A major Trump administration agency is cutting off federal funding to the Los Angeles Homeless Services Authority, the local agency that coordinates billions of dollars in homelessness spending, after accusing it of “obvious fraud,” “wanton mismanagement” and repeated failures to protect taxpayer money, Fox News Digital has learned.
The Department of Housing and Urban Development is immediately suspending LAHSA’s participation in federal funding programs while HUD’s inspector general investigates possible misconduct by the agency and its leadership, according to a letter sent to LAHSA board chair Wendy Greuel and CEO Gita O’Neill. Fox News Digital obtained and reviewed the letter.
HUD, which is part of the White House fraud task force led by Vice President JD Vance, cited a long list of concerns in the letter, including conflicts of interest, poor financial controls, alleged fraud, weak oversight and broader mismanagement inside the agency. LAHSA has already been under pressure from city and county officials, who have considered taking over or bypassing parts of its work.
The decision places one of the nation’s largest homelessness agencies under direct federal scrutiny after years of criticism over Los Angeles’ handling of the crisis. LAHSA receives money from the city, county, state and federal governments. Since 2021, the agency has received nearly $1 billion from the federal government alone, according to HUD.
“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 “LAHSA’s failures have been so severe and pervasive that Los Angeles County has withdrawn its funding for the agency, and the City of Los Angeles is considering doing so as well.”
The agency’s former top executive, Va Lecia Adams Kellum, resigned last year after it was found that she had helped direct $2.1 million in federal funds controlled by LAHSA to the Santa Monica-based nonprofit employer of her husband.
HUD also pointed to a federal judge’s finding last year that LAHSA had committed “obvious fraud” after the agency allegedly continued requesting funding for an 88-bed shelter even though it knew the shelter was operating at about half capacity. HUD said the judge also considered placing LAHSA into receivership.
Another issue cited by HUD involved LAHSA’s inability to verify the existence of nearly 2,300 housing sites under its responsibility. According to HUD, 70% of the contracts tied to those sites did not disclose any expenses during the previous year.
Public audits have raised similar concerns. The Associated Press reported that audits found LAHSA routinely paid service providers late and kept poor records, limiting its ability to monitor contracts. That included $5 million in cash advances sent to five service providers. HUD also cited a November 2024 report from the Los Angeles City Controller’s Office, which found that LAHSA failed to spend $513 million in public funds budgeted for fiscal year 2024. The agency blamed staffing shortages and outdated technology.
“Under President Trump’s 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.”
Other audits found that LAHSA’s record keeping was so poor that the agency could not accurately determine how effectively its spending was helping homeless residents in Los Angeles.
Federal Trade Commission Chairman Andrew Ferguson, vice chair of the White House Task Force to Eliminate Fraud, praised the move and credited Turner, President Donald Trump and Vance for their roles in the effort.
“Los Angeles didn’t 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’s 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.”
Los Angeles Mayor Karen Bass and other city officials have pointed to recent homeless-count figures as evidence that the situation is beginning to improve. LAHSA reported that countywide homelessness declined for a second straight year in 2025, and Bass said it was the first time in the city’s recent history that homelessness had fallen two years in a row.
Still, the count found more than 72,000 people experiencing homelessness across Los Angeles County. Critics argue that modest decreases do not offset years of heavy spending, persistent encampments and audit findings showing that the region’s homelessness system has struggled to track whether public funds are producing real results.
HUD’s action also follows moves by local officials to distance themselves from LAHSA. The Associated Press reported last year that the Los Angeles City Council had begun exploring ways to bypass the agency and contract directly with service providers. Los Angeles County, meanwhile, moved to redirect hundreds of millions of dollars in annual homelessness funding away from LAHSA and into a new county department, citing a need for stronger accountability.
“HUD cannot ignore LAHSA’s wanton mismanagement of public funds,” the agency wrote in its letter Thursday. “HUD’s mission is to reduce the plague of homelessness in America. 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.”
