HUD pulls federal money during active probe
The Department of Housing and Urban Development has suspended federal funding to the Los Angeles Homeless Services Authority while its inspector general investigates possible fraud and other offenses. HUD said the agency showed “obvious fraud,” “wanton mismanagement,” and a habit of treating taxpayer money like a suggestion. The move targets the bureaucratic middleman responsible for helping direct billions in homelessness spending in Los Angeles, where tents have remained a stubborn fixture despite years of very expensive promises.
Judge and auditors found familiar red flags
HUD said LAHSA received nearly $1 billion in federal money since 2021. The agency’s troubles are not exactly hidden in a filing cabinet. A federal judge last year found what HUD called “obvious fraud” after LAHSA kept seeking money for an 88-bed shelter even as it was operating at about half capacity, and the judge reportedly considered receivership. HUD also pointed to former executive Va Lecia Adams Kellum, who resigned after she was found to have helped direct $2.1 million in federal funds to her husband’s nonprofit employer. That is the kind of conflict of interest that makes public trust leave the room before the meeting starts.
City and county move away from LAHSA
The pressure is not coming only from Washington. HUD said Los Angeles County has already withdrawn funding from LAHSA, and the City of Los Angeles is considering doing the same. Mayor Karen Bass’s office said she has “grave concerns” and directed the city to evaluate moving away from the agency. Her office warned that threatening federal money “does nothing to house people” and said people could lose their lives. LAHSA, naturally, says the answer is more funding and less scrutiny, which is a familiar pitch from organizations that have had years to prove competence and instead produced press releases.
Records failures and unspent money piled up
HUD said LAHSA could not verify nearly 2,300 housing sites it was supposed to oversee, and 70% of the contracts tied to those sites did not report any expenses over the prior year. Public audits found a pattern of late payments, poor record keeping, and $5 million in cash advances to five service providers. The City Controller’s Office also found LAHSA failed to spend $513 million budgeted for fiscal year 2024, blaming staffing shortages and old technology. HUD Secretary Scott Turner said the agency would “fund results, not corrupt failure,” and taxpayers would no longer bankroll an organization that put itself before the people it was built to serve. In Washington, that is about as close as anyone gets to admitting the spreadsheet has feelings.
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