>\n\n\n\n
“Under President Trump\u2019s leadership, HUD will fund results, not corrupt failure or the homeless industrial complex,” HUD Secretary Scott Turner said in a statement to Fox News Digital. “Year after year, hundreds of millions of taxpayer dollars were funneled to LAHSA with little accountability. Meanwhile, homelessness skyrocketed. Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve.”<\/p>\n\n\n\n
Other audits concluded that LAHSA’s poor record keeping made it unable to accurately identify or calculate how well its spending has been benefiting the homeless population in Los Angeles.<\/p>\n\n\n\n
Federal Trade Commission Chairman Andrew Ferguson, who is the vice chair of the White House Task Force to Eliminate Fraud, praised the leadership on this issue from HUD Secretary Scott Turner, President Donald Trump and Vance, who serves as the chairman of the fraud task force that was established earlier this year.<\/p>\n\n\n\n
“Los Angeles didn\u2019t care about helping the homeless, but the Trump administration does,” Ferguson told Fox News Digital. “It is unconscionable that Los Angeles has wasted billions of taxpayer dollars that was supposed to be used on housing our nation\u2019s most vulnerable. Instead of providing a roof and care for the homeless, Los Angeles has used these funds to line the pockets of left-wing NGOs. Such a disgrace ends today.”<\/p>\n\n\n\n
When pressed for comment, a LAHSA spokesperson told Fox News Digital that “after initial review, this appears to be a blatant attempt to pull yet more resources from Los Angeles, a city they have targeted time and again, when it is clear that LAHSA has either corrected or is in the process of correcting nearly all of the issues raised. Local oversight actions have already resulted in strong repairs and reforms to LAHSA\u2019s internal controls, which are accountable and viewable to the public.<\/p>\n\n\n\n
“We are also beginning to implement KPMG’s recommendations to modernize our financial systems and prevent similar findings from occurring again. If HUD\u2019s inspector general actually conducts a fair review of LAHSA\u2019s current and future practices, they will clearly see how our systems now allow us to clearly track the work and investments that have resulted in LA outperforming the nation by reducing homelessness over the last two years,” the spokesperson continued.<\/p>\n\n\n\n
“While the review plays out, our immediate priority is to explore all available options to ensure that federal funds continue to support the thousands of people who have been housed through LAHSA and our broader rehousing system.”<\/p>\n\n\n\n
While Bass and Los Angeles officials have pointed to recent homeless count data as evidence that the crisis has begun to improve, with LAHSA reporting that countywide homelessness fell for a second straight year in 2025 and Bass saying it marked the first time in the city\u2019s recent history that homelessness had declined two years in a row, Bass released a statement expressing concern over LAHSA.<\/p>\n\n\n\n
“Mayor Bass, too, has grave concerns about LAHSA and zero tolerance for mismanagement and negligence, which is why she previously directed the city to evaluate how to move away from the agency,” she said.<\/p>\n\n\n\n
But the numbers still showed more than 72,000 people experiencing homelessness across Los Angeles County, and critics have continued to argue that modest declines do not erase years of runaway spending, encampments and repeated audit findings that the region\u2019s homelessness system has failed to adequately track whether taxpayer dollars are producing results.<\/p>\n\n\n\n
The federal action from HUD comes after Los Angeles city and county officials had already begun backing away from LAHSA, The Associated Press reported last year.<\/p>\n\n\n\n
The city council moved to explore bypassing the agency and contracting directly with providers, while the county moved to redirect hundreds of millions of dollars in annual homelessness funding away from LAHSA and into a new county department, citing the need for stronger accountability after a series of audits.<\/p>\n\n\n\n
“HUD cannot ignore LAHSA\u2019s wanton mismanagement of public funds. HUD\u2019s mission is to reduce the plague of homelessness in America,” the agency’s letter to LAHSA leadership states.<\/p>\n\n\n\n
“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. Indeed, diverting dollars from worthy programs to LAHSA merely makes the homeless crisis worse.”<\/p>\n\n\n\n